Microsoft, Novell Extend China Reach

April 21, 2008

Microsoft and Novell are making an incremental investment in their relationship focused on converting unsupported Linux users to supported SUSE Linux Enterprise, with a particular emphasis on the Chinese market. This is a result of increasing customer demand in the region for their business model solution, which builds a bridge between open source and proprietary software and provides interoperability and intellectual property (IP) peace of mind for organizations operating mixed-source IT environments.

This increased demand is exemplified by the People’s Insurance Company of China Group (PICC), The Dairy Farm Company Ltd. (Dairy Farm) and Dawning Information Industry Co. Ltd. (Dawning), which have agreed to receive Microsoft certificates for three-year support subscriptions for SUSE Linux Enterprise Server from Novell.

“It’s very encouraging to see that our business and technical collaboration continues to resonate with customers around the globe,” said Ron Hovsepian, president and CEO of Novell. “Both Novell and Microsoft are committed to furthering this alliance, and we couldn’t be happier with the results to date. PICC, Dairy Farm and Dawning exemplify the benefits our strengthened alliance provides for the international IT community.”

“We recognize that our customers want to use Microsoft products in heterogeneous environments, and therefore we are pleased to offer this option to meet customer needs in one of the leading global markets,” said Ya-Qin Zang, Microsoft corporate vice president and chairman of Microsoft China. “We are very pleased with the initial response in the Chinese market to our joint offerings for IP peace of mind and technology interoperability in such areas as virtualization and high-performance computing.”

Expanded Investment

Microsoft and Novell’s collaboration in China will focus on joint marketing and training efforts that tap into two emerging areas of interoperability demand: high-performance computing (SUSE Linux Enterprise Server and Microsoft Windows Compute Cluster Server running in a dual-boot configuration) and virtualization (cross-platform virtualization solutions featuring Microsoft Windows Server 2008 with Hyper-V and SUSE Linux Enterprise Server 10 with Xen technology). This will include hosting round-table discussions with local chief information officers in Shenzhen, Guangzhou, Shanghai and Beijing, running a virtualization customer pilot, and conducting technology workshops to assist the conversion from unsupported Linux to SUSE Linux Enterprise Server.

In addition, Novell and Microsoft’s collaboration will focus on efforts to convert unsupported Linux users to SUSE Linux Enterprise support, in China and elsewhere, which builds upon a growing global trend of large, multinational companies increasing their demand for subscribed and supported Linux. This is due at least partly to the growing recognition among customers of the true costs and risk associated with running an unsupported IT environment, including the need for patches and bug fixes, supporting forked code, and retaining IT staff.

Demand in China

Companies in China are recognizing the challenges of deploying and managing heterogeneous IT environments and the opportunities to simplify with solutions such as the dual-boot operating system configuration from Microsoft and Novell.

“We are very pleased with the original approach by Microsoft and Novell to address our concerns about deploying and managing a complex high-performance computing infrastructure across two platforms. It is essential for our future competitiveness and success that we can simplify with such solutions and look forward to further utilizing the standards-based systems management technologies being developed by both companies,” said Nie Hua, vice president of Dawning. “We fully understand the concerns surrounding intellectual property rights and feel reassured that these issues have been addressed by our vendors.”

“The Microsoft-Novell collaboration helps to solve interoperability problems and creates a more harmonious IT ecosystem. We are confident that Microsoft and Novell would be able to provide the right level of support when we go ahead,” said Colin Rice, IT director of the Dairy Farm. Dairy Farm is a leading pan-Asian retailer, including 7-Eleven in Hong Kong, Macau, Southern China and Singapore, and other well-known local brands.

The Microsoft-Novell Agreement

As part of the five-year Microsoft-Novell agreement, announced Nov. 2, 2006, Microsoft can make subscription certificates available for customers to redeem SUSE Linux Enterprise Server support services directly from Novell. Since the announcement, Novell has invoiced more than $141 million in SUSE Linux Enterprise Server subscriptions from the Microsoft and Novell collaboration agreement.

A recently released study by IDC, “Worldwide Linux Operating Environments 2008–2012 Forecast: Taking Linux to the Next Level,”1 reported that SUSE Linux Enterprise-paid server operating environment (SOE) subscriptions increased by 38.6 percent from 2006 to 2007 and that Novell’s share of the paid SOE market increased from 26.1 percent in 2006 to 29 percent in 2007. IDC stated in the report, “That surge, thanks to the company’s alliance and interoperability efforts with Microsoft, led to a highly successful year for Novell in 2007.” Novell’s 2006–2007 growth was the highest of any paid or unpaid SOE distribution tracked by this study.