Why Microsoft Can’t Afford To Let Novell Die
Make no mistake – The hedge fund offer for Novell could effectively mean the end of the company. And Microsoft could suffer the worst, says Peter Judge
A couple of analysts have suggested IBM, Oracle or SAP. These all have have problems – Oracle only just acquired an open source operating system it’s not sure what to do with, and IBM always has need of more open source expertise, but it has a partnership with Red Hat and a desire to remain independent of operating systems in its service business. All these companies want SUSE to survive and thrive – but they don’t necessarily want to own it.
Why Microsoft needs Novell
Microsoft, is in a similar category, with one added problem. Windows and Linux are both growing in data centres, and Microsoft has had to acknowledge the enterprise role of Linux, simply because its users are adopting Linux alongside Microsoft technology.
Microsoft now sponsors open source business events and runs educational webinars – such as one we hosted – as well as hosting open source code in a Microsoft-funded forge – Codeplex.com. Microsoft is also funding the Codeplex Foundation – a body, whose mission, to make commercial software and open software play together, reminds us of High School Musical.
But Microsoft has staked any open source credibility that it has, on Novell’s SUSE distribution. If Novell falls to bits, then Microsoft’s efforts to gain open source cred pretty much disappear with it. It’s something that would have been impossible to imagine a few years back, but if we’re looking for someone to prop Novell up, Microsoft would now be a prime candidate.
Of course, given the hostility within the open source community towards Microsoft, Novell and the deal between them, as well as to Codeplex and other open source moves by Microsoft, there would be big questions about how commercially viable Novell would be within Microsoft. But Redmond would be looking at this as an essential purchase for credibility, not a profit centre.
Whoever makes a “White Knight” bid for Novell is going to have to move fast, because talent there is going to leave if it looks like the company will be broken up. And even if the Elliot deal goes through, there is still the possibility of deals behind the scenes, points out Updegrove. For instance, Elliot might agree to instantly sell on parts of Novell to a differnet player – say an IBM, a Microsoft or an Oracle – as soon as it seals a purchase for the whole company.
The Elliot bid is on the table and there is no going back. Novell, as we know it is going to end – and at this stage, we simply don’t know what will replace it.
