Novell helps Microsoft to tax customers
Novell got duped. It didn't mean to - after all, it's been struggling financially for a decade now, and getting some help from a partner, even a dubious one like Microsoft, probably felt like a risk worth taking.
I just hope the rest of the industry will stand firm.
Red Hat has publicly stated that this Microsoft/Novell deal imposes an "innovation tax" on the industry. I doubt few understand what they're getting at. As I work through the public statements on the deal, I'm coming to understand it more and more, and I'm worried. It's not enough to put Goldman Sachs on stage to "prove" the pact is a good deal - anyone know of a bigger investment banking customer than Microsoft for Goldman? Nope. Me, neither. Microsoft would have to get a real customer that isn't shackled to its nipple to give its "customer testimonials" more credibility.
Let's be clear about what this pact requires, as Pam at Groklaw notes: Novell to pay royalties to Microsoft in exchange for a covenant on Microsoft's part not to sue Novell. Translation? "Give me your lunch money or I'll beat the crap out of you."
Novell should be ashamed of itself for playing along with this. No doubt its own salespeople will go out into the market, competing with Red Hat with the words, "We're the only ones who can provide "safe Linux." Could Microsoft hope for anything better? One of Linux's top two vendors scaring the 80% of the market that has long chosen not to buy from it.
Microsoft learned some time ago that suing "the community" was a bad idea. So it proxied the community through Novell. Ballmer says as much:
...I think of Novell as a proxy for the customers. Novell works with the open source community, and so we needed to have a way to work with Novell that was respectful of the community, but nobody represents the community. On the other hand, our customers were clearly saying, we want somebody to represent us in the use that we will make of Linux. And the customers weren't picky, they said, find somebody who is in this game who really wants to get after it. And so, as I said, we got after that with [Novell].Novell, a proxy for the open source community? Novell, the company that has been shuttering every open source project it has started, Linux excepted? Surely Mr. Ballmer could have found a better proxy, one that most of his customers (80%) already buy from: Red Hat. The smart money says that Microsoft offered this Faustian pact to Red Hat, and Red Hat told them, "Don't let the door hit you on the way out."
Why? Again, it comes down to what is truly best for customers: choice without the innovation tax. Ballmer says:
if you want to use Linux, let's make sure that you get a version of Linux that respects our intellectual property.Think about that. Now let me spin it a little:
If you want to use anything besides Microsoft, let me at least make sure that you pay Microsoft, all the same, through hush money royalty agreements.Farfetched? Reread Ballmer's statement.
I'm willing to bet that Microsoft will be hitting the road with this Novell pact, urging other open source companies to sign up to pay for the right to not be sued. They had to have someone desperate enough to cave in the first time to make sure the next few go down more easily. Don't be fooled.
Pam isn't. She writes:
I gather Microsoft no longer thinks Linux is a cancer or communism. Now it just wants a patent royalty from it. Wasn't that kinda SCO's dream at first? A kind of royalty on every box sold, every server shipped? Blech. And this "patent promise" is only for SUSE, so that tells the discerning observer that Microsoft will likely be suing others. As for Novell, if history means anything, it will end up Microsoft roadkill. It's so funny to me that nobody ever remembers what comes *after* the Embrace.Poor Novell. You're like Fontine in Les Miserables, forced to sell yourself by indigent circumstances. You should have tried open source, instead. Some rather like it. Like, for instance, those of us who live in
The Independent Republic of Open Source
4 comments:
Matt, are you bitter about Novell? ;)
The partnering of the evil empire with the likes of Jboss, zend, sugar and probably others that are in the works makes sense. You'd probably even agree to that (Since you like MS every other odd day). I'm sure MS would rather have Alfresco running on MS, than linux if people aren't going to use sharepoint... But seriously, if MS can't beat open source, at least it can make it so it plays well on it's platform (the layers above the os, like java/php/mysql, apps like sugar/etc).
But this SCOesque conspiracy theory is interesting. MS can sue whomever they please. But if the (mostly) same (GPL'd) kernel code is running one place (on a rh) machine is sued, yet the neighbor down the street running SLES isn't, it could be interesting. Though you really think MS would do that? I think the backlash would be horrible.
Here's a better idea for MS. Buy Novell outright, and do what Apple did with bsd. Make xgl/etc pretty. Through a couple hundred people at wine and make it work 98% for backword compatibility. Have really nice integrated apps. Call it say MSLife or something cool like LifeTools 2008. Program it all in C# (or Mono....) and you'd please a lot of people. A solid base, with a pretty decoration on top. Rather than resist the community, play with it. Feed it. Embrace it.... (well I don't know if it needs to go that far...)
I completely agree with MSFT partnering with the open source companies. It makes sense: we're part of their ecosystem (50% of JBoss/Sugar/Alfresco/etc. downloads are on Windows, at least).
As for my supposed inconsistency, I think I'm pretty consistent. I think Microsoft does some great things, and some terrible things. This falls into the latter camp.
I just dislike lawsuits as business strategy. it's a sign of desperation and reveals the absolute basest of designs: if you can't beat them fairly, sue them. I agree that Microsoft will likely not sue, but instead (SCO-like) use the very threat of lawsuits to drive people into their camp. What a bunch of losers.
As for not being able to beat open source, I'm not sure they believe that, and I certainly haven't seen anything to indicate that Microsoft is reeling from open source yet. (This includes Linux - Red Hat is eating up Unix installations, but not yet Windows.)
Matt,
Brutal stuff to read to be sure. I can tell you I was cheering the day of the announcement for these 2 reasons: 1) I felt like the executive team wasn't moribund - as it has been for TOO TOO long - and was willing to make some bold moves; and 2) can you imagine how it felt to stick it to Oracle and Red Hat on the same day, with the market reacting so positively for a change?
Well, enough about the viscerals on this. I do care about open source and am concerned 'the morning after' with the reaction and analysis.
A couple of ways I've been framing some questions include: 1) would NOVL have done this had we been more successful at taking RHAT market share over the last years, since the SUSE acquisition. I mostly think not. And 2) Wasn't NOVL uniquely in a position to get the best deal with MSFT in the sense that the patent portfolio we bring to the table in the negotiations is much more meaningful in terms of a conterbalance to MSFT's own patent portfolio? In other words, and I don't know this, but what unique negotiating position was NOVL in that RHAT wasn't in because of the long history of NOVL and NOVL's patent portfolio.
Finally, if you were the CEO or an executive officer of NOVL, don't you think you'd owe it to shareholders to do SOMETHING to put NOVL at an advantage, even if it's because our Linux gain-market-share exection has been poor over the last few years?
You keep switching blogs on me... :-)
My posts about the Microsoft thing have less to do with my surprise that Microsoft would be devious (I think we've all seen it before), but rather frustration that Novell would need this to compete. When Novell started - post Ximian and SUSE - there was every reason to believe the company could compete and win. But slowly the company's legacy has pulled it back from bold moves. I mean, our first open source project was a UDDI server. Remember that? No one else does, either.
Hula has been shelved. Same with iFolder. It just doesn't stop. Novell keeps hamstringing itself with the weight of its own legacy, and tying up with Microsoft will not help Novell, whatever it may think. You don't do a deal with the devil and expect to go to heaven. And there's just no other way to read the Microsoft deal - it isn't hurting from open source, and it definitely doesn't need Novell to help it compete.
As for what Novell brought (btw, good intel on this is that Novell approached MSFT as early as 2002/03 about this), I can tell you: core patents that go to the heart of Microsoft's Office business. No one else has those. Certainly not Red Hat. I think Microsoft probably felt this was a convenient way to rid itself of that nagging doubt that maybe, just maybe, Microsoft might get desperate enough to unload on them.
All that said, what I want most is a Novell that competes. That is just as savvy and hardball as its competitors. I remember sitting in a meeting with Ron Hovsepian a few years ago when he was laying out the company's new new new mission statement. I complained that it didn't say anything about winning - that Novell is a company that will win. (Instead, it was stuff like, "We're nice to each other." "We give each other rides to work." "We say 'Excuse me.'")
It's not a Utah thing. It's not just that Novell has forgotten how to win. I thought Ron would help to change that, but transplanting a new head (management) for Novell doesn't solve the real problem: the heart of the company. The heart is the Provo office, and it needs to be kick-started.
Part of the reason I'm so bullish on Red Hat is that the company has the attitude of winning. It will win at all legal and ethical costs. I want open source to beat the Proprietary Bloc, and Red Hat is a much clearer leader to do this. Novell is still too tied to its legacy to do the necessary things to lead the open source ecosystem.
Again, I didn't want it this way, but it's what I see every day in the market. It's very, very frustrating for me as someone that helped to build the company's open source practice and street cred. I feel like my time was wasted. That is a miserable feeling.
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