The Redmond giant will provide Xandros users with a patent covenant that protects users from intellectual property claims.
Microsoft will provide the patent licence directly to the end user, which allows it to circumvent patent licensing requirements in the General Public Licence (GPL) which governs Linux.
Both companies said that they will collaborate to improve interoperability between Xandros and Microsoft software for servers and systems management.
Xandros will also join Microsoft in building tools that translate between the Open Document Format and Microsoft's Open XML.
Xandros is best known as a desktop Linux distribution. The firm started shipping a server version of its operating system in April 2006, but its market share ranks far below that of Red Hat and Novell.
The company unveiled Xandros BridgeWays in March, a management tool that supports systems including the major Linux distributions, Solaris and Windows.
Executives at Microsoft and Xandros told www.vnunet.com in an interview that BridgeWays drove the partnership.
"For us to be able to have tightly coupled technologies inside our products [with Microsoft products] you cannot achieve without actually sitting down with Microsoft," said Andreas Typaldos, chief executive at Xandros.
The company will use the Web Services for Management standard as well as APIs where available.
But such standards do not cover all the technology required to provide granular control needs, according to David Kaefer, Microsoft's general manager of intellectual property licensing.
"Interoperability is not just an API, or just a protocol or just a standard. It sometimes requires the sharing of documentation and source code, and sometimes proprietary and royalty free mechanisms," he said.
But Anne Thomas Manes, vice president and research director for application platform strategies at analyst firm Burton Group, dismissed the interoperability pitch as PR.
"[The partnership] is basically just the licensing, so you don't have to worry about Microsoft coming after you with a patent licensing suit," Manes told www.vnunet.com.
Financial details of the deal were not disclosed. Typaldos said that Xandros will make royalty payments to Microsoft based on shipping products, but will not compensate the company for the shared development work.
The deal is similar to the partnership signed last November between Microsoft and Novell, but differs on a few points.
In the Novell deal, Microsoft purchased a licence for Novell intellectual property and bought 70,000 SuSE Linux coupons. Novell in return is compensating Microsoft for its intellectual property, but still receives a net payment of US$308 million (A$365 million).
The technology part of the Novell partnership focused on virtualisation as well as interoperability.
Microsoft will not pay Xandros for any of its intellectual property, and will not purchase any of its software. The firms have made no mention of virtualisation.
It is unclear whether the Xandros agreement will stand the test of time. The forthcoming third version of the GPL will ban any patent agreements signed after 28 March this year.
While this allows the Novell-Microsoft partnership to proceed, it is expected to block the Xandros deal.
Eben Moglen, co-author of the GPLv3, has denounced exclusive patent deals with Microsoft as a "divide-and-conquer" tactic designed to break up the open source community.
Microsoft and Xandros declined to comment on the implications of GPLv3 on the deal, pointing out that the licence is currently in a draft stage and might still change.
Xandros Linux signs up for Microsoft patent protection
By Tom Sanders on Jun 6, 2007 5:18PM