News

Update: Novell buys SUSE

• By Jack Vaughan, Will Kilburn
• November 4, 2003

Network operating system mainstay Novell Inc. today agreed to acquire Nuremburg, Germany-based SUSE Linux, a longtime leader in Linux operating system and administration tools. Novell will pay $210 million in cash to complete the acquisition.

The move follows Novell’s August purchase of Boston-based Ximian, a Linux desktop player. The SUSE deal is Novell’s biggest move yet as it tries to become a Linux leader.

Novell’s SUSE purchase will be particularly watched as Novell has at times traded barbs with SCO, a one-time Linux proponent that has asserted proprietary claims on Linux technology. SCO claims on Linux parts are based on the firm's stewardship of Linux-predecessor Unix, software technology it obtained through deals with none other than Novell.

SCO made headlines in March when it sued IBM for allegedly trying to "destroy the economic value of Unix" via illegal incorporation of Unix elements in Linux.

At the same time it disclosed the deal to buy SUSE, Novell announced that IBM intends to make a $50 million investment in Novell convertible preferred stock. Company reps said Novell and IBM are negotiating extensions to the current commercial agreements between IBM and SUSE Linux for the continued support of SUSE Linux on IBM's eServer and middleware products.

SCO’s anti-Linux salvos do not deter SUSE and Novell. Linux demand is still on the upswing, they maintain, and SCO’s role is moot.

"Our customers are still demanding our products; they don’t care about what SCO is saying so far, and there’s no decrease of demand," said Richard Seibt, CEO at SUSE Linux.

“Novell continues to call on SCO to make public the basis of its claims of Linux infringement of Unix,” added Jack Messman, chairman and CEO at Novell. “I think today’s announcement is additional evidence of Novell’s moving forward aggressively with its strategy to support Linux.

“We’re not holding back because of SCO’s unsubstantiated claims,” continued Messman, who indicated that Novell expects the SUSE transaction to close by January 2004.

“The Linux industry has been consolidating for some time, so this is just a next step,” said Tony Iams, senior analyst, D.H. Brown, who marked SUSE as “a key competitor in the Linux space.”

The purchase betokens Novell’s increased focus on Linux, Iams indicated. The company, he said, will look to offer its infrastructure services on top of the Linux OS kernel.

It’s too early to measure the impact of this deal on the ongoing SCO-Linux battle, he indicated, but the deal shows that Linux is maturing.