Linux Player Xandros Grabs Storied Rival Linspire

Linux vendor Linspire is being acquired by fellow vendor Xandros in a deal that will bring the two Debian-based distributions together.

Xandros CEO Andreas Typaldos confirmed the deal in an e-mail to today.

The acquisition ends the independent run of Linspire, the company known formerly as Lindows, which had once proved a thorn in Microsoft’s side. The deal also helps to solidify Xandros‘ position in the marketplace as a competitor to larger players like Red Hat.

“We believe that it will help [Linspire], by making them part of a larger community of Xandros users, and by providing them with the support of a large global, full-product Linux solutions company, with larger product and technology footprint, and greater development, support, and financial resources,” Xandros CEO Andreas Typaldos told “The acquisition will not affect Xandros’ and Linspire’s open source strategies and plans.”

Typaldos said financial terms of the deal were not being publicly disclosed. Through the transaction, Linspire will now become a wholly owned subsidiary of Xandros. Typaldos will also become be Linspire’s president through the deal.

“Xandros and Linspire have had talks at the CEO level over the years about the possibility of a combination given their historically similar Debian-based roots and complementary product lines,” Typaldos said. “Such talks accelerated in late 2007 and culminated in the current agreement.”

But some close to the companies criticized the move.

Kevin Carmony, who held the position of CEO at Linspire until a year ago, argued in a blog post that the deal isn’t good for Linspire’s 100 shareholders, of which he is one.

For one thing, Carmony said the sale of Linspire, which is not traded publicly, had been worked out “in a secret backroom deal” without shareholder approval.

“Common decency would dictate that even if a company only has 1 minority shareholder, there should be a shareholder meeting and the acquisition explained to all shareholders,” he wrote. “Now that all the assets have been sold, what’s my stock worth … and what will happen with Linspire’s customers?”

A Linspire spokesperson did not respond to request for comment by filing time.

Linspire, founded by former CEO Michael Robertson, first gained prominence under the company name “Lindows”.

From 2002 to 2004, the Linux distro fought Microsoft over the name, which the Redmond, Wash. software giant argued was too similar to Windows.

In July 2004, Lindows and Microsoft settled in an agreement that saw Microsoft paying Lindows $20 million while the Linux firm changed its name to “Linspire”.

Both Linspire and Xandros also currently have deals in place with Microsoft, protecting them from the possibility of lawsuits stemming from open source infringement on Microsoft’s intellectual property. Linspire and Xandros each signed separate deals in 2007 with the company.

The acquisition of Linspire marks the second major deal for Xandros, which aimed to accelerate its business by buying e-mail vendor Scalix in 2007, which competes against Microsoft’s Exchange solution for enterprises.

But it is in the emerging “netbook” category of PCs where Xandros may be gaining the most traction. Xandros is the installed Linux distribution on the popular Asus EeePC, which has been making waves as the first in a growing category of inexpensive, lightweight ultra-mobile PCs.

Not surprisingly, Xandros leadership points to recent events as a sign of good things to come for the distro.

“Xandros has been on a fast growth path for the last couple of years, has an aggressive headcount and revenue growth plan at this time and is currently in heavy hiring mode,” Typaldos said. “We believe that at this point Xandros is already the third-largest Linux company in the world, and that we may already be the largest private Linux company in the world.”

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