Novell Loses Shirt, Penquin Smiles

Funny thing about that headline? Both events are happening in the same company. Novell had a huge 3Q loss while its Linux efforts continue to gain traction. –

Nowhere is this clearer than in Novell’s Linux revenue, which soared 30 percent, year over year, to $31 million for the quarter. Novell invoiced a total of $51 million in Linux bookings in the quarter, up 36 percent year over year. Novell’s Linux revenue is growing faster than the market, which IDC pegs at 19.7 percent CAGR from 2008 to 2010.

Where is much of it coming from? Unfortunately, Microsoft, but some signs suggest that Novell is increasingly standing on its own in the Linux market, rather than relying on Microsoft to peddle SUSE Linux (which it has no long-term incentive to do).

Novell has invoiced Microsoft for 73 percent of the original $240 million investment. There’s now another $100 million to burn down, which I expect Microsoft to continue renewing as it attempts to chip away at Red Hat’s leadership position in the Linux market. Microsoft will fail at this game, but perhaps it will take a billion dollars to realize this–or maybe a further weakening in the Windows server market vis-a-vis Linux.

Linky.