CyberTech Rambler

February 26, 2010

How much Microsoft is charging for its Novell SuSE subscription?

Filed under: Uncategorized — ctrambler @ 8:30 pm

The headline news is Novell’s Linux finally break-even, but the important information to me is the Novell finally come clean on how much it charges Microsoft for those SuSE coupons. You find that information eight paragraphs down.

Novell sells the coupons to Microsoft at less than half-price (45%) of its list price. That is serious bulk discount. This means Microsoft has extremely great flexibility to sell/dump the coupons. Microsoft is unlikely to be selling those coupons at the full list price. At that price, it would be stupid if it did. Selling them at 80% the list price, i.e., the price I expect it to, already generate a bumper profit of 35% for Microsoft and it has to do nothing. My hunch? If you are big enough Microsoft might charge you a symbolic one dollar for it, but it is likely that Microsoft will be palming it off for about 50% (the 5% extra to cover admin cost on Microsoft side). If I am looking at a mix Microsoft/Linux setup, that’s a bargain.

What is not good for Novell is it appears to be having problems converting those customers who cash in the coupons to stay with Novell. It is only charging 10 to 20% of the old list price for renewal. That is very low. Perhaps it is a reflection that once the conversion to SuSE is completed, the maintenance is relatively cheap for Novell to administer. Even then, I would expect the cost to be about 30% the current list price for new customers.

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