Software maker Novell Corp. said on Tuesday Microsoft Corp. will make two separate up-front payments totaling $348 million to the company under an agreement to allow Novell’s open-source Linux OS SuSe work with Windows.

Microsoft will pay Novell $240 million up front in subscription fees to allow the world’s largest software maker to use its Linux software. Microsoft will pay an additional $108 million upfront for use of patents, Novell said in a filing with the U.S.

Last week, Microsoft and Novell entered a broad set of business and technological agreements to make their products work together better to serve corporate customers using both Linux and Windows computer servers.

Microsoft agreed not to sign a similar agreement with any other Linux distributor for three years. Microsoft’s pact with Novell will no doubt deal a blow to other Linux distributors such as market leader Red Hat Inc.

Under the pact, which will run until at least 2012, Novell will also pay Microsoft at least $40 million over five years for use of Microsoft’s patents based on a percentage of its revenue from open-source products.

Microsoft also agreed to spend $12 million a year to market scenarios where users can virtually run Linux on Windows machines and vice versa. Microsoft will also spend $34 million over the life of the agreement to put in place a sales force devoted to the combined offering, Novell said.

More information can be found on Novell’s website.
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