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LinuxBiz: A Daring Rescue, and Plans, Finally, to Make Money

Linux Planet kicks off a new regular feature.

  • August 31, 2001
  • By Dennis E. Powell

Welcome to a new feature of Linux Planet, where every other week we'll focus on things related to the business aspects of Linux. But, we hope, this feature will be different from most Linux business coverage, which is either rewritten PR pieces or articles bemoaning the presence of filthy lucre in our pristine little community. There is much to talk about, and there are serious questions to be asked. We hope to talk about those things and ask those questions. Many involved in both the development and the use of Linux probably are only peripherally concerned about these things, but there are others, people who have to decide whether to make the commitment to move their businesses to Linux or to provide investment capital to Linux companies, to whom good information is a valuable tool. They need to know that Linux isn't some flaky operating system put together by people who will move on to other things as soon as their interest wanes. They need to know that moving to Linux, or investing in the ideas of Linux programmers, is not a dead end -- or in cases where it might be, that it might be.

And the business aspects of Linux are all over, sometimes taking surprising turns. This was the week of the Linux World Conference and Expo in San Francisco, but it was also the week of some surprising developments. Because many Linux business people were in San Francisco and difficult to pin down for deep interviews, we will begin with a look at recent Linux business developments, each of which is the kind of thing to which an entire edition of LinuxBiz will be devoted.

SuSE Bailout

A series of rapid-fire developments have taken place at SuSE Linux, Europe's leading commercial Linux distributor and one of the mainstays in promoting desktop Linux. Dirk Hohndel, president and chief tech officer, resigned on August 28. Just two days later, it was reported that IBM and Intel, among others, had injected more than $45 million into the company to keep it afloat. The company's dire straits, if the bailout reports are accurate, were a well kept secret. Questions, too, are raised: Is there a connection between the financing and Hohndel's departure? What do the companies who have invested in SuSE receive in return? Will SuSE alter course?

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  • Corel Linux Is, What, Purchased?

    Canada's Corel, publisher of the pace setting DRAW! and, later, WordPerfect and its associated office suite, came late to the Linux distribution game and produced an innovative if quirky distribution comprising Debian Linux with a customized KDE desktop. Beloved of newbies, it was not embraced by existing Linux users, who eyed it suspiciously due to its attempt to emulate the Windows user interface. Those suspicions were confirmed in the view of many when Corel, already on hard times, fell even further and was rescued by a substantial investment by Microsoft Corporation. Corel's President, the flamboyant Dr. Michael Cowpland, resigned. Microsoft in due course divested. And this week came word that a new company, the Ottawa-based Xandros, had "signed a strategic licensing agreement with" Corel that will result in Xandros now marketing a Linux distribution based on the Corel product. Xandros is apparently made up of many of the laid-off Corel Linux people, some of whom came to be highly regarded in parts of the Linux development community. The announcement, though, raises as many questions as it answers: What, specifically, is meant by the amorphous phrase, "strategic licensing agreement"? What, specifically, does the new company hope to produce? To what market will it be aimed? What do its principals believe makes it stand apart from other, established, distributions, most of whom are involved in struggles for survival?

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    Progeny Retrenches

    Ian Murdock, the "ian" in Debian, has announced that his company, Progeny Linux Systems, is stopping work on its "Linux NOW" product, a very ambitious distributed networking plan. His Progeny Linux, a Debian-based distribution with value-added features, will continue, he said. In the announcement, Murdock was the first Linux distributor to come right out and say that the network distribution model might not be the key to financial success, at least not now. Will it be revived? Has Progeny, which is held in high regard by many Linux purists who normally shy away from anything with a whiff of commercialism about it, done as well? What is his plan for ensuring the growth and success of Progeny?

    A New Theory of Evolution

    Ximian, the commercial face of the Gnome desktop, announced that it plans to sell a shrinkwrap version of Evolution, its email program, for $29.95 and $49.95, for standard and professional versions respectively. While unremarkable in itself, this is substantially different from the company's initial plan to sell a service whereby one's Ximian Gnome desktop would automatically be filled with content, where concert tickets would automatically be purchased, with the dates entered into one's Evolution calendar, and where software would be automatically and transparently updated. A day later, the Ximian Red Carpet service, where for $9.95 per month users can upgrade software "during peak periods . . . up to 50% faster" was announced. In the past, Ximian has spoken of the commercial partners it would have involved in Red Carpet, from ticket agencies to software vendors. Where are they? Will they be available only to subscribers, or will they merely be up to 50 percent faster? In a climate where Linux distributors are withdrawing entire distributions in shrinkwrap at $29.95 or $49.95 for even their "professional" editions, what does Ximian anticipate will be the demand for a boxed email program at those prices? Has its corporate strategy changed?

    Free as in VA Linux

    A little more than a year and a half ago, a thousand dollars would get you four shares of VA Linux, one of Wall Street's darlings at the time. Today (well, at market open today), that same grand will add 690 shares of LNUX to your portfolio. [Though we take absolutely no delight in their or anyone else's troubles on the equity market, ethics demand nonetheless that we make clear that some Web sites owned by VA Linux might be seen as in competition with LinuxPlanet.com and other sites owned by our parent company, Internet.com.] A week ago, VA Linux announced that it would sell a closed source, "Enterprise Edition" of its SourceForge software. Eric S. Raymond, a member of the VA Linux board of directors and a leading open source advocate, flew to the company's defense, saying that companies don't like open source software, so this was just a move to "throw a sop" to the "managerial underbrain." LinuxBiz will rise above the obvious question --"Huh?" -- and instead will seek out, as best it can, a candid analysis of the impediments to the acceptance of Linux in the corporate world, the places where companies such as VA Linux would, in retrospect, have done things differently, and how they're retooling for a future divorced from the easy money mania of the past.

    The Stock Market Has Crashed

    The Linux world is not separate from the rest of the planet. Much in the way of corporate hopes for Linux as a profit center -- as opposed to an efficient system that properly utilized can increase productivity, reliability, and efficiency at low cost -- have risen and fallen on the equities markets. In addition, many in the Linux sphere have been directly and terribly affected. This is written at 1 a.m. Eastern time today, and in the last four hours we have received email, to wit: "I spend every day working in a veritable blood bath. This is far from over. Those with stocks are the lucky ones. They are just losing money. Many more are losing their jobs, doing what they truly loved. I've now survived 3 rounds of layoffs. I wish all I had to loose was some money in stocks." And: "I know and work with people that have lost 100's of thousands of dollars in the last year or so... My god, what have we done?" These are from people in the Linux business, not the owners of the businesses, but the people in the trenches. They were hired for jobs that are now at risk, with retirement plans that tend to be weighted toward company stocks. Cold, sober analysis and interviews with people who have jobs other than peddling equities are in order. We cannot save people's jobs, but we can keep them informed.

    And So We Begin

    If nothing else, we hope that the topics mentioned above demonstrate that the whole idea behind LinuxBiz is one that won't be boring. But to do our best, we need your ideas, your information, and your tips. While the author of this feature has experience in business reporting, this will not be the place where he gives voice to his opinions -- that happens in his Wednesday column. This feature is reporting only, and for that, ideas and information are always needed. The link is on the author's name above, and both story ideas and tips will be kept entirely confidential.

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