The Official Mandriva Blog

Last Saturday I participated in Mozilla24 a cyber and physical event organized by the Mozilla foundation. The overall event took place in France, Japan, Thailand and the US. The panel discussion I was in was only (I assume for time zone reasons) in France, Japan and Thailand.

In France, it was held at ENST (a Telecommunication Engineering School in Paris), in a rather ugly auditorium (like most auditoriums of French engineering schools). It seemed from the pictures on the screen that they had found similarly ugly places in Japan and Thailand. Which means the glitter was in the technology rather than in the setting.

The technology was indeed impressive: good and clear communication around the globe, possible interaction between the sites and good quality sound and video. On the other hand, there were lots of people busy pulling wires and frantically typing on keyboards, so I assume there was a lot of work behind the seemingly effortless exercise.

Participants in France were OpenOffice.org (Charles Schulz), Wikimedia (Pierre Beaudoin), Mozilla Europe (Tristan Nitot) and Mandriva (yours truly).

Tristan was his usual mix of fun, kindness and smart and told us some cute stories on the beginning of Mozilla in France, when life was tough (it is much better now). He had given each presenter a list of questions to answer and to my surprise everyone followed the scenario he had provided.

In my presentation, I explained the three key words which drive our strategy: simple, innovative and open. Simple as in “take technology to the masses by making it simple�, innovative as “include innovations in the distro to take them mainstream� and open as in “open source, free software and open standards�. Then I went to our focus on bringing Linux to emerging markets via OEM relationships, as we are doing today for instance in Brazil and Argentina.

I had a question on fighting Microsoft in emerging markets. This is a good question: we indeed met them recently when they offered $3 licenses to a prospect we were talking to in an emerging market country (more on this soon)! I had another question on the multiplicity of distros: 5 years from now, will there still be many distros? Our vision is we should see convergence on the lower layers of the distro, i.e., the core components and the added value of a specific distro should move up in the software stack.

In some great news for the Mandriva Corporate distros, the French Ministry of Agriculture and Fisheries has chosen Mandriva Corporate Server to replace Windows NT Server on all its server machines (around 400). The migration will take place within two years. The full write-up is in the press release.

On Friday, May 25, we held our general meeting of shareholders. It was held at Mandriva headquarters, as it is since we have a room large enough to hold the participants. Shareholder meetings usually gather 30 to 40 people. Most of them are small shareholders, most of them support open source in general, Mandriva in particular.

These meetings follow the formal process of shareholder meetings: our auditors are there, our lawyers are there (but they were not this time), someone checks at the entrance that only shareholders participates and registers the number of votes carried by each attendant (either directly or through proxy). This is an expensive operation each time (50 to 60K€), which is why we limit as much as we can their occurrence.

As we do every time, we first went through a general presentation of the company situation. Then we went through the tedious process of approving all the official resolutions.
The general presentation went on for quite a while. There were many questions and discussions.

• Arnaud Laprévote and Sébastien Lefebvre, the two managers of Linbox, were there. They represented their company and answered a bunch of questions on how they would fit in the global Mandriva picture.
• Laurent Cadieu represented Occam, our new key shareholder. He explained why they invested, what they expect, how they will be involved. Laurent also replied to a whole bunch of questions.

There were also many questions on the company situation, the numbers and the strategy. People were trying to understand what’s going on, why the results are what they are. There were many questions “why don’t you do this and that?â€?. Mandriva is a company for which many people have ideas on what to do and not to do.

For instance, a common question is “why don’t you sell computers with Mandriva insideâ€?. It’s a valid question: if FNAC, Carrefour, Walmart and Fry’s were all selling PCs with Mandriva, we would make a bit of money every time and our problems would be solved. The answer is: we’ve tried many times. It involves an hardware manufacturer and a consumer channel. We have had a few of those (in France, Brazil and Argentina for instance), but they are difficult to organize: you have to convince the hardware vendor, but moreover you have to convince the channel. Then about the idea of selling our own machines on our e-commerce store, the complexity of the process does not justify the small revenue number (and selling hardware is a job in itself).

We also gave our numbers for the last semester (October-March), which were lousy as expected. We will have a formal announcement of those shortly.

Besides a few technical issues (such as changing the nominal value of the stock), here are the important decisions made:

• We approved the 2005-2006 financials.
• We approved a first increase in capital of 1.65M€ reserved to Occam.
• We approved the delegation to the board to organize a second increase in capital open to all shareholders. This will be a maximum raise of 1.6M€. We should open the subscription period in a week or two, and keep it open for about four weeks.
• We approved the Linbox acquisition and the increase in capital to perform the acquisition.
• We appointed two new board members, Laurent Cadieu and Marc Goldberg, both of them OCCAM representatives.
• As French law requires, we proposed to the assembly to vote on 50K€ (roughly) increase in capital reserved to employees (usually boards recommend to vote against, we recommended to vote for).

Thus ends a (way too) long process. We can now go back to our business.

We are now working on a number of changes: cutting costs, focusing more and putting in place a new organization.

I will report on those shortly.

Last week was an exciting one: we announced we were going to raise some cash, we shipped our new version of the distro, Mandriva 2007 Spring and we held our international distributor meeting in Paris.

Let me focus on the cash raise:

Because we are publicly traded, raising cash follows a rather slow process: we need a board meeting, then a shareholder meeting to put the decision up for a vote and this takes some weeks to organize. So the actual cash infusion will happen only after the May 25, if/when our shareholders approve it.

I have spent the last 5 months working on this and I am very happy we found a solution. We needed the investment and it’s been a tough race. Those who’ve done this know what I am talking about. I have looked at all possibilities (yes, all) and talked to everyone (yes, everyone) who could be potentially interested in such a deal, given the time constraints. I can now again allocate all my time and energy to running the business and I look forward to it.

The lead investor in the round of financing is Occam. Occam is a European VC fund. It’s fairly new (we are their second investment), but managed by seasoned professionals with a strong track record. They spent a lot of time understanding the market and the opportunity. We met for the first time in December and have worked with them since then. They will have two representatives on our board. They plan to be actively involved in the company and are interested in its long term prospect. I am sure they will contribute with their expertise and relationships.

We spent a lot of time on the structure of the deal. Requirements were that:

1. We needed to get Occam in reasonably quickly.
2. It was important that some of our existing shareholders showed their commitment to the company by participating.
3. We all (Occam included) thought essential to allow all shareholders to get in at the same conditions as Occam and the others

So the deal is in two rounds, the first one is 1.65M€, reserved to Occam. The second one is open to all shareholders and is guaranteed by Occam and the existing shareholders: the rule is that to do such a round, you need to find investors ready to commit to fund 75% of the deal. Several of our existing shareholders are participating: Millennium Partner, currently our largest shareholder, Windhurst Capital and BBS Finance. Jacques Le Marois and yours truly are joining also. Then any shareholder who wants to participate can do so, in proportion to what he/she owns.

There is no special treatment to any one in this deal: those who participate get the exact same conditions I get, and I get the exact same conditions as Occam.

In summary, the round will be about 3M€. Occam will put about 2M€. We will get about half a million euros from the committed shareholders and we expect to get about another half from the other existing shareholders.

The subscription price is set a 0.34€ a share, which means pre-money valuation of the company is 2M€. How was the price set? the same way price is set in any financial transaction: at the level where the seller finds a buyer. Would I have liked to get the price higher? you bet, I’m a shareholder. Am I happy we closed this deal? you bet, I’m a shareholder.

We, of course, discussed the set up and its announcement with the AMF (French equivalent of SEC), listened to their suggestions and took them into account.

Besides rebuilding our cash situation, we will use the funds for two purposes:

Get out of Chapter 11.

Technically, we are still currently in a Chapter 11 process (“redressement judiciaireâ€? in French), since February 2003. So we still have some creditors to repay. And we’re executing a plan by which we replay about 100k€ per year. The plan could go on until 2013, but it is actually a handicap in many ways: some public bids are forbidden to companies in our situation, both at the French and European level, and even when they are not, it’s a bad image. Our listing in a better market than Marché Libre is also virtually prohibited by this situation: Chapt 11 companies are put in a special compartment for “sick companiesâ€?, not a very attractive proposition. So, we will repay entirely our remaining debt (about 700K€) and we will become clean again.

Acquire Linbox.

We have been talking to Linbox for a very long time (some people would say too long). Last year, we signed an agreement with them, for an acquisition, which was a paper only deal (exchange our shares against their shares), which valued them at about 1.3M€ in shares. But, as we were ready to execute, things went south: our numbers went bad, our stock tanked, and this was of course considered “substantial changes in the situation of the companyâ€?. So we put the deal on hold, till we could get back the company to stable situation. In the meanwhile, we started working with the Linbox people, and their Paris employees moved into our offices. As we worked together on some business deals, we became more and more convinced that putting the companies together made a lot of sense. So, as we reached agreement with Occam, we renegotiated the conditions. We’re now acquiring Linbox for 280K€ in cash and 200K€ in stock. This will be presented to shareholder vote at the May 25 meeting. I look forward to working with the Linbox team and grow the business together.

I am often asked about the Mandriva business model. So here is a quick summary of the key points:

1. we’re open source
2. we’re a product company
3. we’re publicly traded
4. we address both the consumer market and the corporate market
5. we address the consumer market through multiple channels
6. we have a network of partner/distributors
7. we address the corporate market through direct sales
8. we are international

Being open source means:

• Every software product we develop and distribute is under GPL (including Pulse for instance).
• We receive contributions and we deeply appreciate the help of all of those who help us develop the distro.
• We provide two free (as in free beer) versions of Mandriva Linux together with their free maintenance: Mandriva Free, which does not include any proprietary components, and Mandriva One, which includes some proprietary drivers. These ship at the same time as the commercial versions of the product and are available for download from public mirrors.

We devote an important part of our expenses (about 30%) to the development of products. These include Linux distributions and tools to manage them. We also invest in advanced r&d projects to develop technology, some of which is integrated in our products.

We are listed on the Euronext Marché Libre. This means we publish quarterly results and we have to follow the rules and regulations from the AMF (French equivalent of the SEC).

We address both the consumer market and the corporate market. Today, we do roughly 55% of our revenue in corporate and 45% in consumer. We believe this double focus makes sense because there are both marketing and engineering synergies between those two segments.

• Marketing, because our image in the consumer world helps us when we address a corporate customer.
• Engineering, because the core of the product is common to both consumer and corporate products.

This does not mean that one funds the other: we believe each business should be profitable by itself.

We address the consumer market through three channels (in order of importance)

1. e-commerce channel includes our web store, Mandriva Store, which sells essentially boxes and downloads, and the Mandriva Club which operates by subscriptions
2. OEM agreements are established with hardware vendors such as HP or Positivo who ship and sell PCs with Mandriva pre-loaded in various geographies
3. Retail stores resell our boxes

Our consumer products are Mandriva Free, One, Discovery, Powerpack, Powerpack+ and Flash. As a service, we provide web support through our MandrivaExpert platform.

Our network of franchisees has about 25 members. Some of them have been with us for quite a while (such as our Czech and Polish friends), but we have recently grown this network aggressively. These distributors execute a strategy adapted to their local situation: they customize products, chose specific channels, and provide associated services.

We address the corporate market through direct sales and in partnership with service companies. Our key products are Corporate Server, Corporate Desktop and Pulse, our tele-distribution tool. Our services are consulting, support, maintenance and training, and we have teams dedicated to each one of these tasks. Work for a large organization typically consists in customizing a distro, helping the customer deploy it, providing tools to manage it and maintaining it and supporting it over time.

We operate worldwide: our consumer business spans 150 countries, our corporate business is more focused on France and Brazil, with some activities in other countries such as the US.

We keep questioning that model. It has evolved over time as we’ve questionned it and we’ve listened to suggestions. It will keep evolving. Except for our core value of being an open source product company.

The French “Assemblée Nationale” (the lower house of the French parliament) recently announced its intention to move to open source.

It started with some initial political annoucements. I am allways slightly suspicious of these. The beauty of open source for our political leaders is that you can make bold announcements without spending a penny. I won’t be nasty and won’t give any example.

Anyway in this case, they actually delivered: they are doing something serious, have a budget assigned to it and published an official call for proposals. The information is public and the actual call can be found here.
In this case they actually did a pretty good job. They did a proper analysis. They based their call on previous studies that had been done in the administration. They understand that there need to be a customization phase to actually design a desktop adapted to the needs of the user population, they understand they need tools to administer this and manage evolution over time and support.

They took risks and I am sure they had lots of pressure, but they went ahead and did a professional job.

It is not a very large deal: 1,000 desktop and the maximum budget allowed for a deal under such a process is about 130K€, which is not huge for the whole deployment, maintenance, support and administration. But it is a good show case and can be used as an example for the Administration and for other deployments.
In a forum where I am not exactly popular, there are regular questions on whether we answered that bid.

Of course, we answered: it’s the archetype of the deal we want to make. We followed the process, we found partners, we worked very hard and we submitted some very thourough answers. This meant a lot of work for us. Will we win? at this stage the decision is in the hands of the technical services of the assembly, I can only hope we will be rewarded for our hard work and for the quality of our answer.
I believe we have everything needed to provide a solid answer: we have a great distro, focused on the desktop, we provide professional support and we have a tool for deployment and administration, Pulse, which is 100% GPL. We also have the right partners answering with us.
Let us hope they will be more calls like this, let us hope other government agencies will understand that they need the help of enterprises to do this.

Last week, we were busy with the Paris Linux Tradeshow (Linux Solution) which took place Tuesday through Thursday in La Défense.

This is annual big mass of Open Source in France. Everyone is there and you meet everyone. Mostly French, but a few international players show up. There is the usual interesting mix between jeans and suits.
I found the show pretty active and I was happy with the Mandriva booth: nice design, lots of activity and a good crowd of people. The Mandriva team did a great job and I was proud of their work.

François Bayrou (center right candidate to the French presidential election) stopped by the booth, and spend a whole 35 seconds there. Pascal Joly grabbed him and gave a Mandriva One CD, but he replied he was using a Mac. Well, too bad François, but it was nice (and smart) of you to come and show interest for the Open Source movement.

Pierre Jarillon, from ABUL, gave me plenty of ideas and offered me a bottle of Bordeaux wine. It is a Château Saint Jean that his daughter makes. I tasted it yesterday and it’s pretty good. The only one entirely made under Mandriva, he claims. Maybe he’s wrong and there are others.

We had a lot of partners on our booth, among those:

Fon is cool: they have a grand scheme to take over the world, and they have made some of the first steps. It’s true that having Google and Skype as shareholders is a good start. We did some work with them and there should be something good for our users soon.

Wengo is also very cool. I talked to David Bitton, their CEO. They are also planning to take over the world. Once again, having Neuf Telecom as a reference shareholder is going to be helpful. We are preparing a partnership with them, to be announced soon. There again, we believe there is a good cultural match and we can help each others.

Nexedi is more serious: you can’t really use the word “funâ€? for an ERP, but this is great technology and they’ve been working with Mandriva for ages. I have a lot of respect for Jean-Paul Smets and I am happy to follow the steady progress of his company.

Our friends from Linbox were there of course, showcasing their products.

I also talked to Jean-Marie Verdun about his new start up, Splitted Desktop. What does the name mean? nothing says Jean-Marie, this ways people like it and ask questions. Pretty ambitious start up, still in the fund raising stage, but there is clearly a need for this type of product/technology. Another one in the club of those planning to take over the world.

We had put a lot of our stuff around Metisse, our future 3D desktop technology and things went very well. More about this soon.

A lot of people complained about our lack of communication. I hear the complaints and I will work to solve the problem.

Mandriva Flash sold well on the floor and Pascal Joly was happy about it.

New “Ia Ora” theme (that’s “Hello” in French Polynesian!), 3d desktop with both AIGLX and XGL, GNOME 2.16, KDE 3.5.4, Kernel 2.6.17… No, no, don’t read this post, go get your own brand new Mandriva Linux 2007!

Mandriva Linux Free 2007

• It’s Free as in Free and Open Source Software, and Free as in you don’t have to pay.
• It’s 3 CDs.
• Catch the Mandriva Linux Free 2007 torrent using your favourite BitTorrent client!

Mandriva Linux One 2007

• 1 CD with the greatest software. Use it in Live mode, install it in minutes from the desktop.
• There’s the Free Software version, with no proprietary drivers.
• There are the free, as in gratis, KDE and GNOME versions, available in 4 flavours according to your language. These include the proprietary drivers for WiFi, video, etc.
• Grab the Mandriva Linux One 2007 torrent using your favourite BitTorrent client! And share it people, spread the love!

Mandriva Linux Discovery 2007

• The DVD designed for Linux beginners, with simplified menus and ergonomy (also available on CD).
• Includes a free 1 month subscription to Mandriva Club (Silver level), to Mandriva Online (the powerful update notification service) and 1 month of free commercial support by Mandriva on our Mandriva Expert platform.
• Includes full versions of LinDVD for DVD playback; Flatout, a hit game powered by Linux; more full versions of commercial software.
• You’re one small step away from adopting Linux with Mandriva Linux Discovery 2007.

Mandriva Linux Powerpack 2007

• 2 DVD’s of pure Mandriva Linux experience for those of you who want to get some.
• Includes a 6 months subscription to Mandriva eTraining including the Linux System Administration course (certified by the Linux Professional Institute), a 1 month subscription to Mandriva Club (Silver level), to Mandriva Online (the powerful update notification service) and 2 months of free commercial support by Mandriva on the Mandriva Expert platform.
• Also includes full versions of LinDVD for DVD playback; Flatout, a hit game powered by Linux; also more full versions of commercial software.
• Fellow Linux lovers, meet Mandriva Linux Powerpack 2007.

Mandriva Linux Powerpack+ 2007

• A 2 DVD solution for your Small Office / Home Office.
• Increased security with Invictus Firewall, the Mandriva-made and exclusive redundant firewall solution, VNC software for remote administration, new VPN configuration tools, ERP, CRM and CMS solutions.
• Best in class commercial software: Arkeia Smart Backup, BitDefender, VMWare.
• Includes a 6 months subscription to Mandriva eTraining including the Linux System Administration course (certified by the Linux Professional Institute), a 1 month subscription to Mandriva Club (Gold level), 3 free months of Mandriva Online (the powerful update notification service) and 3 months of free commercial support by Mandriva on the Mandriva Expert platform.
• Yes, this is Mandriva Linux Powerpack 2007.

We’re very proud of Mandriva Linux 2007. Congratulations to the team, special cheers to our contributors, translators, documentalists and testers!

You too, join the community that is making Linux better on the desktop since 1998!

Do read the release notes and errata.