Microsoft sells Linux to Wal-Mart
Published:23-January-2007
By BR staff writer
Wal-Mart, the world's largest retailer, has become the latest big name to buy SUSE Linux vouchers from Microsoft Corp, following the software firm's landmark deal with Novell Inc last November.
The retailer will take an undisclosed number of SUSE Linux Enterprise Server subscription certificates - the support vouchers that Microsoft has to distribute to hold its end of its bargain with Novell.
The sale, which is being positioned as further customer validation of the controversial Microsoft-Novell partnership, is perhaps not entirely unexpected, due to the executives involved.
Microsoft's COO, Kevin Turner, is the former CIO of Wal-Mart, and it was Turner, as a former customer, to whom Novell chief executive Ron Hovsepian turned when he wanted to start negotiating with Microsoft last year.
"I reached out to Kevin Turner in the April [2006] timeframe, the COO of Microsoft, and I suggested to Kevin that there was a relationship to be had," Hovsepian said in November. "I said to Kevin, I know you're at Microsoft, but I want you to go back to when you were a customer."
The fact that Turner, who left Wal-Mart for Microsoft in August 2005, likely had and still has more than a passing familiarity with the retailer's technology systems and executives, could have greased the wheels of the SUSE sale, one could speculate.
A Microsoft spokesperson declined to comment on the number of support certificates that Wal-Mart will buy, other than to say "this is a big agreement."
Microsoft has agreed to buy from Novell 70,000 certificates a year for five years, at the cost of $240m. A certificate becomes "activated" when it is sold to a customer, according to a Microsoft spokesperson.
Since the deal was announced, "35,000 new certificates for three-year priority support subscriptions to SUSE Linux Enterprise Server have been activated", according to a joint Microsoft-Novell statement.
It appears from this that the companies' short-term target for certificate activations, previously described as "ambitious", is attainable.
Hovsepian told financial analysts on December 5: "In January, we are targeting to build a pipeline of 150 customers and ship approximately 20,000 certificates."
Later that month, the companies said they had had activated 16,000 certificates. If the running total today is 35,000, it suggests an additional 19,000 have made it into customers' hands since December 20, with seven business days left in January.
Microsoft has committed to pay Novell for the certificates regardless of whether customers buy them. If a coupon goes unsold, Novell recognizes the revenue as a one-time sale. But if it is sold, Novell recognizes the revenue over the one-to-three years of the support contract.
Before Wal-Mart was named today, Deutsche Bank, Credit Suisse and AIG Technologies had already been outed as customers.
The Microsoft-Novell deal was not well-received by everybody. Implicit in Microsoft's interpretation of the partnership is that Linux violates Microsoft patents, and that the only way to indemnify yourself legally is to buy Novell's SUSE Linux distribution.
This, naturally, caused consternation among rival Linux vendors, and the open source community at large, which really didn't need any more excuses to despise Redmond.
