January 29, 2002

Who's Aduva to get $14 million in financing?

Author: JT Smith

- By Grant Gross -

The announcement
this month that Linux company Aduva had received $14 million in funding caught my eye for a couple of reasons. One: What Open Source-related company is
getting that kind of financing these days? Two: Who's Aduva?

I searched for Aduva in NewsForge's database an only came up with a handful of stories in the past year and a half. In fact, the last press release on Aduva's own site, the last one before the $14 million announcement anyway, is dated Aug. 28, 2001. So it's safe to say this is a
company that's been keeping a low profile.

It turns out that was by design, says Azi Cohen, the company's CEO. Aduva has been laying low as it reconfigures its main product, a Linux management suite, to sell to OEMs instead of directly to customers.

So what's a Linux management suite? Cohen says Aduva's Knowledgebase is a constantly updated repository of information on all things related to deploying Linux,
in essence being the eyes and ears of businesses using Linux for issues such as dependency and conflict problems and security updates. Aduva accomplishes this
by testing the thousands of Linux software packages in its lab filled with more than 100 servers.

If this sounds like something individual Linux distributions are doing, it kind of is, except on a grander scale, says Cohen. Aduva is testing on several
distributions, not just one, and Cohen claims the Knowledgebase has information on 40,000-plus components and millions of dependency rules for Linux-related software. Supported right now are Red Hat and SuSE's Intel-based Linux OSes, and SuSE on an IBM mainframe.

"Sometimes when you try to install something ... then something else doesn't work because of the issue of dependencies," Cohen says on a phone call from Israel. Conflicts and dependency problems exist in every operating system, he adds, but the problem is especially serious in Linux as thousands and thousands of developers from around the world create programs for Linux.

"Distros are trying to make things work together," Cohen says. "But individual contributors don't often have the equipment needed to test dependencies
significantly. At the end of the day, you need big facilities with a
lot of capabilities in order to do the full process, to really check that all the combinations of a piece of software or hardware works. We, at our laboratory,
can create more than 90,000 different Linux configurations. We have an infrastructure to check every combination that no one else has."

Even the tech analysts aren't sure what to make of Aduva. One analyst at a major tech market research firm declined to talk in detail about Aduva, because the company wasn't one of his paying customers. (How's that for independent analysis?) In his analysis of Linux software management, he says Aduva's Director solution "did not receive rave reviews from me," but then again, Aduva's not his customer, so take that with a grain of salt.

On the other hand, Stacey Quandt with Giga Information Group, calls Aduva's products the "best of breed" in Linux system management for businesses. She says she's not particularly surprised that the company received a $14 million investment, even in this economic climate. Aduva has a six-month-old relationship with Hewlett-Packard, Quandt adds, and she expects Aduva's profile to rise as more companies focus on security and systems management to protect their technology investments.

Giga does not publicly disclose its clients.

Cohen says Aduva's change in focus from end users to OEMs was partly responsible for the $14 million investment, which came from the Intel 64 Fund, BMC Software, and
other sources.

"Through the year -- and this year was hard for everyone -- we have seen that the habits of end customers have changed dramatically," Cohen says, explaining the move to the OEM strategy. "This year they were much more cautious ... secondly, they started
looking on the big names and the big brands when they wanted to purchase something new; they were very cautious [about going] to a startup company, looking for
a full solution instead of a niche solution.

"More and more so, as time went on, we started to see the capability of the small company to reach the end customer in the current climate is actually fading
away," he added. "Somewhere around the middle of the year, we realized we needed to change our attitude and look for others that will be able to take the message [to customers]."

So when Aduva began to approach potential OEM partners, including BMC Software, Cohen found interested investors.

"While it's very difficult today to go to a venture capitalist to ask for funding for the Linux market, it was quite obvious that once we convinced BMC Software
that we had something that was 100% compliant with their technology ... it was quite easy for them to understand that they not only want to use Aduva as an
OEM technology within their own solution, but also that it's important to invest in the company and give it more funding," he says. "I must say that this strategy of going from direct activity to indirect channels of high-end vendors was not only able to develop our future business in an easier way, but also help us a lot in the financing of
the company. Lucky us, we put those things together."

This recent round of financing was the third in Aduva's history. The company received $7.8 million in January 2001 and $1.8 million in January 2000.


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