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Editor's Note: On Linuxcare

Firm Announces Layoffs, Cancellation of IPO

  • May 4, 2000
  • By Kevin Reichard

It saddens me when a Linux company is going through financial woes, especially high-profile firms like Linuxcare, which announced yesterday that it was laying off staff members and going through a major downsizing. At the same time, Linuxcare withdrew its application for an IPO, leaving the company's future in serious doubt; don't be surprised if Linuxcare is sold in firesale fashion to Red Hat Software or VA Linux.

But I have to admit that this development is not surprising. Anyone who hung around the Linux world could see that Linuxcare was burning through a lot of cash in some dubious ways: last year it lost $21 million and generated just $3 million in revenues. The original idea behind Linuxcare was sound: provide Linux expertise to corporations that had none. Good idea, but one that requires a sales infrastructure to go into these corporations and make the sale. Somewhere between concept and execution the need for sales expertise was ignored, and it seemed as through the company felt that if they put out a cool Web site there was no need for an aggressive sales force; customers would just flock to the service.

Just take a look at the Linuxcare Web site. You'll see lot of content--some of it good, some of it worthless--but you won't see a clear statement of what the company is and why a corporation should contract with Linuxcare to provide Linux consulting services.

But while folks may flock to a Linux Web site, that doesn't translate to sales. And if I'm trying to induce a Fortune 100 to commit millions of dollars to my company, I'm not so sure the best approach would be to feature Arne Flones columns on my Web site. Arne is a wonderfully talented writer and an important member of the Linux community, but I'm sure he'd be the first to agree that his views are not exactly those that would resonate in the executive suite.

But beyond that, Linuxcare seems to be a lot of ideas that don't necessarily add up to a business plan. One problem with Linuxcare is that a sales force would have a hard time finding something tangible to sell, since all Linuxcare seemed to offer was general Linux expertise. By trying to offer a variety of services and excelling in none, Linuxcare diluted its brand. Is Linuxcare a software-development firm, a training firm, an outsourced support firm, a certification firm, or a Linux system-integration firm? A company the size of Linuxcare just can't be all of the above, no matter how slick the Web site.

Within the Linux community there is sometimes an outright dismissal of sales as an important component of any commercial concern. There are some who feel that Linux and Open Source is above such mundane issues; something as superior as Linux and Open Source shouldn't be sullied by the muck of the commercial world. But guess what: the bazaar actually exists, and a company like Linuxcare needs to realize that it needs to play by the rules of the bazaar, not by the rules of the cathedral.

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