Microsoft pays Novell $308m for exclusive Linux partnership

Novell is to receive up to $308m from Microsoft in the coming years as part of a partnership agreement signed last week.  

Novell disclosed the financial details in a filing with the Securities and Exchange Commission on Tuesday. 

Microsoft and Novell unveiled a technical, sales and intellectual property partnership last week that expires on 1 January 2012.

The deal effectively makes Novell's SuSE desktop and server products the only Linux distribution approved by Microsoft.

Under the terms of the partnership, Microsoft will distribute an estimated 70,000 coupons to its customers each year entitling them to a free multi-year subscription to Novell's SuSE Linux Enterprise Server.

Microsoft will pay $240m for these coupons which it can either sell or give away.

Microsoft has also committed to spending $12m annually over the course of the agreement to market Linux and Windows virtualisation.

The company will invest $34m over the entire period on a dedicated salesforce to market the combined offering.

The Linux partnership is exclusive, and Microsoft has stated that it will not enter into any similar agreements with other Linux vendors.

The two software makers have also signed a patent cross-licensing deal to ensure that Microsoft will not enforce any of its patents against SuSE users and developers.

Because the cross-licensing deal covers more Microsoft installations than Novell users, Microsoft will make a one-time payment of $108m.

Novell is required to pay Microsoft a percentage of future software sales with a minimum of $40m over the next five years.

Novell did not provide any financial details about the technical collaboration. The pair will create technologies to make SuSE and Windows " guests" on each other's operating systems, as well as create standards to manage systems in heterogeneous environments.

Microsoft and Novell have also committed to developing a translator technology that enables interoperability between Microsoft's Open XML document format and the Open Document Format.

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