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IBM, Novell Strengthen Server Ties

The companies put the heat on Red Hat.

SAN FRANCISCO -- Old friends Novell (NOVL) and IBM (IBM) - Get International Business Machines (IBM) Report 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) - Get Red Hat, Inc. Report.

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) - Get Microsoft Corporation (MSFT) Report

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."

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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.

"We continue to see enterprises embracing open source," Levy said. And having an integrated system with both IBM and Novell standing behind it should make the difference. "We're not two small start-up companies trying to support open source."

"If

enterprises haven't been looking at open source before, this is the reason to," Levy said.

Tom Rosamilia, general manager of the middleware division of IBM Software, said an Evans Data market research study shows IBM's WAS CE, which had been downloaded 1 million times as of July, is taking market share away from JBoss.

WebSphere CE gives IBM an application server for the middle market beyond IBM's usual comfort zone in financial services and Fortune 1000 IT departments. WAS CE is being used by a European florist chain to manage marketing programs and by Enigma, a software vendor catering to American automakers, Rosamilia said.