SAN FRANCISCO - Longtime software antagonists Microsoft Corp. and Novell Inc. have reached a technological truce that promises to smooth the way the still-dominant Windows operating system and the increasingly popular open-source Linux system work together.

The agreement announced Thursday between the world's largest seller of patent-protected software and a leader in the open-source software movement has potentially important business, technical and legal implications.

Microsoft CEO Steve Ballmer (R) talks as Novell President and CEO Ron Hovsepian watches during a news event to announce a set of collaboration agreements for Microsoft's Windows and Novell's Linux interoperability and support in San Francisco November 2, 2006. [Reuters]

"This builds a very important intellectual-property bridge between the open source and proprietary sides of software," Brad Smith, Microsoft's general counsel, said shortly before the companies formally announced their alliance in San Francisco.

After news of the deal leaked, Novell's shares shot up 92 cents, or 15.7 percent, to close Thursday at $6.79 on the Nasdaq Stock Market, where Microsoft's shares dipped 4 cents to finish at $28.77.

"They said it couldn't be done. This is a new model and a true evolution of our relationship that we think customers will immediately find compelling because it delivers practical value by bringing two of their most important platform investments closer together," Microsoft CEO Steve Ballmer said in a statement.

Under the partnership, Microsoft's sales team will offer its corporate customers a chance to license its Windows operating system as part of a package offering maintenance and support for Novell's Suse Linux platform. Novell primarily relies on the fees for customer support to make money off the Linux software, which is developed by a global community of programmers who aren't tied to any single company and freely share improvements to the code.

By working together, Redmond, Wash.-based Microsoft and Waltham, Mass.-based Novell are betting they will enable more companies to seamlessly run Windows and Linux together without crippling breakdowns.

The two companies also plan to improve the interaction between Microsoft's top-selling suite of Office software and a free alternative known as OpenOffice. This appears to be the only part of the collaboration with a potentially significant impact for consumers.

To encourage more companies to embrace Novell's open-source platform, Microsoft has pledged not to assert its patent rights over any of its technology that may be blended with Suse Linux.

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