Microsoft, Novell to cooperate

Microsoft Corp. and Novell Inc., rivals in the market for software that runs server computers, agreed to make their products work together, the companies said.

The companies will jointly develop and market software that lets the Windows and Novell's Linux operating systems co-exist on the same machine, Microsoft Chief Executive Officer Steve Ballmer said at an event in San Francisco Thursday.

Novell shares rose the most in four years on optimism the agreement may entice more corporations to use its version of Linux software.

The agreement dulls a long-standing rivalry between Microsoft and Linux software makers, which had become the biggest threat to Microsoft's Windows server. Linux took more than 11 percent of overall server sales last year and was growing faster than Windows.

"I was actually shocked," said Eugene Munster, an analyst at Piper Jaffray in Minneapolis. "This is like the sign of the apocalypse here that Microsoft is actually endorsing the Linux platform. Things are changing in the world of software."

Novell shares, down 23 percent this year, jumped 92 cents to close at $6.79 Thursday on the Nasdaq Stock Market. Microsoft, based in Redmond, Wash., fell 4 cents to $28.77.

About one-third of Novell's 5,200-person work force is in Provo.

Under Thursday's agreement, Microsoft, the world's largest software maker, and Novell also won't sue each other's customers if their software encroaches on their patents. Microsoft will recommend Novell's Suse Linux Enterprise for customers who want to run computers with both systems and will distribute coupons for maintenance and support.

The two companies will establish a joint research facility to make sure customers can consolidate multiple Linux and Windows systems on a single server machine. The facility will also work to improve interoperability between documents created with Microsoft's Office and its open-source rival OpenOffice.

"Microsoft can bring to the table an easier sales process and, to the benefit of Novell, potentially greater sales down the road," Mark Mowrey, an analyst with Al Frank Asset Management in Laguna Beach, Calif., said in an interview.

Officials from Microsoft and Novell spent six months forging the accord after Novell CEO Ron Hovsepian called Microsoft in April. While Novell will get the biggest benefit, the pact may also help Microsoft, the world's largest software maker, get more of its software into corporate data centers.