Novell Changes Linux Licensing

Software player rejiggers framework for customers. How will the channel be affected?

Responding to concerns from customers and partners, Novell is restructuring its corporate licensing framework to streamline the process and make license agreements more flexible.

Beginning March 1, the Linux software company will no longer force users into CLAs (contract license agreements), which attached upgrades and maintenance agreements to the software deal.

Customers will now purchase VLAs (volume license agreements), which are purely transactional, or MLAs (master license agreements), which are priced directly from Novell through national resellers and are attached to maintenance agreements. Maintenance, upgrades, service and support will now be sold a la carte. Customers still interested in contracts, for legal or regulatory purposes, may purchase MLAs.

The company also will allow customers to purchase licenses on a per-device basis, in addition to the current per-user agreement.

Novell executives said the reconfiguration was two years in the works following complaints from users and VARs in regular surveys that the CLAs overcomplicated the program. "A lot of it is spurred simply by confusion over the CLA program," said Steve Bartell, Novells licensing program manager, in Waltham, Mass. "Anything we can do to strip out complexity and give more options in the field helps us."

The reconfiguration makes the process transactional, allowing customers to buy what they need, when they need it, Bartell said.

The program will strip down the various levels assigned to each program.

Bartell and others said it is unlikely the reformation will affect Novells market share; the company runs a distant second to Linux leader Red Hat. But it could have the effect internally of swelling the ranks of MLA customers.

"I think thats where theyd like to drive users," said Jim DEsposito, a Novell sales representative with Softchoice, a Toronto-based software VAR. "Having maintenance attached and automatic renewal is a positive thing for any company."

"I believe that Novell wanted to remove the possibility that people would view fees to Novell as Novell taxes on their business," said Dan Kusnetzky, an analyst at IDC, in Framingham, Mass. "Often organizations use open-source software because they believe that it is a lower-cost option—an option having fewer limitations and encumbrances. Novell is attempting to make sure that people who just wanted an open-source product can obtain one. If they wanted a complete suite of support and training options, they can have that as well."

For customers, the program change will have little impact, DEsposito said. "Theyre going to pay a little more, but theyre going to get a little more," he said. MLAs have a larger discount but require larger purchases, driving cost up slightly. However, with that comes greater maintenance and service, DEsposito said.

For partners, of course, larger sales mean better business, but those limited to VLA sales—typically the smaller, local and regional VARs—may lose business to national resellers able to market the MLAs.

Partners also will benefit from a sleeker sales process, Bartell said. The new license agreement structure eliminates paperwork and approval paths that often elongated the sales cycle, said Bruce Lowery, a Novell spokesperson. "It removes layers of complexity that could extend the sales cycle a few weeks or more," Lowery said. "It also is adding options. It allows a user and partner to have more flexibility on [the] other side of the sale."

"The operational stuff, on [the] channel side, will be a lot easier," DEsposito said. "It clears up the system internally a good deal and knocks down what we need to look up out on the sale."

Internally, Novell expects to save resources traditionally spent to serve the mass of CLA customers and redirect them to better serve the pack, Bartell said.

"The transactional relationships will require much less work and allow us to focus on those customers in longer-term relationships," Bartell said. "It will help us improve relationships with customers, open up areas that werent as attractive [previously]."

The program additionally opens the Novell line to smaller companies that may have been stymied by the cost of a bundled contract, Bartell said. Allowing purchases on a per-device basis will open Novell to new verticals, he said, where shift work demands multiple users on the same device.

"Customers who look at the licensing agreements and say, This doesnt work for me, especially in health care, will have a simpler choice now," Bartell said. "They can now start counting by device."