Microsoft Corp and partner Novell are extending their strategic alliance in China with the goal of having more domestic companies purchase their brand of open-source computer operating system Linux.

The initiative is aimed at encouraging greater side-by-side deployments of Microsoft's Windows and Suse Linux Enterprise, Novell's retail Linux distribution, by enterprises in China, where use of pirated computer software remains high.

We recognise that our customers want to use Microsoft products in heterogeneous environments, therefore we are pleased to offer this option, said Microsoft China corporate vice-president and chairman Zhang Yaqin.

Microsoft and Novell attributed their alliance's expansion into the mainland to fresh demand from large domestic enterprises.  State-owned People's Insurance Company of China Holdings (PICC), Greater China 7-Eleven franchise operator Dairy Farm Group, and server computer maker Dawning Information Industry have each recently agreed to buy from Microsoft three-year licences for Suse Linux Enterprise Server.  The difference between free-to-download versions of the Linux system and branded distributions from companies like Novell and competitor Red Hat Software is the addition of certain proprietary software and technical support with retail packages.

The Microsoft-Novell collaboration helps solve interoperability problems and creates a more harmonious information technology ecosystem, said Dairy Farm IT director Colin Rice.  Jean Bozman, research vice-president at market analysis firm International Data Corp (IDC) said servers based on Windows, Unix and Linux operating systems compete for workloads in the internet infrastructure, high-performance computing and enterprise computing spaces worldwide.

The Microsoft-Novell collaboration in China involves an undisclosed amount of new investment from both companies in their five-year technical and marketing alliance, which was forged in November 2006.

Microsoft has committed about US$450 million to its pact with Novell, including US$240 million-worth of Suse Linux Enterprise subscriptions, US$60 million in joint marketing and advertising, a US$34 million investment in Novell's sales team for selling so-called virtualisation software based on Windows and Linux, and US$108 million as part of a patent agreement - under which Novell, in turn, will pay Microsoft at least US$40 million over five years.  Both Novell and Microsoft are committed to furthering this alliance and we couldn't be happier with the results to date, said Novell president and chief executive Ron Hovsepian.

Novell has attributed more than US$141 million in new Suse Linux Enterprise Server subscriptions to the deal with Microsoft, as more companies are encouraged to simplify server computing infrastructure operations with a dual-boot configuration using Microsoft and Novell. 

The collaboration will focus on joint marketing and training, with an eye to converting unsupported Linux users to Suse Linux Enterprise support.

It is essential for our competitiveness that we can simplify with such solutions and look forward to further utilising the standards-based systems management technologies being developed by both companies, said Dawning vice-president Nie Hua.  We fully understand the concerns surrounding intellectual property rights and feel reassured that these issues have been addressed by our vendors.