Microsoft and Novell announced extensive plans to convert "unsupported Linux users" in China to combined implementations of Windows/SuSE Linux, just as Red Hat admitted to delaying its release of an international Linux desktop.

Today's announcement with Novell represents the extension of a highly controversial interoperability pact first rolled out in late 2007 in the US, this time with "a particular emphasis on the Chinese market." According to the headline of the oddly worded statement, the intent of the extended agreement is to move "unsupported" Linux users to "supported" use of Novell's SuSE Linux Enterprise server software.

But a closer read shows that Microsoft and Novell expect to focus an "expanded investment" in marketing and training in China around two areas involving software from both vendors.

The two areas include SuSE Enterprise Server and Windows Compute Cluster Server running in a dual-boot Linux/Windows configuration, for high performance computing (HPC); and cross-platform virtualization using Windows Server 2008 with Hyper-V and SuSE Enterprise Server 10 with Xen technology.

The move comes just days after Red Hat admitted delaying release of a Linux product that might have given Novell's leading rival a leg up in China as well as other emerging markets. In a blog posting on its Web site last week, Red Hat sneakily slipped in an admission that Red Hat Global Desktop (RHGD) -- a desktop product for emerging markets first slated to ship late last year -- will now be postponed indefinitely.

If Red Hat has indeed dropped the ball here, at least in China, it could be because of Microsoft's and Novell's recent success there. Initially, both companies had been facing strong competition from Red Flag Linux, a Linux distribution both funded and embraced by the Chinese government.

About five years ago, though, Microsoft started to win over the Chinese government -- first by inviting China and some other "select partners" to view Windows source, and then by deeply discounting pricing on Windows and Office for the Chinese government to around $10 per seat, or even less.

In any case, it looks likely that neither Microsoft nor Novell stands to make much money in the Chinese market -- and neither would Red Hat -- for quite some time, at least.

The phrase "unsupported Linux users" that appears in today's press release from Novell and Microsoft, is undoubtedly a euphemism for "users of pirated software" -- since according to industry estimates, about 90% of the software used in China is still pirated today.

But maybe Microsoft and Novell can use their experiment in China to kick in the tires a bit on the virtualization and HPC aspects of their earlier Windows/Linux interoperability deal, testing the software together with their new mutual customer, the Chinese government.