September 12, 2001

Bumpy ride continues for Turbolinux: No more package sales in U.S.

Author: JT Smith

- By Mike Newlands -
A turbulent year for San Francisco-based Open Source and proprietary software developer Turbolinux Inc. is far from over, with the news the company has fired the president of its profitable Japanese subsidiary and is stopping package sales
of its products in the United States.

Kuniteru Kojima was dismissed as president of Turbolinux Japan KK August 31 and has been replaced by acting president Jesse Casman while a permanent replacement is sought.

Although there has been no official statement from Turbolinux Inc., which normally posts press releases of important events on its Web site, Japanese trade publication Nikkei Open Systems interviewed Casman, a 34-year-old who joined Turbolinux in the
United States two years ago and transferred to Tokyo early this year.

Casman said Kojima was dismissed following disagreements on policy with the head office in the United States. According to Casman, Kojima was worried that stopping sales of packaged products in the United States could cause "misunderstandings" and
impact the Japanese operation, which was doing well from package sales. Indeed, said Casman, there was some confusion with Japanese customers believing Turbolinux was withdrawing from the Linux business.

Questions directed by NewsForge to Turbolinux Inc. chief executive officer Ly-Huong Pham were answered by Dino Brusco, vice president of marketing at Turbolinux.

Asked why Kojima was dismissed, Brusco sidestepped the question and responded: "Kuniteru Kojima has accepted a new role at Turbolinux as special advisor." He confirmed Casman was acting president while a new president was being sought. Casman said he would work with Kojima "concerning the business of our partners."

Brusco also admitted package sales have been discontinued in the United States. "In the U.S., there has been very little demand from customers wanting to purchase from retail outlets. Therefore, in the U.S., Turbolinux is focusing on the enterprise
and OEM customers. We continue to offer our product for sale through our own web site. Due to customer demand in the Asia-Pacific region, we continue to offer our products through retail channels in the Asia-Pacific region."

Casman had pointed out in his interview that Turbolinux was founded in Japan by Cliff Miller under the name Pacific HiTech in 1992 and renamed when the headquarters were moved to the United States. Miller, now DEO of Mountain View Data, left in mid-2000 following a disagreement with venture capitalists who had invested in Turbolinux.

Casman was quoted as saying: "Turbolinux failed to show a significant presence in the U.S. distribution retail market except in some OEM supplies such as distribution for the S/390 series."

He also said the U.S. operation would focus on the new closed-source PowerCockpit software product, which allows one-time installation of Linux into multiple servers. It will be launched in Japan soon, he said.

When Brusco was asked if there was a major restructuring going on at Turbolinux he again evaded the question and said: "Turbolinux is a healthy and growing global software company" before he listed the company's products and recent achievements.

Asked if Turbolinux Inc. is planning to center development of its main distribution products, including Turbolinux Workstation, at its Japanese subsidiary he said: "Turbolinux Japan has always been, and will continue to be our central
development team for our distribution products."

When asked how important Japan is to Turbolinux in terms of contribution to sales and profits Brusco said: "Turbolinux is a global software company. Our Japan operations have always been a key contributor to the success of our company and we will continue to invest in Japan and other geographies."

In the first half of this year Turbolinux canceled a proposed IPO and a planned merger with LinuxCare.

In a July article NewsForge noted: "The company has enjoyed moderate success in Asian markets, notably Japan, but faces an uphill battle in North America in an arena that analysts say is increasingly dominated by Red Hat's enterprise
Linux offerings.

"Current company strategy seems to conflict with the Turbolinux push into North America. The plan to profitability includes building on its sales of shrink-wrapped software, but its major market for that particular strategy remains Japan. Still, Turbolinux's new CEO (Ly-Huong Pham) believes that its current plans, including this particular strategy, will enable the company to reach profitability in the near future."

It looks like there's been a change in strategy since then.


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