Linuxcare starts over - with software

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Linuxcare, a company that failed spectacularly at selling services for the Linux operating system, is back with a new strategy: selling software. After largely scrapping its earlier business, laying off most of its staff and starting from scratch, Linuxcare now has begun selling a product called Levanta. The software is designed to make it easier to run Linux on IBM's top-end mainframe computers, said chief executive Avery Lyford, a former IBM server executive who took over leadership of the company on 10 September. The new software is for a "commercially viable" niche, Giga Information Group analyst Stacey Quandt said. It's useful for a real-world trend, replacing large numbers of smaller servers with a single powerful machine. Lyford is a long acquaintance of venture capitalist Kleiner Perkins Caufield and Byers and Linuxcare board member Ted Schlein, who led his firm's 1999 investment in Linuxcare. Lyford agreed to be chief executive on the condition that investors and employees almost completely ignore the company's rocky past. "If it happened before 10 September and it doesn't affect the customer, I don't care," Lyford said. "We share the same name and investors (as the previous incarnation of Linuxcare), but I don't have any patience for people in the company who want to dwell on the past." Linuxcare was founded in 1998 as a company that would provide technical support and consulting services for Linux, a clone of the Unix operating system and competitor to Windows. The San Francisco company's fortunes rose as Linux hype paralleled Internet mania and it attracted $32.5m in 1999. The business didn't work out, though. The company had revenue of $1.5m but a net loss of $21m in 1999, with continued unprofitability expected in 2000 and 2001. The company's previous chief executive, Fernand Sarrat, departed in April 2000 amid layoffs and scuttled initial public offering plans. In 2001, the company tried to merge with Linux seller Turbolinux, but called the deal off after trying for three months to operate as a single company. Now all that remains of the old days is the company name, some venture funding and a small amount of continuing services work with IBM and Hewlett-Packard that generates between $1m and $2m a year, Lyford said. The main business now is Levanta. The software is designed to make it easier to install instances of Linux on mainframes that often cost more than $1m and that can run dozens of operating systems simultaneously. IBM is pushing Linux on mainframes as well as its other server lines. Linux helped to reverse declining mainframe sales last year, and Linux provides a mainframe with links to new software, system administrators and programmers. Linuxcare provides Linux administration tools that can be run by traditional mainframe administrators, by Linux administrators, or through a Web interface, Lyford said. With Levanta, new systems can be installed, instances of Linux can be updated en masse, and those changes can be reversed if necessary. The software costs about $150,000 to run on a two-processor Linux section of an IBM mainframe, Lyford said -- "underneath the typical price" for mainframe software." It may sound expensive, but the $150,000 price tag "could be very enticing" for mainframe customers used to such heady prices, Quandt said. Levanta has been released with limited availability, Lyford said, with general availability scheduled for October. Levanta customers include Verizon, but Linuxcare plans to announce another on Tuesday at the LinuxWorld Conference and Expo, Lyford said.

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