Whither the SUSE Exodus? Novell’s Linux Business Soars

Linux the only bright spot for Novell's quarter despite OSS community concerns over Microsoft pact.

The Open Source community has had the opportunity to be extremely vocal of late. With the Vista launch, and Dell’s IdeaStorm suggestion box website they’ve had ample chance to flex their feedback muscles. Still neither of these recent events compares to the sheer outrage that the Microsoft-Novell pact received last year. But as Novell proved last week, this was an instance of the community being more loud than correct.

When Microsoft and Novell announced their partnership last year the OSS community blasted the pact as a deal with the devil, expressed serious concerns over patent language in the agreement, and vowed to drop the use of the distribution en masse. Finally, the outrage reached a crescendo when Samba project lead, Jeremy Allison, left the company, saying, “Whilst the Microsoft patent agreement is in place there is nothing we can do to fix community relations. And I really mean nothing.”

The community could very well be upset but from the look of things, Mr. Allison may have been the only one leaving Novell behind. Rather, in the short term, the very opposite has happened. Novell’s Linux business skyrocketed last quarter and in fact is the only part of their business that appears to be doing well.

The company reported last week that revenue from Linux Platform Products was up 46% from the same quarter last year to $15M and Linux-related invoicing was up a staggering 659% to $91M.

While you can’t draw a straight line from these increases to the deal with Microsoft, you have to imagine it had some impact. And certainly the backlash predicted to take it’s pound of flesh from the Linux vendor never materialized. Why not? Because the agreement with MS didn’t impact the quality of an already popular Linux distribution and paying customers saw some value in tight ties with the largest software company in the world. Fear almost certainly didn’t drive any new sales for Novell. When’s the last time you cut a check to SCO?

Making a deal with MS was a risky proposition for Novell — and they’re still working through the kinks. But Novell is a company willing to take chances. Had Novell not taken the chance on buying SUSE Linux in 2003, they and their NetWare product suite would likely have been completely marginalized by now. The deal with Microsoft may just be another one of those necessary risks they had to take.

Throughout the company’s history Novell has had to take big risks reinventing themselves — especially when Microsoft nearly put them out of business in the 90s. That willingness to take chances is a good thing. Because for a company that lost $20M last quarter overall, it’s going to take more than Microsoft distributing Linux support coupons to completely turn things around.

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