Microsoft has recognised the growing interest in Linux by signing a deal with Novell to support SuSE on Windows PCs.

The deal should, in the long term, make it easier users to run Suse Linux and Microsoft Windows on their computers. Microsoft also plans to offer sales support for Suse Linux and to distribute 70,000 coupons for SuSE Linux Enterprise Server maintenance.

"This is to bridge the divide between open source and proprietary source software," said Microsoft CEO Steve Ballmer. "It gives customers greater flexibility in ways they have certainly been demanding." The partnership is quite an about-face for Ballmer who has constantly warned about the inadequacies of Linux.

However, despite the new partnership, Ballmer hasn't changed his mind. He added that the deal does not mean that Microsoft is now going to be a huge Linux proponent. "If you want something, I'm still going to tell you [to buy] Windows, Windows, Windows," Ballmer said.

SuSE has also learned to live with its former arch-enemy: just three years ago it was launching what it called its Windows destroyer, now the lamb lies down with the lion.

As part of the deal, Microsoft also will agree not to assert rights over patents to any software technology that might be incorporated into SuSE Linux. Protected under this are individuals and non-commercial open-source developers that create code and contribute to the SuSE Linux distribution, as well as developers getting paid to create code that goes into the distribution.

Brad Smith, senior vice president and general counsel for Microsoft, said it was difficult to come up with a "covenant" between the companies to marry open-source code and proprietary code, but "we sorted out the economics so Novell's customers don't have to."

That said, under the patent cooperation agreement, both companies are paying each other upfront in exchange for a release of patent liability. Additionally, Novell also will make running royalty payments to Microsoft based on a percentage of revenue from open-source products.

Basically, the agreement ensures that Novell SuSE customers are protected against patent litigation from Microsoft.

However, at the event, Smith declined to comment whether Microsoft thought that Novell rival Red Hat's Linux distribution violates Microsoft's intellectual property.

Microsoft has been relenting lately on its tight hold on patents through a programme called its Open Specification Promise. Through the programme, Microsoft has promised not to take any legal action against developers or companies that want to use specifications for a host of technologies for which it has patents.

Microsoft and Novell plan to work together on three key areas of technical collaboration: virtualisation, web services management and the Open Document Framework spec. Specifically, the companies will build technology that will allow customers that want to run Windows on top of Linux and vice versa, said Jeff Jaffe, Novell's chief information officer.

The companies also will build connectors between the open-source OpenOffice and Microsoft's own Office productivity software, which have different document formats, as well as facilitate integration between the companies' rival directory products.

Thursday's deal between Microsoft and Novell seemed eerily similar to one struck between Microsoft and Sun Microsystems in 2004 that ended the Java dispute between the two companies and promised better interoperability. However, few concrete effects of that deal have been seen in the industry since it was struck.

The deal between Microsoft and Novell will certainly be a blow for Red Hat, the second in as many weeks. Last week, Oracle said it would offer technical support for Red Hat Linux, a plan that both validates Red Hat Linux while undermining Red Hat's own support and maintenance business. Red Hat is the leading supplier of Linux and the biggest rival for Novell's Suse Linux distribution.

Novell is one in a line of companies that has been forced to change its core business because of Microsoft, and so makes a strange partner. Novell built its business on the back of its Netware network OS, but the appearance of Windows NT on the scene as a viable alternative was a primary reason for Netware's ultimate demise. In recent years, Novell has rebuilt itself into an open-source software company through purchases of companies such as Suse Linux and Ximian.

The deal also will not only pit Microsoft and Novell against Oracle and Red Hat, but also IBM, which was an early supporter of Linux, particularly Red Hat's distribution.

Original reporting by IDG news service