Please support our Business Exchange advertiser: Affiliate Marketing
Featured Entry Aug 22nd, 2008, 2:27 pm
One has to wonder what's going on in the world between Microsoft and Novell. They signed a deal in 2006 worth over $300 million so that Novell could provide licensing certificates and support to Microsoft for its SuSE Linux distribution. Novell, in turn, has to pay Microsoft $40 million over 5 years for indemnification for its customers.
Huh?
Stories like this one stem from the announcement of a couple of days ago when Novell invoiced Microsoft for a $100 million payment based on this agreement.
I still don't get the whole idea behind this deal. It sounds great for Novell who gets a lot of money to fund further development of SuSE and other branded products but what the heck is Microsoft getting out of this? Has Ballmer lost his ability to negotiate? Is Bill Gates ok with this deal? Still?
It makes one wonder if Microsoft is actually buying in to a Linux solution because they see the writing on the wall for their own beleaguered OS, much as Novell did a few years ago with NetWare, or if Novell is simply selling out.
Microsoft could be investing in Novell for a complete buyout at some point in the future after Novell developers create the ultimate OS for them, using Microsoft's money, of course. $300+ million buys you a lot of development.
How much would it take to buy Novell? $2 billion? $3 billion? More? Whatever the asking price, I think almost $350 million is a good down payment on it. What Microsoft would be getting for their money is years of development, a huge customer base of Linux users, and the future of Microsoft. By the time an actual buyout is announced, Novell and Microsoft will be so deep into each other's pockets that a merger of the two will only make good financial sense.
And, if you're wondering what happens to this deal at the end of the 5 years, stay tuned. My prediction is that in 2011, just before the 5 years is up; there will be an announcement. A big announcement. An announcement so big, in fact, that the SEC will have to have time to analyze it.
Huh?
Stories like this one stem from the announcement of a couple of days ago when Novell invoiced Microsoft for a $100 million payment based on this agreement.
I still don't get the whole idea behind this deal. It sounds great for Novell who gets a lot of money to fund further development of SuSE and other branded products but what the heck is Microsoft getting out of this? Has Ballmer lost his ability to negotiate? Is Bill Gates ok with this deal? Still?
It makes one wonder if Microsoft is actually buying in to a Linux solution because they see the writing on the wall for their own beleaguered OS, much as Novell did a few years ago with NetWare, or if Novell is simply selling out.
Microsoft could be investing in Novell for a complete buyout at some point in the future after Novell developers create the ultimate OS for them, using Microsoft's money, of course. $300+ million buys you a lot of development.
How much would it take to buy Novell? $2 billion? $3 billion? More? Whatever the asking price, I think almost $350 million is a good down payment on it. What Microsoft would be getting for their money is years of development, a huge customer base of Linux users, and the future of Microsoft. By the time an actual buyout is announced, Novell and Microsoft will be so deep into each other's pockets that a merger of the two will only make good financial sense.
And, if you're wondering what happens to this deal at the end of the 5 years, stay tuned. My prediction is that in 2011, just before the 5 years is up; there will be an announcement. A big announcement. An announcement so big, in fact, that the SEC will have to have time to analyze it.
This blog entry was written by Ken Hess, staff writer aka khess. It has been filed under the Business Exchange category. It has received 2,274 views, 2 comment(s), and 68 linkbacks. 3 voter(s) have rated this entry an average of 4.33 out of 5 stars. It was promoted to featured status Aug 22nd, 2008.
khess | Junior Poster in Training | Aug 23rd, 2008
bmo | Newbie Poster | Aug 22nd, 2008
•
•
•
•
I'll repeat the "Huh?" but on a different tack.
"What Microsoft would be getting for their money is years of development, a huge customer base of Linux users, and the future of Microsoft."
Maybe this is what the executives at the companies are thinking, but I have serious doubts.
350 Million is a good down payment for development? Wait, doesn't Microsoft have BILLIONS at its disposal to pay for development? Just what are they doing in Redmond, anyway?
Huge Linux customer base? As a Linux user and abuser, this statement seems to come from an entirely different universe. First off, our community is still dwarfed by Apple. Secondly, there are hardly any paying customers compared to the much larger part of the Linux community that simply downloads the latest favored distribution for free.
Going back to my first paragraph about the $350M to pay for developers, the future of Microsoft lies not in its software, but in its management. Maybe one day when management figures out that the company is worth more split apart instead of having to invest so much energy in tying its apps to its OS to enforce its hegemony, they might have a chance of getting out of the rut they're in. But today, their apps developers have to pay attention to the OS marketing decisions, and the OS developers have to pay attention to the apps marketing decisions. Splitting Microsoft apart would sever those chains and free the minds of Microsoft's developers, but until that happens Microsoft will never change.
--
BMO
"What Microsoft would be getting for their money is years of development, a huge customer base of Linux users, and the future of Microsoft."
Maybe this is what the executives at the companies are thinking, but I have serious doubts.
350 Million is a good down payment for development? Wait, doesn't Microsoft have BILLIONS at its disposal to pay for development? Just what are they doing in Redmond, anyway?
Huge Linux customer base? As a Linux user and abuser, this statement seems to come from an entirely different universe. First off, our community is still dwarfed by Apple. Secondly, there are hardly any paying customers compared to the much larger part of the Linux community that simply downloads the latest favored distribution for free.
Going back to my first paragraph about the $350M to pay for developers, the future of Microsoft lies not in its software, but in its management. Maybe one day when management figures out that the company is worth more split apart instead of having to invest so much energy in tying its apps to its OS to enforce its hegemony, they might have a chance of getting out of the rut they're in. But today, their apps developers have to pay attention to the OS marketing decisions, and the OS developers have to pay attention to the apps marketing decisions. Splitting Microsoft apart would sever those chains and free the minds of Microsoft's developers, but until that happens Microsoft will never change.
--
BMO