Microsoft Corp. (NASDAQ:MSFT) has not paid out this kind of money unless the company was settling a patent claim or antitrust judgment. The company is investing $400 million in its partnership with Novell [subscription required]. The partnership, announced last week, aims to get the Windows and Linux operating systems working nicely together on PCs.
MSFT will be paying for coupons so that corporate customers can get annual licenses to the Suse Linux operating system. It is, in essence, paying for the distribution of the open source software it has feared would take market share from Windows.
With Microsoft's new operating system, Vista, about to launch, supporting rival Linux would seem a queer thing to do.
Not necessarily. If Microsoft becomes the de facto largest reseller of Linux, it will have some measure of control over how fast the open source initiative can grow. Novell, Inc.'s (NASDAQ:NOVL) annual sales are under $1.2 billion, and its rival in the Linux market, RedHat, Inc. (NASDAQ:RHAT) has sales of well under $300 million.
Microsoft also got a promise from Novell that it would not sue Microsoft over Windows, presumably over any patent issues or monopoly practices.
And that, by itself, could be worth $400 million.
Douglas McIntyre is a partner at 24/7 Wall St.
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