The Software Titans and the Future of Novell's Assets
One thing that many people are missing as they examine the implications of hedge fund Elliott Associates L.P.'s $2 billion offer to buy Novell is how Microsoft and other software titans stand to be impacted. Microsoft has long been in partnership with Novell, and Novell has been heavily dependent on the company to help it get lucrative Linux deals. Is there any possibility that Microsoft might buy Novell's Linux business from Elliott Associates? Could Oracle or another company do so?
I'm in agreement with ZDNet's Dana Blankenhorn that we're not likely to see Microsoft pick up Novell's Linux assets:
"I doubt Microsoft wants to actually buy that business. Owning a Linux would be a real complication. Suddenly all those patent cross-licenses that claim Microsoft has patent rights to the software take on a different odor, and Microsoft is forced to go down the SCO road to prove its claims."
What if someone else buys Novell's Linux business (because Elliott Associates is very unlikely to keep it)? The obvious candidates would be Oracle, VMware or IBM, although Dell has been cited as a possibility by some. Matt Asay argues the following:
"An Oracle, VMware, or IBM could make Novell's Suse Linux asset stretch much further than Novell could, because each of these companies (among others) has a strong, revenue-generating software portfolio that largely obviates the need to make money on Linux directly."
That's true. Suse Linux could strengthen the product portfolios of companies such as Oracle and IBM immediately. Oracle, in particular, has had major trouble trying to compete on the Linux front with Red Hat and Novell. One thing's for sure: If you're under the impression that a hedge fund will oversee Novell for any significant length of time, think again. Elliott Associates will almost certainly carve Novell up, and it won't be a surprise to see a big, household name in the software industry inherit Novell's core assets.