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Jun. 12, 2009
In an effort to sustain its sales and profits in a tough recession, Microsoft is attempting to
exploit its very controversial relationship with Enterprise Linux vendor Novell.
Microsoft's plan is to maintain Windows Server 2008's place in the data center by propping up Novell's
SuSE Linux against other Linux flavors. But some IT industry observers are wondering if that will work in
the long term.
The Redmond software company claims there has been a doubling of business related to its relationship
with Novell since December 2008. The software giant said that as companies look for value in IT services,
they are signing on for the interoperability and intellectual property peace of mind solutions offered
with Novell.
Such a bold statement has surprised more than one...
Microsoft said that with Novell, it has signed up more than 100 customers-- double the rate of the first
two years. So is the implication that this year is going to be a big year?
The software behemoth said the two companies had sold more than $200 million in certificates for Novell's
SLES support and maintenance to more than 300 customers since the companies reached their agreement in
November 2006.
Of course, if you read between the lines, these numbers suggest the deal is within the original
expectations. Or are they?
This is a very self-justifying announcement, designed to re-sell a deal that's been questionable and
that saw Novell's chief executive actually partly apologize for earlier in February.
In November 2006, Microsoft agreed to shift 70,000 of those SuSE Linux certificates worth a total $240 million.
It then committed to a further $100 million, potentially bringing that value to $300 million, so any number
Microsoft claims are well within the relationship's original goals.
Putting all of this into perspective, Novell lost more than $200 million during the quarter ended April
30. Microsoft didn't amplify this in its statement, but it just referred to the 100 new customers who'd signed
up in the last six months.
In the mean time, it still isn't clear whether this rate is double the rate of the first two years as
a whole or whether this is twice the rate of the first six months of the previous years. You do the math.
However, the apparent increase in business certainly dosen't add up with current industry server sales.
IDC reported server revenue and unit sales in the first quarter were the industry's worst for the past
11 years. Revenue across all server types fell 24.5 per cent while unit shipments dropped 26.5 per cent.
What is likely happening is that customers who've purchased SLES certificates from Novell or Microsoft
during the last three years are finally activating them. If you've already paid for something and IT
spending has been cut, why not use what you already have?
As can be expected, Microsoft certainly can live with that. A win for SLES helps keep Windows Server 2003
and 2008 in data centers as it's not
been replaced for Linux, with open-source code like PHP and applications such as Drupal running happily on
Windows.
Also, the IP (intellectual property) protection is misleading and irrelevant. The real benefit of the whole
deal is the interoperability between Windows' Active Directory and SLES to better provision and manage Linux
systems as a whole.
It will be interesting to see how this 'deal' matures and the impact (if any) that it can have on the
IT industry in general.
Source: Linux News Today.
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