by Timothy Lee
Thu, Sep 27th 2007 7:41pm
Slashdot is linking to a story supposedly showing that Novell's Linux business has seen amazing growth in the nine months since they signed a controversial patent deal with Microsoft. "The affect on sales year over year, for Novell's first three quarters of our fiscal year, which ends Oct. 31 -- our Linux business was up 243 percent year over year," said Novell exec Justin Steinman. But so far, at least, this growth doesn't appear to be reflected in Novell's financial results. If my math is right, Novell's revenue for "Linux platform products" totaled $32 million in the first three quarters of 2006, while the total for the first three quarters of 2007 is $53 million. That's a healthy 65 percent growth rate, but it's a long ways from 243 percent. (Novell's Open Enterprise Server is also based on a Linux kernel, but revenues from that product line have been flat at about $45 million a quarter, which would make Novell's overall Linux growth rate even smaller). What accounts for the growth we are seeing? Steinman says that customers are beating a path to his door because people want to "pick the Linux that works with Windows." But a more likely explanation is that customers are just redeeming the tens of millions of dollars in vouchers that Novell sold to Microsoft as part of last year's patent deal. Novell says it has gotten $100 million in business through its Microsoft partnership. That's more than twice as much revenue as Novell received from "Linux platform products" for all of 2006, suggesting that almost all the growth we've seen so far is probably a result of customers redeeming those vouchers—and it's not clear whether Microsoft is selling the vouchers at full price or at a steep discount. Maybe we'll finally see spectacular financial growth when Novell releases its its fourth quarter results later this year, but it would have been helpful if Novell or PC World had been clearer about how they're measuring that 243 percent sales increase.
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