Ballmer repeats threats against Linux

In a no-nonsense presentation to New York financial analysts last Thursday, Microsoft's chief executive said the company's partnership with Novell, which it signed in November 2006, "demonstrated clearly the value of intellectual property, even in the open-source world."

Steve Ballmer

The cross-selling partnership means that Microsoft will recommend Suse Linux for customers who want an environment mix of Microsoft and open-source software. It also involves a "patent cooperation agreement," under which Microsoft and Novell agreed not to sue each other for patent infringement.

In a clear threat against open-source users, Ballmer repeated his earlier assertions that open source "is not free," referring to the possibility that Microsoft may sue Linux sellers. Microsoft has suggested that the Linux operating system infringes some of its intellectual property, but it has never named the patents in question.

"I would not anticipate that we make a huge additional revenue stream from our Novell deal, but I do think it clearly establishes that open source is not free, and open source will have to respect the intellectual-property rights of others, just as any other competitor will," Ballmer said.

"But I don't want to eliminate in your minds the notions of risk of pricing that comes from competition with open source. We are higher-priced, but we bring greater value," he added.

Alongside the renewed threat over intellectual property, Ballmer was also bullish over winning large corporate accounts against Linux vendors.

"We have done very well versus Linux on the desktop and on the server, and I am hopeful that we will build share, particularly in Web servers and high-performance clusters, from Linux in the next year," he told analysts.

But Red Hat's chief executive was not impressed. Addressing a Merrill Lynch conference on Monday, Matthew Szulik urged his customers to use up their open-source coupons from the Microsoft-Novell partnership. These coupons entitle them to support and maintenance for Novell's Suse Linux Enterprise Server.

"We certainly expect that there will be those cases where customers will consume those coupons," Szulik said. "We're certainly encouraging one or two customers to consume all of them; let's get this over with."

As of January, Microsoft had already sold 35,000 open-source coupons out of the 70,000 it has committed to make available each year as part of the five-year partnership.

Deutsche Bank and Credit Suisse Group and American International Group are among those to take advantage of the Microsoft-Novell collaboration to roll out a mixed infrastructure of proprietary and open-source software.

Richard Thurston of ZDNet UK reported from London.