Microsoft and Novell have announced a set of deals bunched together to create one of the most significant developments in the Linux versus Microsoft saga: technical collaboration, a so-called ‘intellectual property bridge’ (I-won’t-sue-you, you-won’t-sue me), and a joint support and services deal designed to counter the Oracle-Red Hat announcement of last week.

As this was breaking last night, our Open Source Practice Head Raven Zachary said, “Microsoft’s move to embrace Linux through an alliance with Novell is one of the most significant open source announcements to date. This announcement seems rushed, years in advance of what I expected from Microsoft, and clearly a response to Oracle’s announcement last week.”

First, the technical collaboration addresses three areas of threat by the open source world to Microsoft, to wit, server virtualization, web services management and open document formats. The companies will collaborate around these areas.

Second, the two companies have built what they referred to as, “An intellectual property bridge between OS and proprietary source business models,” what we reckon is a mutual no-sue agreement. At first, we thought it specifically related to the WordPerfect and Quattro Pro stink or some such; a NetWare suit was settled in 2004 but there were outstanding issues around the applications.

Nope.

The folks on stage said, “The patent resolution was with respect to operating systems; that they were able to clean up almost everything, but not WordPerfect and Quattro Pro.”

Novell CEO Ron Hovsepian: “What we did around patents was very innovative.”

Microsoft General Counsel Brad Smith: “You’re talking about two companies that each had some very important patent portfolios… Microsoft has one of the largest software patent portfolios in the world… It’s always challenging when you get teams of patent lawyers together.”

Finally, the juicy stuff: business cooperation. obviously this is a countermeasure to Oracle’s pre-emptive move against Red Hat last week. The official word and the key moment:

“Those customers combining Windows and Linux Should Choose Novell”
–Microsoft

Much talk was made of getting versions of Linux which respect Microsoft’s intellectual property, which implies that Red Hat may be stepping on some Microsoft patents- and customers which use Novell’s SuSE will have, “technical Interoperability and patent peace of mind”, a fairly unveiled threat that RHEL users do not enjoy the latter at the least.

Bizarrely, the MS gang schlepped Shane Robinson from HP up onto the stage, and Microsoft CEO Steve Ballmer (we noted the music directly before the speech included one song stating that “I won’t dance again”) chuckled that, “We’re still competitors. We’re all friendly when we’re in the same room…”

Some passing thoughts:

One has to wonder whether this is one of Novell’s most astute move in years or its worst move ever. There are obvious symbiotic aspects to such a deal: Microsoft heads off any Oracle advantage while Novell gets knighted as The Linux Of Linuxes by Microsoft.

This makes sense, giving Novell the ability to manage services from a third party on its own terms. Novell has proved that it has the ability to cut out market share in the enterprise Linux market that MS couldn’t possibly do on its own.

But it also smacks the ol’ raspberry right at Red Hat: Raven said last week that the biggest loser in the RH-Oracle thing was Novell - now the calculus has changed, and the biggest loser is probably Red Hat itself. Microsoft teams with Novell against its nemesis, Oracle, Oracle gives the ol’ half-a-peace-sign to Red Hat, and Red Hat…Well, I guess Red Hat goes home and kicks the dog.

In that same chat with Red Herring yesterday, Raven said, “Novell may have found Microsoft willing to help with its response to Oracle’s announcement last week and this move allows Microsoft to be involved in the inevitable loss of Windows customers to Linux. The Linux and open source communities will first experience shock which will eventually give way to mass celebrations as a decade-long technology battle enters a new stage. “

Raven will kick in more complete thought-out discussion of all this in a little while in The 451 Group’s Market Insight Service, later today.

Reporting came from Rachel Chalmers in San Francisco and Raven Zachary in Boston and then again in New York…And then again in Portland.