Microsoft and Novell, once bitter rivals, have begun a groundbreaking partnership to make the Windows operating system work with Novell's open-source Suse Linux software, the companies said Thursday.

It's yet another once-unthinkable move for Microsoft, long a staunch defender of its proprietary software against open-source rivals, especially Linux. And it brings together two historic adversaries after years of bruising competition that had dented Novell's business.

In addition to solving the technical problems involved, the Redmond software giant and Waltham, Mass., software company are nearly done working through the sticky wicket of competing intellectual property claims between the two operating systems.

As part of the deal, Microsoft will refrain from asserting patent rights over code contained in Suse Linux, and will pay a "net balancing payment" of an undisclosed amount to Novell, according to a joint statement.

Microsoft had previously signaled its grudging acceptance of Linux. During the past year, the company's attitude toward open source software has changed because of what Microsoft Chief Executive Steve Ballmer calls "a maturation in the open-source world."

Open-source software is non-proprietary software code that can be viewed and, in some cases, modified, by anyone.

The Redmond software giant has awakened to the reality that many of its customers want to use both Windows and Linux. The Novell deal's goal is to bridge the divide between open source and proprietary source software -- and keep clients happy.

"I think it was a necessary move for Microsoft. Realistically, Microsoft Windows and Linux will continue to coexist for some time," said Joe Wilcox, senior analyst at Jupiter Research.

In the past few years, Microsoft has slowly softened its stance against open-source software, sharing some source code with partners and developers. It has even begun supporting some open-source projects, such as last fall's deal to make Java application server software JBoss (now part of Red Hat) work with its Windows operating system.

Deal with Zend

Earlier this week, the company announced a strategic relationship with Cupertino PHP software company Zend, conceding that not all Web developers would use Microsoft's .Net platform.

Nevertheless, Microsoft's support of Linux may be the culmination of a major strategic change.

"When we have Steve (Ballmer) standing here saying Microsoft is going to work on interoperability between Windows and Linux, that in and of itself is a huge endorsement," Novell Chief Technical Officer Jeff Jaffe said during the news conference. "Microsoft for a long time has been contributing to various aspects of open source, but today really takes it to a new level."

Novell's stock jumped 15.7 percent to $6.79 Thursday.

The deal puts some pressure on Redwood City-based Oracle, another large proprietary software company and frequent Microsoft competitor. Oracle announced last week it would support Red Hat's version of Linux and begin selling a Linux operating system largely composed of Red Hat code.

Microsoft took a more cautious path, deciding not to throw its entire weight behind Linux. Instead of becoming a Linux service provider or retailer, the company will sell its customers 70,000 one-year subscriptions in the form of "coupons" for Suse Linux Enterprise Server technical support.

"Oracle loves Linux because it's not from Microsoft. Our approach is to help our customers who have both Windows and Linux," Ballmer said. "Our goal is to get every Linux server customer to get on Suse Linux server."

In fact, Ballmer and Novell Chief Executive and President Ron Hovsepian took great pains to demonstrate that they remained competitors despite their shared goals.

Ballmer said at the conference, "I'll say it right now: If you have a new application, the answer is Windows, Windows, Windows, and Ron's going to tell you something different."

Despite the major success of Linux -- which Ballmer said runs about one-third of the approximately 20 million servers worldwide -- there was still a concern that large software companies like IBM or Microsoft might sue vendors or developers of the software.

"There has always been a pall over open-source operating systems because there's always a worry that vendors like Microsoft would go after them and their customers for patent or copyright violations," said Rob Helm, research director at Directions on Microsoft, a consultancy that specializes on the company. "Novell now seems like it has put its customers into safe harbor vs. Microsoft, at least."

Unresolved issues

However, Ballmer and Hovsepian admitted that they hadn't reached a deal on every legal issue, including Novell's antitrust claims against Microsoft over Novell's WordPerfect product, which lost a rough battle to Microsoft Office productivity software during the 1990s.

"They left a lot of stuff unresolved . . . but they've resolved the most important areas," Helm said.