IBM, Novell Strengthen Server Ties

SAN FRANCISCO -- Old friends Novell(NOVL Quote - Cramer on NOVL - Stock Picks) and IBM(IBM Quote - Cramer on IBM - Stock Picks) took the relationship further Thursday with an application server agreement that promises to extend Linux's reach within businesses and give Novell an edge over Red Hat(RHT Quote - Cramer on RHT - Stock Picks).

In a number of related agreements announced here at the LinuxWorld confab, Novell will include IBM's WebSphere Application Server Community Edition (WAS CE) as part of its SUSE Linux Enterprise Server (SLES) software. Also, IBM released client software for Novell's SUSE Linux Enterprise Desktop and said that version 2.0 of WAS CE will be out in October.

Taken together, the developments will make it harder for Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) to make headway in the midmarket business server space when it releases Server 2008 early next year.

But Novell and Microsoft are also partners working on interoperability. Microsoft's Sam Ramji, director of platform technology strategy, speaking in a session on interoperability, said one of Microsoft's top priorities is modifying its virtualization capability to be able to run SUSE Linux "as a first-class citizen, and vice versa: to make sure Server 2008 can be run on top of SUSE."

Novell stock closed Tuesday at $6.43. IBM ended at $113.53.

Novell's SLES software has already shown growth multiple times the market for server software "before this agreement," said Roger Levy, general manager for open platform systems. Novell has recorded 1.8 million downloads combined of SUSE Linux Enterprise for desktops or servers -- about half for each -- since its launch a year ago, he said. The company expects this agreement to propel sales well past their current level.

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