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Linux switch costs Microsoft £230m

True price of landmark deal with Novell

Microsoft will spend more than $440m (about £230m) in licensing fees and sales and marketing costs over the next five years to keep up its end of the historic Linux agreement it made with Novell.

The two companies announced the surprise agreement late last week, billing it as an effort to "bridge the divide between open-source and proprietary-source software", according to Microsoft chief executive Steve Ballmer. Under the deal, Microsoft has agreed to offer marketing and sales support for Novell's Suse Linux and to co-develop technologies that will help customers integrate the competing OSes (operating systems).

Microsoft has also agreed to distribute 70,000 Suse Linux subscription certificates so Microsoft customers can get Suse updates and technical support from Novell.

According to US Securities and Exchange Commission documents filed by Novell yesterday, Microsoft will make an initial payment of $240m (£125m) for the Novell's Suse certificates and will also spend a total of $34m (£18m) on sales efforts. An additional fee of $12m (£6m) per year will be spent on marketing over the life of the five-year agreement.

But the most controversial component of the deal is a patent co-operation agreement under which Microsoft has promised not to launch patent lawsuits against Novell customers.

In a note published yesterday, Novell said this agreement amounts to a "covenant" between Microsoft and Novell's customers, but Linux advocates maintain that it is effectively a patent cross-licensing agreement between Novell and Microsoft. Such an agreement would be in violation of Linux's software licence, which does not allow distributors to enter into exclusive agreements with patent holders.

Novell disputed this idea. "Novell's customers receive a covenant not to sue directly from Microsoft," the company said on its website. "We have not agreed with Microsoft to any condition that would contradict the conditions of the licence, and we are in full compliance."


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