September 21, 2004

Mandrakesoft positions for the future

Author: Tina Gasperson

Mandrakesoft, the Parisian Linux company known for its stylized penguin, is persistent. A new release of its flagship Linux operating system and some interesting financial news suggest the company, which filed for bankruptcy only last year, is back on track.Mandrakelinux came on the scene in 1998, the brainchild of enthusiastic young Linux developer Gaël Duval, along with Stefane Fermigier, Nat Makarevitch, Arnaud Crespin, Philippe Blanfuney, Sebastien Blondeel, and Duval's brother Antoine. In the original announcement to the KDE mailing list, Duval wrote that he wanted to produce a Linux distribution for people who "don't want to spend too much time in installing and configuring their Linux system."

It didn't take long for Duval to decide he wanted to make a legitimate business out of Mandrakelinux, and by 2000 he had secured a full complement of upper-register executives, including Henri Poole in the role of CEO. Whether Duval and friends accomplished this with the help of venture capital or the executives were willing to work for free is a detail no one from the company cares to expound on.

The corporation set out to woo enterprise-level decision makers toward its open source solutions, with mostly depressing results to date.

True to its roots, Mandrakelinux enjoyed a landslide of popularity within the open source community because of its unintimidating presence for new Linux users and its easy availability online. Forget having to order a CD -- current and future users could simply download an ISO image, free, from any of a number of mirror sites.

Popularity among corporate organizations has been harder to come by -- unfortunately for Mandrakesoft, since corporations are accustomed to paying for their operating systems, and money is the commodity Mandrakesoft was lacking all along.

But like the proverbial "little engine that could," Mandrakesoft keeps chugging along, sometimes through deep valleys, such as the controversial departure of Poole in April 2001. Perhaps the lowest point came on January 13, 2003, when the company filed for "de cessation des paiements," the French equivalent of chapter 13 bankruptcy proceedings.

But current Mandrakesoft CEO François Bancilhon, along with Jacques Le Marois as chairman and Duval handling communications, continues to concoct new offerings for big companies, and some of that creativity is finding its mark.

The first sign of progress was Mandrakesoft's exit from bankruptcy last March. Now, in an announcement to investors released last Thursday, Mandrakesoft said its shareholders have voted to transfer from the unregulated Marche Libre market to a regulated market by December 2005, and to conduct a capital increase of "up to 6 million euros at a price of 6 euros per share."

Le Marois said Mandrakesoft is targeting Euronext's Nouveau Marche market, a European equivalent of the NASDAQ. "We have more than 1,200 shareholders," he added. "We are signing more and more corporate deals, which are bigger and bigger."

For instance, the company recently announced it had sold the French government's Ministry of Education 1,500 copies of its Mandrakelinux Corporate Server as a replacement for Windows NT. That government already has pockets of Mandrakelinux usage, but is expected to continue to expand the presence of open source software over the next few years.

Le Marois said also that the company is optimistic about Mandrakeclub sales, calling it "one of the main lines of revenue, and a nice way to do business while keeping the open source model."

Mandrakeclub is a kind of fan club with privileges for happy users. Members pay a monthly fee and in exchange get perks including first access to new versions and discounts on Mandrakesoft products and services. Fees range from $5.50 to more than $100 per month.

But it takes a continuous stream of meaningful income to keep a full-fledged corporation afloat. Will Mandrakesoft go adrift? Ever the optimist, Le Marois told NewsForge the company will succeed in "getting back on a virtuous cycle."

"The more references we get, the easier it will be to get more business," he said. "You should see several announcements about big customers [for Mandrakesoft] in the upcoming weeks."


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