Last Updated: 3/25/2004 8:51:19 AM
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Novell, IBM & HP unite efforts to put Linux on top

Novell on Wednesday reforged its alliances with IBM and Hewlett-Packard, strengthening its campaign to make Linux corporate America's operating system of choice in place of Microsoft's long-dominant Windows.
In announcements made Wednesday at the BrainShare 2004 Conference, Novell and IBM unveiled plans to ship Novell's SuSE Linux with Big Blue's entire line of computer network servers. The two also finalized IBM's previously announced plans to invest $50 million in Novell.
Dan Kusnetzky, IDC's vice president for system software, said Novell benefited substantially from IBM's long-running relationship with SuSE, the world's No. 2 Linux distributor behind RedHat. Novell acquired the formerly German-owned company last November for $210 million.
"IBM is loyal to those who are loyal to IBM," Kusnetzky said. "Furthermore, it's in IBM's best interest to facilitate a lively, growing and robust Linux market.
"If the Linux market continues to grow as it has in the past, IBM stands to gain a great deal of revenue by providing systems, peripheral devices, software and services for Linux," he added.
Jack Messman, Novell's chairman and chief executive, said the two companies' closer ties are indicative of "the momentum behind Linux in the marketplace" as a growing alternative to Microsoft.
"Novell is working with companies like IBM to deliver the powerful, fully supported SuSE Linux . . . on leading enterprise servers," he stated. "This marks a critical step in making Linux mainstream in the corporate data center."
Under the agreement, IBM will be able to preload SuSE Linux across its entire server lines. The companies also have extended IBM's existing agreement with formerly German-owned SuSE Linux, the world's No. 2 distributor of the OS, behind RedHat Inc.
Meantime, Novell's finalization of the previously announced $50 million investment by IBM was welcomed, though it was expected to reduce Novell's current quarterly earnings by 7 cents per share.
The investment is targeted at Novell's preferred shares, convertible to 8 million shares of common stock at a price of $6.25 each. With the deal, IBM reportedly gains about 2 percent ownership of Novell.
Wednesday also saw Novell unveil a new Linux-related pact with HP. The company already had a deal to load SuSE Linux onto its servers, but will now expand that bundling arrangement to its line of desktop computers -- a market where it consistently is No. 1 or 2 in worldwide sales.
That was a milestone for Novell and Linux, as the OS has up to now primarily made its biggest advances in the mainframe-server arena.
Investors reacted enthusiastically, driving Novell's stock price to $10.93 per share, up $1.17, or 12 percent, on the Nasdaq exchange. IBM shares rose 45 cents to $91.77, while HP tacked on 23 cents to end the day at $21.62.