The companies said Thursday they will collaborate on development of specific technologies, for example to help Microsoft's Windows, a proprietary operating system, work with Novell's Suse Linux, which is based on open-source code. On the business side, they will promote each other's products.
In addition, the software makers have struck a deal on patents designed to give customers peace of mind about using Novell's open-source products, Microsoft CEO Steve Ballmer and Novell CEO Ronald Hovsepian said at an event here.
"This set of agreements will really help bridge the divide between open-source and proprietary source software," Ballmer said.
The impetus for the arrangement was to make it easier for software buyers to run both Windows and Linux-based systems, Hovsepian said. "We came together to focus on giving you, our customers, the choice," he said.
The companies will create a joint research facility at which they will build and test new products, and work with customers and the open-source community. The focus will be on three technical areas: virtualization, Web services for server management, and Microsoft Office-OpenOffice.org compatibility, the company executives said.
Novell favors the open-source Xen virtualization software as a foundation to run multiple operating systems in separate virtual machines on the same computer; Microsoft is working on its own alternative, code-named Viridian. Virtualization raises the prospect of different operating systems simultaneously running on the same server.
The companies will work together on optimizing their virtualization technologies, said Jeffrey Jaffe, Novell's chief technology officer. Novell will offer a version of Suse Linux Enterprise Server with optimized virtualization features for Windows Server Longhorn; Microsoft, in turn, will sell a version of the upcoming Windows server product that is optimized to run the Novell software in a virtual environment, he said. Neither company, however, will sell the other's operating-system product.
"Microsoft is taking a significant step toward being a better open-source citizen," RedMonk analyst Stephen O'Grady said. And among Linux companies, "Novell is likely to receive a significant boost in attention and credibility, and Red Hat will have to further defend its position as the de facto Linux supplier."
Additionally, Microsoft will officially recommendfor people who want to run both Windows and Linux. It will distribute coupons for maintenance and support for Novell's Suse Linux Enterprise Server operating system. Microsoft and Novell will help each other's customers with support, transferring people over to the other company's help staff if needed.
The two companies also said they will provide each other's customers with patent coverage for their respective products. Moreover,against individual, noncommercial Linux developers.
"Today, Novell is the only company in our industry that is able to provide the customer not only with the code to run Linux, but also with a patent covenant from Microsoft," Brad Smith, Microsoft's general counsel, said at the event.
In addition, Microsoft promised not to assert patents against developers being paid to create code for, Smith said.
Money is flowing both ways for the patent agreement, Smith said, including an "up-front balancing payment that runs from Microsoft to Novell, reflecting the large relevant volume of the products that we have shipped and an economic commitment from Novell to Microsoft that involves a running royalty."
However, the alliance won't affect, one source familiar with the plan said. The suit, filed in 2004, alleges that the software colossus used anticompetitive practices that hurt Novell's earlier WordPerfect office suite business.
Microsoft executives repeatedly said that customer demands provided the impetus for the partnership. "The customers were telling us to find a way to address the patent issue directly so they wouldn't have to figure out how to deal with it themselves," Smith said.
For Bill Schrier, chief technology officer for the city of Seattle, the arrangement means that Suse Linux is now an option.
"We don't use any open-source products today and one reason is because of the intellectual property issues," he said. "In this case, where Microsoft says they won't assert their patents, it makes Linux more attractive to us."
Schrier also has other wishes for the partnership, none of which has to do with open source. The Seattle city government uses Novell's GroupWise for e-mail and Netware for file and printer sharing, but uses Windows on desktops and servers. "The two environments don't mesh very well," he said. "With this announcement, I hope they will fix that."
Some in the open-source community find aspects of the deal troubling, however. Eben Moglen, the attorney for the Free Software Foundation that created and oversees the General Public License (GPL), said that it .
"If you make an agreement which requires you to pay a royalty to anybody for the right to distribute GPL software, you may not distribute it under the GPL," Moglen told CNET News.com on Thursday. Section 7 of the GPL "requires that you have, and pass along to everybody, the right to distribute software freely and without additional permission."
Microsoft and Novell declined to detail the financial side of their agreements. Novell, however, will have to report details soon because they are material to the company's earnings, said John Dragoon, Novell's chief marketing officer.