Microsoft paying $308m for Novell deal

by admin November 8, 2006 at 11:40 am

In one of the more complex examples of “coopetition” in the computer industry, Microsoft will pay Novell a net amount of $308m (?Ǭ£161.4m approx) to market and distribute its competitor’s product.

The five-year Microsoft-Novell partnership, unveiled last week, involves a mix of patent, technology and business issues. Novell disclosed details of the partnership in a Securities and Exchange Commission filing on Tuesday.

Microsoft will pay Novell $240m for 350,000 coupons ?¢‚Ǩ‚Äù 70,000 per year ?¢‚Ǩ‚Äù entitling customers to support and maintenance for Novell’s Suse Linux Enterprise Server, Novell chief executive Ron Hovsepian said on Tuesday. In addition, Microsoft will spend $94m over the five-year deal on its own sales and marketing work for Suse products.

Microsoft hopes the partnership will help the fortunes of its management software for virtualisation, technology that lets different operating systems run simultaneously on the same server, said general counsel Brad Smith. “The principal purpose of this is to enable us to take our virtualisation solution to market,” he said.

The deal also involves patent-related payments. Microsoft will pay Novell a net amount of $108m in an agreement under which both companies release each other from patent claims from past actions, Hovsepian.

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