November 13, 2001

Linuxcare finally gets a permanent CEO; is he in time to save the ship?

Author: JT Smith

- By Steven J. Vaughan-Nichols -

Linux companies haven't had an easy time of it lately, but Linuxcare
has had it worse than many. In April and May 2000, the CEO
and CTO left under a cloud, the company was racked by
internal power struggles, employees were laid off at a rapid pace
and a much ballyhooed IPO had been put off indefinitely. And
all of this was before the stock market fell apart.

Since then, the company has shrunk to about 50 employees from a high
of approximately 280 and endured a February 2001 merger with
TurboLinux that was called off in May in what could be called a
corporate annulment rather than divorce. So why is Avery Lyford, former
consultant in McKinsey & Company's Business Building Practice, CEO
of Athena Communications Systems, and the man who launched IBM's
PC Server product line, pleased as punch to be Linuxcare's first
permanent CEO since Fernand Sarrat left in April 2000?

Because, he still believes in Linux. Lyford says, "Linux really is the best
way to solve enterprise projects. This is like the early days of
PCs -- Linux is the better way to get things done. We were in a place
where we needed to have more faith than facts. Now, the facts support the
faith. IBM's blessing of Linux has made it accepted in the church of
enterprise computing.

"I'm a geek and proud of it."

Before Lyford arrived, though, Linuxcare had changed its mission.
It's no longer the support company it was in 1999 and early
2000. The change began in June 2000 as David Sifry, co-
founder of Linuxcare and then CTO, said that Linuxcare was
moving into helping original equipment manufacturers (OEM),
system integrators, and independent software vendors (ISV) to
create custom mixes of Open Source software and hardware.
At the time, Sifry predicted that this would prove an important future
revenue stream.

He was right. By the end of the TurboLinux marriage, Art Tyde, another
co-founder and then temporary Linuxcare CEO, announced that the
company was abandoning its technical support business plan.

Today, according to Lyford, "Linuxcare is not a technical support call
center. We're a service company that's also into custom programming. If
someone wanted to port Linux from the PowerPC to the PA-RISC
architecture, we'd be there to help.

"If it's a trivial problem, then it's not a Linuxcare
problem." Linuxcare today is about "building products to manage and
use Linux on the enterprise business application level. We're not in the
embedded or small-to-medium business space."

That doesn't mean that Linuxcare won't provide any support. Its
Deltabase program, a knowledge base of Linux and Open Source
operational equipment specifications and driver support, is still available
for corporate customers.

The company will also do some direct support. Lyford says, "We'll
still be there for people at the end of their technical support rope." In
return, Linuxcare learns "what the real problems are that Linux has with
real business."

Despite its messy past, Lyford says, "Linuxcare still has good
relationships with IBM, Dell, Compaq, Sun, and we're going to keep
them." But the San Francisco-based company is not looking to be
bought out or for other mergers. Lyford says, "There will be no more
TurboLinux partnerships."

However, in the right situation, Linuxcare might buy another company.
Sources close to the company reveal that in spite of its recent difficult
history, Linuxcare remains relatively cash wealthy. Before Linuxcare
would make such a move, though, there would have "a customer need
that would be best served by buying another company," Lyford says.
"If someone needed us to work in the long term on, say IBM mainframe
S/390 capacity problems," Linuxcare might buy a small company with expertise
in this area.

Linuxcare might also hire individuals to help with specialized
long-term projects, but the company is not looking for
employees. Lyford says, "We're not going to do binge-and-purge hiring. We want to build a team and that takes a while to
build it. We'll only do very selective hiring for very targeted skills
around our customers' needs." If a customer has a short-term
need, Linuxcare will hire on former staffers and other Linux
experts as contractors.

As for the future for this enterprise-solution-building
Linux company, Lyford says, "we'll stay private. Many
companies use the IPO as the end of the race. We'll do an IPO
when it makes sense. Right now an IPO would be a bad
approach."

An IPO is the last thing on Lyford's mind. Instead, he
says that while "financially Linuxcare is in good shape with good solid
backers, we're going to run lean and mean and only spend money on
where it matters to the customer." In a breath of fresh air from the CEO of
a technology company even in these days of recession, Lyford says,
"Like, I fly coach. People who run startups who fly first class blow my
mind."

And where is Linuxcare going in 2002? Lyford says, "We're going to help
drive the enterprise to Linux. We want to prove Goldman Sachs [which
found that Linux servers rank near the bottom of spending priorities in a
recent survey of Fortune 1000 companies] is flat wrong not by debating
them but by proving Linux in the marketplace."

Category:

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