[LWN Logo]

 Main page
 Linux in the news
 Back page
All in one big page

See also: last week's Commerce page.

Linux and business

VA Linux Systems filed for its Initial Public Offering, finally. They seek to get some $70 million from the offering, which is being underwritten by Credit Suisse First Boston and others. People interested [VA Logo] in details and who are gluttons for punishment in general are invited to slog through VA's S-1 filing but be warned that it is not light reading. For the rest of you, here's a few highlights...

For the last fiscal year, VA Linux managed to lose $14.5 million on $17.7 million in revenues. The loss is mostly attributed to their aggressive expansion efforts over the last year. And it has indeed been quite an expansion: despite having been formed in 1995, VA only had 15 employees in July, 1998. In July 1999, they were up to 153 employees.

What are those employees doing? They have 29 people in research and development, 66 in sales and marketing, 10 in customer and professional service, and 48 in administration, finance, and operations. For its development staff, VA has been aggressively hiring high-profile Linux names for a while. The S-1 filing gives a current list of who they are: Ted T'so, San Mehat, Leonard Zubkoff, Walt Drummond, H.J. Lu, Mark Vojkovich, Brad Grantham, Geoff "Mandrake" Harrison, Carsten Haitzler (aka "Rasterman"), Michael Jennings, Chip Salzenberg, Sean Perry, Joey Hess, and Jon "maddog" Hall. Their associated projects include kernel development, XFree86, Enlightenment, cluster management, Perl, and Debian.

VA's business is currently 85% servers. Their strategy reflects this in general - it is very much oriented toward business, rather than home, customers. They have an impressive list of business customers, including Akamai Technologies, Argonne National Lab, Cisco Systems, CNET, EMC, eToys, France Telecom, GTE, Linuxcare, Lucent, MIT, Rhone-Poulenc Rorer, Sandia National Laboratories, Tucows.com, and 24/7 Media. They have more than 50 customers who spent more than $50K in fiscal year 1999.

VA's business plan remains very firmly tied to hardware sales and services associated with the use of that hardware. They stress the importance of their web sites in a couple of ways: (1) over 80% of their sales go through their web site, and (2) sites like Linux.com and themes.org are an important part of their branding strategy. But they seem to have no ambitions to make their living through a portal site strategy - the web sites are there to support the primary business.

Branding is important to them. They see their competitors as being companies like Dell, Gateway, HP, Sun, Compaq, etc. One senses a certain feeling of "brand inadequacy" compared to those names. Thus they plan to continue to promote themselves hard to build up a well-known brand.

They give the usual set of risk factors. One of them is the current set of inadequacies in the Linux system:

Because the Linux operating system currently lacks some functionalities, we cannot sell our systems in markets which require those software capabilities. For example, Linux cannot support some database applications which precludes our selling our products to entities which require those types of database applications. If these efforts to expand the functionality of the Linux operating system are not successful on a timely basis, our ability to continue to grow our business will be impeded.

Other risk factors include that they expect to run losses for "the foreseeable future," that Linux could suffer fragmentation, possible problems enforcing the GPL, that they have no control over the Linux trademark, and that the barriers to entry in their business are low.

What will they do with the money? The filing is pretty vague:

We intend to use the net proceeds from this offering primarily for working capital and general corporate purposes, including the expansion of our sales and marketing efforts and our professional services organization, as well as for capital expenditures.
The possibility of acquiring other companies is also mentioned, though they state that there are currently no such plans or negotiations in progress.

So who owns VA? The big owners, according to the filing, are:

Larry Augustin19.4%
Douglas Leone (Sequoia)25.1%
John T. Hall8.6%
Leonard Zubkoff7.0%

A number of people hold substantial (but smaller) shares.

In the end, VA's approach to the field can be summarized by a couple more quotes from the filing:

We believe that open source solutions will continue to gain market acceptance as the limitations of more expensive and less customizable proprietary applications become more pronounced.
We believe successful Linux vendors must combine in-depth knowledge of Linux and other open source software with system design expertise and close ties with the open source developer community in order to maximize the benefits of Linux for customers.
VA Linux Systems has come a long way in a short time; clearly they intend to continue on that path.

TAO CORBA ORB released Object Computing Inc. has announced the availability of its TAO product. TAO is an open source object request broker (ORB) compliant with CORBA 2.2. It is specialized toward real-time and high-performance applications. Commercial support services are available.

Press Releases:

    Products for Linux:

  • Amdahl announced support for its storage products attached to TeamServer systems running Linux.

  • Belkin Components announced it has received certification and technical recognition of its line of keyboard/video/mouse switches, which have met and exceeded stringent Linux-compatibility testing.

  • BuyPogo.com announced the availability of Linux-installed systems using the AMD Athlon processor.

  • Coriolis announced that the book, "Under The Radar: How Red Hat Changed the Software Business -- and Took Microsoft by Surprise" by Robert Young, is now available.

  • EMJ released their version of embedded Linux.

  • Mission Critical Linux announced the first of its "three foundation tools" for mission-critical systems - a kernel crash analyzer.

  • OMNIS announced the availability of OMNIS Studio for Linux.

  • Penguin Computing announced a new Athlon-based cluster system designed for high-availability web serving applications.

  • Penguin Computing has also announced an Athlon-based system intended for gaming applications.

  • SSH Communications Security announced version 3.0 of its "IPSEC Express" product. This version adds Linux support - Red Hat 6.0 and SuSE 6.2 are listed.

  • VMWare 1.1 for Linux is now available.

  • WinLinux claims to be the most popular Linux system on Download.com, with 20,000 downloads in the first five days.

    Products with Linux support or Linux versions:

  • Activision and Loki Entertainment Software announced that the games "Heretic II" and "Heavy Gear II" will be ported to Linux.

  • Addonics Technologies Inc. announced the NetCD 2000, a compact plug-and-play, multi-protocol CD/DVD server.

  • Andover.Net announced GIFWorks 3.0, a free online application that allows Web builders to select, process and create animations online with a standard Web browser.

  • BEA Systems, Inc. released BEA WebLogic Server 4.5.

  • Breakaway Solutions, Inc. announced that it has been selected by Sun Microsystems to host and distribute Sun's new StarOffice suite of office productivity tools.

  • dotNow! announced the addition of free Web site hosting and free Web-based email services plus the debut of My dotNow!

  • Easy Software Products announced the first production release of ESP Print Pro.

  • IntraACTIVE, Inc. announced the beta release of their Banter MultiNetwork Instant Messenger.

  • Lucent Technologies announced the OptiStar product line of network and storage adapter cards and software that can handle and accelerate the flow of information from a server's hard drive to the end user.

  • Mortgage Builder Software, Inc. announced the laptop version of its loan origination system, Mortgage Builder.

  • OpenNetwork Technologies announced the release of an extended suite of companion products of DirectorySmart.

  • Oracle Corp. announced that with the immediate availability of Oracle Application Server 4.0.8., it is also launching a sales promotion aimed at former NetDynamics, Netscape and Forte application server customers. They say that in recent months the Oracle Application Server has been one of their most popular products, and nearly 2/3 of the downloads have been for the Linux version.

  • PK Electronics announced UPS Management Software (UPS-MS), a new UPS software package that is both multi-operating system and cross-platform.

  • Quicknet Technologies, Inc. announced the Internet PhoneCARD.

  • RSA Security Inc. enhanced its RSA BSAFE product line with RSA BSAFE Crypto-Ci, a cryptographic software development kit (SDK) available for use by developers worldwide.

  • SFUS Inc. announced the North American release of Germany-based, SFS SOFTWARE'S SITEFORUM WebServer.

  • Tatung Science & Technology Inc. announced the COMPstation U10-440R2U, which comes pre-installed with Solaris 7, but it also provides support for Linux.

  • UniTrends Software Corp. announced Backup Professional 1.2y, a complete enterprise-wide network backup and recovery solution. It backs up all the PCs on a network and is perfect for installations with a Linux server and Windows PCs.


  • Ariel Corp. announced it has joined Motorola Computer Group's Embedded Connections Partner Program.

  • BusinessNet Holdings Corp. announced the acquisition of an equity stake in LinuxLab Inc., the producer of a Linux-based web server.

  • Cobalt Networks Inc., maker of Linux servers, made a deal with Gateway Inc. to supply them with server appliance technologies.

  • Cygnus Solutions and ICS announced a joint effort to provide a commercial graphical integrated development environment for Linux.

  • Hummingbird and SuSE announced a marketing and development partnership. "The new relationship will give SuSE's Linux users easy access to all of Hummingbird's traditional client connectivity products including: Exceed, HostExplorer, NFS Maestro Server, NFS Maestro Client, NFS Maestro Gateway and NFS Maestro Solo while enabling Hummingbird to enhance its presence in the Linux operating system market"

  • Intel and Nokia put out a press release describing their new digital TV solutions.


  • Cygnus Solutions announced the commercial availability of Cygwin, a UNIX/Linux shell environment and portability layer enabling delivery of open source projects to Windows.

  • Ebiz (operators of TheLinuxStore) announced its latest financial results. Linux seems to be working well for them.

  • HireTechs.com helps out individuals with the following background: Linux, Oracle, AS400 and more.

  • HireTechs.com launched its new auction website, which uses Zope and runs on Intel hardware and Red Hat 6.0 Linux.

  • HotDispatch, Inc. announced the closing of a $6-million first round of venture capital financing. The funds will be used to expand HotDispatch's marketplace for Java and Linux technical services.

  • Manchester Metropolitan University announced that it has selected IBM DB2 Universal Database on the Linux operating system as a new platform for its Internet service.

  • ScreamDesign announced the release of YAMS (an e-commerce system) and MAMS (a web site access control system). Both are being released as free software.

  • Verio Inc. announced it has expanded its Web-hosting services using Cobalt Networks' Linux based server appliances.

Section Editor: Jon Corbet.

October 14, 1999


Next: Linux in the news

Eklektix, Inc. Linux powered! Copyright © 1999 Eklektix, Inc., all rights reserved
Linux ® is a registered trademark of Linus Torvalds