A Novell Auction Would Be Bad for Open Source

by Ostatic Staff - Jun. 01, 2010

Once again, the buzz has grown surrounding rumors that Novell may soon be snapped up in a buyout. As many as 20 companies may have registered bids for the company, according to the Wall Street Journal. Matt Asay notes that an auction of the company could become a patent troll bonanza, and I have to agree. Let's remember that Novell is no spring chicken. It owns lots of patents and lots of legacy applications. Overall, it would not be good to see Novell bought out, partly because it's one of the few U.S.-based public companies focused primarily on open source.

Asay writes:

"The Novell auction, in short, is a very big deal, and not just for the company that ends up acquiring Novell's business. That business has been in decline for over a decade, punctuated in the second quarter by a 17 percent slide in services revenue, 8.5 percent dip in license revenue, and a 2.8 percent drop in maintenance and subscription revenue. But Novell's assets have arguably never been more valuable in an industry that has seen a spate of lawsuits lately."

Asay also notes that it may not be the worst thing for NOvell, with its declining fortunes, to sell to a private equity firm, and that the key is that the buying firm cares about Novell's business. In the cases of private equity firms, I doubt that that last stipulation will be met.

With Sun Microsystems now swallowed up by Oracle, only Red Hat and Novell remain as public, U.S. companies betting primarily on open source. Red Hat and Novell remain key advocates for the open source movement. With the merger scene bouncing back, it would be easy to see a private equity firm buy Novell only to flip it. That wouldn't serve anyone well (except the buying firm), and even Red Hat's future will likely be brighter if it continues to have Novell, as an independent open source company, to compete with..