Mandrakesoft Is Out of Court, But Is It Out of Trouble?

Mandrakesoft proved to judges in the Parisian version of the Chapter 11 bankruptcy court earlier this week it had a viable business plan and exit strategy. Now all that remains is for the popular Linux distributor to follow through on its promise.

Despite a devoted customer base, the open source operating system has some daunting challenges to overcome before it can prove itself on the world stage, namely, to the lucrative business and government sectors.

Gael Duval, Mandrakesoft co-founder and creator of the Mandrake Linux OS, is confident his company is poised to meet the challenge of wooing the revenue-generating sectors that have so far focused on other commercial Linux vendors, like Red Hat and SuSE (currently in the process of being acquired by computing giant Novell ).

“We already made several deals in the U.S. in this area, and Mandrakesoft is gradually becoming the de facto Linux standard in the French administration,” he told internetnews.com. “We also have several deals with several [corporations] such as Total and France Telecom.”

The Paris-based company has had some difficulty getting U.S. manufacturers to pick up their OS. Initially, IBM featured Mandrake running its DB2 software, but hasn’t picked them up as a distributor on its product line. IBM already has a far-reaching program in place with Red Hat, and threw in a $50 million investment with Novell at the time of the company’s announced acquisition of SuSE.

Dell has thrown its hat entirely behind Red Hat and while Mandrakesoft forged a deal with Hewlett-Packard last year to put the Mandrake Linux OS on certain PC and laptop models, the No. 2 manufacturer is focusing much of its Linux efforts on SuSE.

In February, Web server tracker NetCraft published a survey that bears evidence to Mandrake Linux’s use on Apache Web servers worldwide. While the survey isn’t a definitive guide to all Linux servers on the ‘Net — it only tracks Linux vendors with its name in the Apache Server headers — it shows Mandrake Linux-powered servers (52,543) lag far behind Red Hat (1.45 million), Debian (442,752) and SuSE (296,217).

But there’s no denying Mandrake Linux has its appeal, especially among the Linux faithful in the consumer world. Unlike the other commercial vendors, Mandrake Linux can be downloaded free of charge from their Web site or any number of mirror sites on the Internet. Where Mandrakesoft makes its money, Duval said, is in retail sales of the software (23 percent), professional services (10 percent) and e-commerce, Mandrakeclub and original equipment manufacturer sales (66 percent). For fiscal year 2003, Duval said Mandrakesoft took in $4.69 million in revenues.

He said its popularity on the consumer end would soon translate into gains in the big-business arena.

“Mandrakesoft will continue to deliver easy-to-use open source products to individuals and small businesses. This is our basic business, and our offering will also soon grow on the corporate front,” he said. “There is a lot of business to do in this area.”

It will need to, if research by the Washington, D.C.-based Institute for Policy Innovation is accurate. According to its Tuesday report, “Why Open Source Can’t Meet Mass Market Demands,” open source projects will never break out of their niche fan base if they can’t produce original intellectual property (innovations) outside academic or scientific circles, or provide quality software.

“While open source may fill a useful role in specialized computing environments, open source does not translate to the mass consumer market for software,” said report author Tom Healy in a statement. “The mass consumer market is qualitatively different from other markets. It demands a much higher level of software engineering in order to provide the requisite ease of use, robustness and flexibility.”

That’s bad news for a Linux distributor whose main success has been at the desktop level. Still, Duval scoffs the report’s findings, saying the report glosses over some important exceptions, like Apache, which runs on more than 50 percent of the Web servers today or Mozilla, the open source child of Netscape.

“Saying that open source is mostly shoddily made is the kind of argument which has often been a key argument to propagate FUD [fear, uncertainty, doubt] about Linux,” he said. “Mandrake Linux provides many innovations and takes benefits from all the modern Linux kernel features. And the Linux kernel is not an imitation of UNIX, it’s only the same philosophy. So where is the innovation? Innovation is not a matter of being proprietary or open source; innovation is a matter of people who think about software and design it.”

For the time being, and until the business world proves them wrong, Mandrakesoft is continuing with business as usual. In May, the company will release a final version of Mandrake Linux 10, currently in beta testing through their Community edition.