Microsoft is spending less than $500m on its ground-breaking deal with Novell to promote SuSE Linux and shut Red Hat out of Windows accounts.

Microsoft is to pay Novell $240m for 350,000 subscription coupons of SUSE Linux Enterprise Server (SLES, to be released in annual batches of 70,000, according to a Novell regulatory filing. Coupons can be redeemed from Novell for single- or multi-year subscriptions, upgrades and technical support. To refresh your memory, $240m is roughly a quarter's revenue for Novell.

Microsoft will spend another $94m on sales and marketing of Windows and Linux during the five-year lifetime of the companies' deal. Also, a patent co-operation agreement will see Microsoft make an up-front payment of $108m to Novell. In return Novell will pay Microsoft a minimum of $40m, based on a percentage of Novell's Open Platform Solutions and Open Enterprise Server revenues

Novell has been stung by criticism of the patent provisions of the deal and has published an FAQ (http://www.novell.com/linux/microsoft/faq_opensource.html) to tackle "a flood" of questions. Reaction has ranged from uncertainty to accusations that Novell is selling out by effectively accepting the concept of closed-source patents in open source, and so giving Microsoft a legal toehold against other open source and Linux vendors.

Novell says that while Microsoft would not sue Novell customers Novell itself has received no such covenant or a patent license from Microsoft - a quid pro quo that means it doesn't flout the GPL (the GNU General Public License (http://www.gnu.org/licenses/gpl.html)).

According to Novell, its relationship with Microsoft is not an admission that Novell's products contain any Microsoft patents; and Novell will not include Microsoft patents in future products. ®

Related stories

Royalties are the admission price, Microsoft tells freetards (27 March 2008)
http://www.theregister.co.uk/2008/03/27/microsoft_brad_smith_patents_royalties/
Microsoft indemnifies Novell Moonlight users (6 March 2008)
http://www.theregister.co.uk/2008/03/06/microsoft_moonlight_patent_protection/
Red Hat, Novell sued for patent infringment (12 October 2007)
http://www.theregister.co.uk/2007/10/12/novell_red_hat_linux_patent_sued/
Start-up sued in US courts over GPL 'violation' (22 September 2007)
http://www.theregister.co.uk/2007/09/22/sflc_gpl_microsoft/
Lenovo to ship Linux laptops (6 August 2007)
http://www.reghardware.co.uk/2007/08/06/lenovo_linux/
Microsoft recruits latest open source expert (13 June 2007)
http://www.theregister.co.uk/2007/06/13/microsoft_linux_recruits/
Glory fades on Novell's Microsoft deal (31 May 2007)
http://www.theregister.co.uk/2007/05/31/novell_quarter_micosoft/
Microsoft too busy to name Linux patents (24 May 2007)
http://www.theregister.co.uk/2007/05/24/microsoft_novell_patents/
GPL to undermine Microsoft's Novell deal? (18 May 2007)
http://www.theregister.co.uk/2007/05/18/gpl_microsoft_novell/
SAP and Novell cosy up on support (15 May 2007)
http://www.theregister.co.uk/2007/05/15/novell_sap_support/
Novell's tiny regret in Microsoft deal (21 March 2007)
http://www.theregister.co.uk/2007/03/21/novell_microsoft_pact/
Analyst reverses stance on Red Hat threat (14 February 2007)
http://www.theregister.co.uk/2007/02/14/red_hat_oracle_sun_support_linux/
Microsoft pulls in record Q2 (25 January 2007)
http://www.theregister.co.uk/2007/01/25/microsoft_q2_fy2007_earnings/
Oracle turns the screws in Red Hat switcheroo (23 January 2007)
http://www.theregister.co.uk/2007/01/23/oracle_red_hat_management/
Software's unfinished business for 2007 (27 December 2006)
http://www.theregister.co.uk/2006/12/27/2006_review_year_ahead/
Financial firms back Microsoft Linux deal (21 December 2006)
http://www.theregister.co.uk/2006/12/21/microsoft_novell_customers/
Novell: in it for the interop, not the money (13 December 2006)
http://www.theregister.co.uk/2006/12/13/novell_microsoft_survey/
Microsoft and Novell: Bambi meets Godzilla? (29 November 2006)
http://www.theregister.co.uk/2006/11/29/ms_novell_deal_comment/
OpenSUSE 10.2 RC1 out and about (27 November 2006)
http://www.theregister.co.uk/2006/11/27/opensuse_10-2_rc1/
Red Hat answers big boys with middleware (21 November 2006)
http://www.theregister.co.uk/2006/11/21/red_hat_jonas/
Microsoft to Novell: Respect (21 November 2006)
http://www.theregister.co.uk/2006/11/21/novell_ms_titfer/
Moglen: How we'll kill the Microsoft Novell deal (20 November 2006)
http://www.theregister.co.uk/2006/11/20/eben_moglen_on_microsoft_novell/
Microsoft makes claim on Linux code (20 November 2006)
http://www.theregister.co.uk/2006/11/20/microsoft_claims_linux_code/
Open Source - it isn't just about being nice (17 November 2006)
http://www.theregister.co.uk/2006/11/17/open_source_tiemann/
'Take your covenant and shove it', Samba tells Novell (13 November 2006)
http://www.theregister.co.uk/2006/11/13/samba_novell_patent_warning/
Microsoft's patent promise 'empty' (11 November 2006)
http://www.theregister.co.uk/2006/11/11/microsoft_patent_kuhn_warning/
Free software still legal - judge (10 November 2006)
http://www.theregister.co.uk/2006/11/10/gpl_wallace_appeal/
Perens: 'Novell is the new SCO' (7 November 2006)
http://www.theregister.co.uk/2006/11/07/perens_on_ms_novell/
Is your software free, open or litigated? (6 November 2006)
http://www.theregister.co.uk/2006/11/06/microsoft_novell_analysis/
MS and Novell: the end of a good feud (6 November 2006)
http://www.theregister.co.uk/2006/11/06/microsoft_linux_novell/
Microsoft loves Linux, Vista licenses, CA boss goes to jail (3 November 2006)
http://www.theregister.co.uk/2006/11/03/regweekly_3nov/
Microsoft loves SUSE Linux (true!) (3 November 2006)
http://www.theregister.co.uk/2006/11/03/microsoft_novell_suse_linux/
Novell raises exec pay under shadow of delisting (26 September 2006)
http://www.theregister.co.uk/2006/09/26/novell_delisting_payrise/
Novell delivers another mediocre Q3 (30 August 2006)
http://www.theregister.co.uk/2006/08/30/novell_q3_06/
Novell reaches out to Microsoft Office users (16 August 2006)
http://www.theregister.co.uk/2006/08/16/novell_desktop_microsoft_office/