Novell Feels Open-Source Steam - TheStreet

Novell Feels Open-Source Steam

An alliance with Microsoft could hamper its future.
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Angry over

Novell's

(NOVL)

alliance with

Microsoft

(MSFT) - Get Report

, powerful members of the open-source movement are threatening to punish the struggling software provider.

Should the threats become reality, a restrictive covenant in a new version of the General Public License, which covers distribution of the Linux, could make it difficult for Novell to distribute the free operating system and related software.

In the worst case, Novell would have to spend as much as $200 million a year to write and market its own software instead of relying on the thousands of programmers who currently contribute code to Novell and other companies at no charge, says Trip Chowdhry, managing director of Global Equities Research.

A crippled Novell, which is already struggling to gain traction with Linux, would fall even further behind

Red Hat

(RHT) - Get Report

, its major rival.

A new version of the general license, or GPL 3, due in March, will likely stop Novell from distributing 95% of any new Linux-related code developed after it takes effect, and that, says Chowdhry, "will pretty much wipe out any gains that Novell may have gotten from upfront payments from Microsoft."

In November, Microsoft and Novell entered into a

partnership aimed at strengthening the smaller company's position in Linux while making Windows and the popular open-source operating system work together. Microsoft also agreed to lend its considerable marketing muscle to the marketing of Novell's Suse Linux.

If the agreement had gone no further, there would be no controversy. But Microsoft also agreed not to sue Novell customers over alleged patent violations. Because Linux is developed by so many people at so many firms, violations of intellectual property rights are fairly common and can easily lead to litigation. And since Microsoft is a formidable opponent, the threat of a lawsuit by the software giant can scare away potential customers.

The problem for some members of the Free Software Foundation, which is revising the GPL, is this: Microsoft has singled out Novell and its customers for patent protection. Other developers could still be sued, and that is seen as unfair and a violation of the spirit, if not the letter, of the existing GPL, says Bernard Golden, CEO of Navica, a systems integrator and publisher of an open-source-oriented newsletter.

If a restrictive provision of the GPL goes into effect, Novell will still be able to distribute its existing software, but it will, in theory, lose access to code written after it takes force.

More likely, says Golden, is a tactical retreat by Novell that would entail modifying its agreement with Microsoft.

Golden says the underlying cause of the conflict is an ongoing cultural divide within the open-source movement, between "pragmatists" who are pushing hard to make their software profitable and "ideologues" who believe software must be free.

It is also unclear, he says, how widely the new GPL will be adopted.

For its part, Novell is keeping quiet about the controversy, saying only that "we won't comment until something has changed."

Shares of Novell were recently up 4 cents to $7.09.