"We've had an issue, a problem that we've had to confront, which is because of the way the GPL (General Public License) works, and because open-source Linux does not come from a company -- Linux comes from the community -- the fact that that product uses our patented intellectual property
is a problem for our shareholders. We spend $7 billion a year on R&D, our shareholders expect us to protect or license or get economic benefit from our patented innovations. So how do we somehow get the appropriate economic return for our patented innovation, and how do we do interoperability. The truth is, because of the complex licensing around the GPL, we actually didn't want to do one without the other.
"What we were able to craft, with a lot of hard work with Novell, was an agreement essentially where we would do the technical work in a variety of different areas to improve interoperability between the two environments. And we agreed on a, we call it an IP bridge, essentially an arrangement under which they pay us some money for the right to tell the customer that anybody who uses Suse Linux is appropriately covered. There will be no patent issues. They've appropriately compensated Microsoft for our intellectual property, which is important to us. In a sense you could say anybody who has got Linux in their data center today sort of has an undisclosed balance sheet liability
, because it's not just Microsoft patents. Because of the way open-source works, there's nobody who's been able to do patent coverage or patent indemnification behind that.
"So we built a technology bridge, and we built an IP bridge and a commercial framework that supports that. Novell said to us, 'Hey, look, if you're serious about this stuff, you better help us promote Suse Linux.'
To which we said, 'You know we're trying to sell Windows, that's what we do for a living! Windows, Windows, Windows, baby! We don't do Linux that way here.'
"What we agreed, which is true, is we'll continue to try to grow Windows share at the expense of Linux. That's kind of our job. But to the degree that people are going to deploy Linux, we want Suse Linux to have the highest percent share of that, because only a customer who has Suse Linux actually has paid properly for the use of intellectual property from Microsoft. And we took a quota, you could say, to help them sell so much Suse Linux. That's part of the deal.
We are willing to do the same deal with Red Hat and other Linux distributors, it's not an exclusive thing. But after a few years of working on this problem, Novell actually saw the business opportunity, because there's so many customers who say, 'Hey look, we don't want problems. We don't want any intellectual property problem or anything else. There's just a variety of workloads where we, today, feel like we want to run Linux. Please help us Microsoft and please work with the distributors to solve this problem, don't come try to license this individually.' So customer push drove us to where we got.
Steve Ballmer CEO, Microsoft