Ray Noorda died last month. A legend in the software business, Noorda came on board with Novell
Yet in the tech world, enemies can easily become allies. That was the case last week, when Microsoft agreed to partner with Novell on its Linux software.
To understand why, consider that Linux is a robust operating system that has evolved impressively with its open-source approach. In fact, Linux has been quite beneficial for Red Hat
This is a big problem for Microsoft. Any threat to its franchise -- namely, its operating system -- must be defended at all costs. And the potential nightmare for Microsoft is that Red Hat's momentum will continue and eventually turn it into . well, the next Microsoft.
It's interesting to note that yet another enemy of Microsoft, Oracle
Either way, with Oracle also pushing Linux, Microsoft perceived a threat. And that's why teaming up with Novell is a smart move. As a result, Microsoft has its own version of Linux, which will work seamlessly with Windows Server technologies. Microsoft, meanwhile, has also agreed not to pursue patent litigation against Novell's Linux technologies. That might mean, however, that Microsoft will prosecute its patent rights against Red Hat.
Microsoft has also accomplished a key goal of creating confusion in the marketplace. What will customers do now? Go with Oracle? Or Red Hat? Or will they do what they have always done over the years and just rely on Microsoft?
Raven Zachary, a senior open-source analyst for the 451 Group, told me, "With this announcement, Microsoft is stirring up the pot a bit without changing its position on the dominance of the Windows platform."
Basically, Red Hat is left in a tough spot. It seems inevitable that corporate customers will hold back, and if they do, sales will slow down. That means there's still lots of risk in Red Hat's stock.
Clearly, Red Hat has accomplished a lot for a company its size. But Microsoft still has many advantages -- not to mention huge amounts of cash -- and it obviously still knows how to play hardball.
Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 37th out of more than 12,000 players in Motley Fool CAPS, the Fool's new stock-rating community that's open to investors just like you.