Tux Redux

Steve Hamm

The last time I tuned into Mandrake Software, the founder of the France-based Linux company was begging Mandrake Linux users to send in contributions to keep the company afloat. Then, silence. Well, it turns out Mandrake survived--just barely. Now it has a new name, a new strategy, and a new lease on life.

Francois Bancilhon, who has led the turnaround as CEO, dropped by today to put Mandriva--the new name--back on BusinessWeek's radar. He's charmingly self-effacing. ("I got the job because nobody else wanted it," he quips) But he also has a plan that could turn Mandriva into a viable alternative to the Red Hat and Novell distributions of Linux, mainly in the BRIC countries. That's Brazil, Russia, India, and China--where a lot of the growth in tech over the next years is expected to happen.

Mandrake got off to a jump start in 1998 when Linux was first emerging as a tech-industry phenom. It grew fast, became profitable in its first year, and quickly raised $20 million in venture capital. It was too much of a good thing. New management quickly cranked up spending, bringing the staf level to 160 and sending the company deep into the red. At its nadir, the company was losing $1 million a month. In 2003, it appealed for help--and received $600,000 in contributions from fans. But that wasn't enough to keep it out of bankruptcy court.

Bancilhon, a French software entrepreneur, had just returned to the mother country from a stint in Denver. He saw an opportunity to revive a company with a strong fan base and easy-to-use technology, and decided to give it a whirl. The turnaround started off rough, with deep staff cuts and a long trip through bankruptcy court that left the company with very little cash and a promise to pay off creditors over a nine-year period.

Bancillon gradually brought the company back to life. He raised $2 million from VCs and refocused on the emerging markets. As always, Mandriva targets desktop PCs primarily, but it's now aiming for corporations and government rather than consumers. A key move came early this year when it bought Connectiva, of Brazil, the leading Linux distributor in South America. Bancilhlon signed a deal recently with HP to distribute Mandriva Linux on PCs in Europe and South American. And he has an alliance with Intel to push Intel a package of Intel motherboards and Mandriva software through Intel's 160,000 resellers. He's hoping that will get business kindled in places like India. One key advantage: Some governments in emerging markets are reluctant to buy from American companies, so Mandriva has an edge over Novell and Red Hat.

Mandriva is still a peanut. Revenues for the year ending in September were just $5.5 million. But it's profitable. And it boasts some substantial customers, including HSBC, France Telecom, NASA, and Verizon.

Does the world need a third major Linux distributor? Probably not. But it wouldn't hurt.

(By the way, here's an amusing journal of a computer fan who replaced Windows with Mandriva)

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