The New York Post got the scoop today that Novell is selling itself in two parts: its SUSE Linux business will go to a mysterious “strategic buyer,” and the rest to a private equity firm.
Novell, the “strategic buyer” and the private equity firm have all agreed to the deal and will sign it in three or four weeks, according to the Post. In the meantime, let the speculation begin!
Who’s buying Novell? Let’s take a look at some possible candidates and the odds they’re the “strategic buyer”:
VMware (3 to 1): After VMware announced its exclusive virtual appliance deal with Novell in June, the acquisition rumors started circling. That has VMware as the favorite among many observers, including Gartner’s Chris Wolf, who says it’s not a coincidence that VMware is training Novell’s SUSE Linux Enterprise Server organization as part of that deal.
But there are a few major points that don’t make VMware a sure bet. Most importantly, Novell doesn’t fit the traditional VMware acquisition strategy, which is to pick up smaller growth companies in an “opportunistic” fashion. Plus, some VMware execs have privately intimated that the virtual appliance deal means much more to Novell than it does to VMware.
Oracle (7 to 1): Unlike VMware, Oracle definitely doesn’t shy away from large acquisitions of major companies. Larry Ellison and co. have made it clear they want to control the entire IT stack, and while the Sun Microsystems deal gave them pretty much everything they need to meet that goal, Novell’s SLES would definitely provide a boost when it comes to the server OS. (Novell has about 16% of the market, and Oracle Enterprise Linux another 11%, according to SearchDataCenter.com’s 2010 Data Center Purchasing Intentions Survey. Add that to the 27% market share held by Solaris, and Oracle would control more than half of the server OS market.)
Also, Oracle’s virtualization strategy focuses heavily on VM templates; adding Novell to the fold would strengthen those offerings, while at the same time weakening VMware’s virtual appliances.
Red Hat (9 to 1): You’re the market leader. Your top competitor is vulnerable and for sale. Why wouldn’t you swoop in? No, I’m not talking about Vince McMahon’s WWF and Ted Turner’s WCW in 2001, I’m talking about Red Hat and Novell today. There have been no indications Red Hat is interested — execs may be content to see Novell split up and see what happens under new ownership — but the deal would make a lot of sense.
Citrix (12 to 1): There’s a clear trend toward tighter integration between the OS and the virtualization layer. Hyper-V comes with Windows Server, and in the ultimate example, KVM is part of the Linux kernel. Acquiring Novell would help Citrix out a lot in this area. The interesting subtext to this speculation is the feud between Citrix and Red Hat: As Red Hat tries to woo Xen customers to KVM, Citrix CTO Simon Crosby has suggested that Red Hat Enterprise Linux customers should move to Oracle or SLES.
Microsoft (15 to 1): These two companies have a long history. Microsoft crushed Novell’s NetWare business in the ’90s, and there was significant proprietary-vs.-open source friction for much of the past decade. But after their 2006 patent agreement, the two companies have grown closer, and now acquisition speculation pops up occasionally. The Novell-VMware virtual appliance deal sure wouldn’t last long if this acquisition happened.
Intel (20 to 1): Just a few months ago, Intel wouldn’t belong on this list. But after acquiring McAfee and stating its intentions to offer a “complete stack,” the chip manufacturer can’t be ruled out. A server OS is a pretty important component of a “complete stack,” after all.
Field (6 to 1): There are plenty of other companies that would make sense as the “strategic buyer,” from IBM to Amazon. And as some of the recent head-scratching IT acquisitions have shown, no company can be completely ruled out. Guess we’ll just have to wait three or four weeks to find out for sure.