Mandriva’s business model
I am often asked about the Mandriva business model. So here is a quick summary of the key points:
- we’re open source
- we’re a product company
- we’re publicly traded
- we address both the consumer market and the corporate market
- we address the consumer market through multiple channels
- we have a network of partner/distributors
- we address the corporate market through direct sales
- 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)
- e-commerce channel includes our web store, Mandriva Store, which sells essentially boxes and downloads, and the Mandriva Club which operates by subscriptions
- OEM agreements are established with hardware vendors such as HP or Positivo who ship and sell PCs with Mandriva pre-loaded in various geographies
- 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.
April 6th, 2007 at 5:23 pm
Great to explain that. Now could you tell us what is the future of the Mandriva Club, which has been bashed by the community for a long time, and what is its role in you current buiness model ? Today (and even before) the club seems to have no real good reason to live. It only separates users, instead of gathering them. If you want to still give a way to users to be able to download the pay-for editions, just change the concept.
The word “Club” is just bad.
Members have no outstanding advantages, whereas the community just hates this concept of “VIP” people. The Club is one of the areas (with the websites revamp) where Mandriva has the most work to do in its way to “redemption” toward the community.
There is no troll here. I’ve been a very happy Mandriva user for 4 years.
April 6th, 2007 at 6:21 pm
the first thing that is coming on my mind : don’t mainain the discovery version any more. Time is expensive, and making discovery isos is expensive, i suppose.
Sell mandriva club subscriptions in small CD boxes in the different commercial places, to have more subscriptions to mandriva pwp, just to make the vision of the club clearer to the new customer.
I can make explanations, but in french only…. my english is too bad !
FC
April 6th, 2007 at 6:28 pm
@liberforce
About the “Club”, one year ago.
8000 silver members: 960K€
5000 standard members: 300K€
Total: 1,26M€
I think it’s less, nowadays.
April 6th, 2007 at 9:47 pm
Note that Mandriva Linux Free is not a free-beer version, it is a pure Free Software edition of Mandriva Linux, one we are particularly proud.
Mandriva distributes this free version since a long time and this Free Software version has not been edulcorated, despite the post dot-com turmoils . In particular, we keep proprietary stuff out of this release, and we do not hide proprietary drivers in it just to make it more “acceptable” for the uninitiated.
It happens that this Free Software edition is also distributed free of charge by Mandriva and its network of public mirrors. But it’s really free as in /freedom/, and definitely more valuable than just a free beer !
April 6th, 2007 at 9:59 pm
To compete against the free ubuntu cd, why not selling the Mandriva One CD for a real low price ?
we can find here : http://www.osdisc.com/cgi-bin/view.cgi/products/linux/mandriva
Mandriva cd for less than 10$, why isn´it possible for you to sell Mandriva one CD for 10$ ?
for example, 10 cd for 10$ ?
it yould be a very smart move…
April 6th, 2007 at 11:00 pm
François,
Veux-tu bien m’excuser pour les conseils (opinions) d’un néophyte, toutefois je tiens à les dire (et je vais me citer) :
What I see as problems, as an unexperienced person (I am not a CEO, you know):
* Boxes sold in retail stores: unnecessary expenses. You won’t see RHEL boxes in physical stores! Mandriva should focus on the web store. Let’s say you have distributed some 2007.0 boxes to physical stores: they won’t sell once 2007.1 is out!
* OEM agreements: François, as-tu jamais contacté Lenovo pour sa série 3000?
* It was a big loss not having Corporate Desktop 4 ready when Corporate Server 4 was out! Red Hat offers all the flavors of RHEL simultaneously!
* There were complaints about the support. International support was probably worse than the domestic support. I guess this has to be worked out somehow.
* The raison d’être of the Club is still unclear. There should be a basic subscription of EUR 20 that would still entice people to join the Club, yet not to engender significant costs.
If what a commenter said, that one year ago there were 5,000 standard members and 8,000 silver members, for a total of 1,260,000 euros, I would hope that for 20 euros a year, some 30,000 basic new members could exist (bringing 600,000 euros), should they have a reason to.
C’est ça.
April 6th, 2007 at 11:14 pm
82% of the value of the company is gone and your adressing the business model
by copying the profile and about section from the Mandriva website …
You took the #1 Free Software distribution and made it into a extremely cheap copy of what you see Red Hat as … and declared it an open source company.
Clearly your network and distribution channel is broken if you cant break even with your development expanses. The fact that you dont adress directly the user market is significantly impacting the consumer revenues , lets not forget that you divert consumer fund toward corporate products and *your friends*.
By leaving Mandriva on the Euronext Marché Libre you are hurting the stock value and the company value. By not fixing how the financial market information is spread and its relevance about the company you manage to hurt its stock value even more.
Clearly there is something wrong with how you manage expanse when the revenue are made from product and you only spend 30% on it. The reminder of 70% as for biggest expanse your own salary.
Your marketing strategy is a failing one , consumer want services that fulfill there needs , corporation whant products that help them serve there clients and make money.
Mandriva Store : clearly dont seem to be attracting new client on its own , its even rebutting some.
- Mandriva Club : we all see that you miss manage that one so badly and only collect money for providing minimum effort and divert users fund from it toward corporate offer that don’t sale.
- OEM agreements ! Please , its more like little offers , one only needs to go to HP websites and Positivo to see that almost no product carry Mandriva as default os or are even supported under those brands.
- Retail stores resell your box back to you ? Because clearly they dont stock and resale them to be a highly profitable company..
“We keep questioning that model.”
Keep questionning *that* model of yours will your paying customer go seek
your competitor because unlike you and your management they listen to there customers …
Apple switched platform completely to Intel will you where doing nothing. Microsoft released Vista , and you managed to loose partners and OEM by not giving them your full attention.
Mandriva #1 problem : François Bancilhon and its entire management.
They are ok making a 5 billion euro company into one worth 4 million euro …
Off course the business model is to blame for there lack of business skills.
April 7th, 2007 at 12:33 am
Re: Moulinneuf
You have made some valid points ( though incoherently). I have been a mandrake user for years ( and I still am) and I hope that mandrake remains a viable company.
Changing name from mandrake to mandriva was a VERY big mistake. Even strong, well established tech. companies do not change names. Linux distributions have a LOT of competition and it is very difficult to establish a name in this crowd; and then changing brand names is suicide.
Living in the US, I can see that businesses ( and even Govt. organizations) do not look beyond RH and sometimes, Novell. Unfortunately, much better distributions exist ( depending on you need) and RH is very crappy and expensive but thats what people prefer. I tried to convince my boss otherwise but he won’t touch anything else… I don’t know about Europe but in the US business market, this is the scenario.
I don’t agree that the club doesn’t serve any purpose. It used to be that way but at least silver members get powerpack download which contains LinDVD. Perhaps club members should get more commercial s/w, incl cedega, crossover, games etc. Or, club members should get better support - for e.g. dedicated email support ( similar to paid mandrake expert) for 30 days etc ( depending on level).
April 7th, 2007 at 8:35 am
@ vasu
“You have made some valid points ( though incoherently).”
They are not incoherent , they are incomplete , I am not in the intent of drawing a map for those who want to attack Mandriva at its weakest.
“Changing name from mandrake to mandriva was a VERY big mistake.”
When will people like you ever learn :
“Dans le procès qui l’oppose depuis début 2000 à Hearst Holdings et King Features Syndicate Inc, propriétaires de la marque Mandrake le Magicien, MandrakeSoft a été condamnée en première instance par le tribunal de grande instance de Paris le 12 décembre 2003 à ne plus utiliser la marque Mandrake en France. La société fit appel de cette décision. Elle utilisa ensuite les marques Mandrakesoft et Mandrakelinux, avant de prendre le nom de Mandriva après sa fusion avec Conectiva. Le 18 juillet 2005, un accord à l’amiable est intervenu entre les deux parties, mettant fin au litige, pour un montant non révélé.”
( Not a direct translation )
The name change was due to a a court order the name Mandrake is a registered trademark of Hearst Holdings et King Features Syndicate Inc who own “Mandrake le Magicien” , who forced Mandrake the GNU/Linux distribution vendor to stop using the name Mandrake in anyway shape or form. Of course that fact was hidden and not discussed by the main press or by Mandrake Linux Management at the time. They ( Jacque Le Marois ) prefered to spent development money , revenue and profit paying lawyer to fight it , instead of coming to an agreement or changing the name as soon as possible. They also hide it under the “its a French thing”
“Living in the US, I can see … market, this is the scenario.”
Business owners and corporate boards and Govt organization tend to play local politics and protectionism first , but Mandriva biggest problem is that even do there distribution is/was the best for the job , the Company Mandriva is ruined by Mandriva Management who keep it perpetually in a Bankrupt position , ask yourself the question would you buy a piece of equipment /software /service from a company you are unsure will be opened in 5 weeks.
The sad part is at some point in the past Mandriva was beating Red Hat at corporation sales and govt sale in the US , it was pre Red Hat IPO.
“.I don’t agree that … (depending on level).”
As it stands now , I disagree , the purpose of a Club is to give more to there fans/customer your own description of what you think you have access to is proof of that , its not my job to tell you what’s inside , but lets just say that its a strong possibility that your missing the commercial Media Center software because they are not pointed to you specifically , among other things , unless they decided to remove it.
You have no idea or vision of what a club can do either
http://www.gothamdreamcars.com/dreamshare-club.htm
http://www.clubmed.com
http://www.cruisecompete.com/specials/lines/seadream_yacht_club_cruises/1
http://www.liverpoolfc.tv/splash/tickets-0407-youthcup.htm
http://www99.americanexpress.com/myca/loyalty/catalog/action?request_type=un_intlCatalog&action=CatalogHomePage&Face=en_CA
http://www.dinersclub.com/en/index.html
http://www.sierraclub.org/
http://www.aaa.com/
http://www.vertu.com/
April 7th, 2007 at 10:49 am
I find it amazing that there are people who don’t know this yet, God knows it was enough of an issue at the time, but - we didn’t change name for fun. We lost a court case over the Mandrake name on the entirely reasonable and logical basis that there was a high likelihood people would confuse a Linux distribution with an American comic strip about a magician. (Thanks, U.S. legal system). After that we were not legally allowed to be called Mandrake any more. A name change had to happen.
April 7th, 2007 at 11:27 am
@ AdamW
Maybe there is no “Why we changed name” on the Main website and on Mandriva Club.
What I find amazing is that you believe everyone heard about it. Heck some people think the Mandriva name is because of the BUYOUT and ACQUISITION witch they call *merging* of Connectiva and Lycoris by Mandriva.
http://en.wikipedia.org/wiki/Mandriva
“Mandrakesoft operated under bankruptcy protection”
Never happened its cessation des paiements , but some US press painted Mandriva as in Bankrupty protection witch is protection de la faillite in French and the Mandriva Management did NOTHING to stop that rumor , lie and painting …
But hey you have your on set of problem :
8000 silver members: 960K€
5000 standard members: 300K€
Don’t tell me your proud of that … with 560 million download of the distribution.
you lost 3/4 of the members !!! when it should have increased by multiple of 20 each year and decreased in price each 6 month.
Your even hidding the fact that you won a prize … For Mandriva Club :
http://www.wcm.bull.com/internet/pr/rend.jsp?DocId=113029&lang=fr
“25.000 membres de la communauté Mandriva” , witch would mean you lost 13 000 in the last year … 780K , well whats almost a million in lost revenue more when you already scrapped 82% of the stock market value of the company and think its NOTHING …
April 7th, 2007 at 12:34 pm
Let’s talk about consumer Market…
What is the interest to give money to Mandriva when you can download free CD ?
What is the interest to give 120 € each year for the club ?
Please, give GOOD reasons to consumers to buy your product…. Try to make a sensitive different between Free products and non free products…
It’s the key of success. Actually, I’m using Mandriva one (which works perfectly well). Why should I pay something ? What’s more in non-free version ?
April 7th, 2007 at 2:00 pm
Yes, forgot about the lawsuit altogether ( regarding brand name).
I believe that RH makes most of its money from corporations willing to pay them. My organization bought a stack of RH ES3 but they are mostly unused . No one finds RH ES easy to use ( they are used to windows server xxxx). Most CTOs/CIOs who buy RH are the same people who bought IBM or M$ or whatever - they don’t want to be left behind in the wannabe rush. So if linux is the new buzz, lets find a brand name and order a bunch of their stuff. Instead of evaluating the needs and learning to make the best use any technology. They don’t understand that in the software business ( or any business which involves services), technology is just a tool- the real enablers are the people.
You might notice that RH stopped retail selling a while ago - there’s no money to be had from consumers. Unless, OEM adoption REALLY picks up for linux. Consumers not only have to overcome the inertia of windows but also the notion that windows comes preinstalled and free on all computers - why pay extra for linux ? On top of that, there are many linux distributions and have to compete among themselves. This is why all distros are giving away free.
IMO, Mandriva’s best chances are to get a couple of sizeable Govt. contracts. Unfortunately, even there - well, Munich was willing to pay more money to IBM for suse linux ( and more than the m$ bid) than they would have been willing to pay if dealing directly with Suse ! European organizations must learn to have more faith in their own businesses and try to encourage growth of that industry there. The people should lobby the Govt. to do the same.
April 7th, 2007 at 2:41 pm
“There’s no money to be had from consumers. ”
If one where to believe you , WOW , and Halo and Dell and Toyota and coke are all running at a lost due to selling to consumers … they all make a profit.
Red Hat made 3 billion in its IPO , they can afford to bypass the consumer , they also have a large corporate paying following.
Neither of witch Mandriva as …
You guys dont realize that the Management expanses and bad acquisition at two high a cost and bad moves are what primarely made the coffers of Mandriva so empty.They also dont show the value of what they have and let anyone ridicule them and paint them as weak and broken all they want.
François Bancilhon as been around since November 2002 that’s around 5 years doing is failed strategy.
https://mandriva.com/en/company/press/pr/corporate_2401
If it worked , the sign of improvment and revenue would have shown by now.
But on the Corporate market you have Red Hat on the right and Novell on the left , neither of witch are going to let Mandriva in easy and Mandriva at this moment in time cannot afford any longuer to divert consumers fund to pay for corporate products that don’t sale.
Mandriva cant afford to keep François Bancilhon around. He already did cost too much.
April 8th, 2007 at 1:07 am
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April 8th, 2007 at 8:32 pm
As far as I’m concerned, the name change is irrelivent. As far as I can tell the, Mandriva Community is pretty near gone. I have found it almost impossible to get any sense of community on the newsgroups, I think this is causing major problems. Please give Gael Duval his club membership back.
Apart from that, I think the business climate in America is extremely hostile and dirty tricks abound. It’s a poor bet to put any stock in the American market, better to bank on other countries (at least you might have a chance). The Brazil move was a wise one, methinks.
April 10th, 2007 at 2:46 am
Why are you looking for community on the newsgroups? Newsgroups basically died as a method of communication in 1996 (sad to say, as they’re massively more efficient than web forums, but you have to roll with the times). They are now nothing more than a very inefficient way to use your ISP’s bandwidth to shove porn around.
Try looking at the Mandriva forums (both official and non-official) instead: http://forum.club.mandriva.com/ , http://www.mandrivausers.org/ , etc.
April 10th, 2007 at 8:54 am
I was surprised that mandriva considers itself as a product company. It is a tough challenge to make money with free beer …
I would suggest to be more focused on providing services with added value. As a client of the consumer market, I would be happy for example to attend seminars. I attented once an online Mandriva seminar for beginners which did not convince me : interactivity was too limited and I felt I was loosing my time.
Secondly, I think it is necessary to define how Mandiva can differenciate from its competitors : there are so many Linux distro …
donald
April 10th, 2007 at 6:38 pm
When I first got this machine, I tried to get the ipw2200 set up using information that I found on Mandrivausers.org; when things didn’t work out, I tried to get help but got no replies. I got the help I needed from LinuxQuestions.org and have been pretty disappointed with the Mandriva community ever since.
I don’t see why usenet should be dead, other than the fact that there are a lot of trolls hanging around. Personally, I like the format much better, the way the messages thread just can’t be beat. It could be a good place to discuss bugs and development issues before filing bug reports, a little community cooperation would go a long way (of course, I understand you guys can’t do much about that).
I’m sorry it works out this way (Mandrake 6.0 was my first Linux), I do still like Mandriva.
It’s almost like being chased out of my own home.
April 13th, 2007 at 6:40 pm
Hi, François, good article, Mandriva still has great chances to go ahead!, you’ve said
“It has evolved over time as we’ve questionned it and we’ve listened to suggestions.”
Well, I’ve sent an email yesterday to you and to Paul Guillet. I hope you read it and send me a feedback.
Sergio Belkin, “Spreading Mandriva in Argentina”
April 19th, 2007 at 4:37 am
3 millions euros raised, nice!
It seems like investors still believe in Mandriva’s business model.
The acquisition of Linbox will definitively boost the server offer.
All those acquisitions are complementary and very relevant considering the corporate strategy.
Connectiva: growing internationally, gaining market share on the soaring Brazilian market
Edge it: services and especially support
Lycoris: desktop and the US market
Linbox: servers
April 19th, 2007 at 3:33 pm
How to steal money and lower the value of the stock from Mandriva current shareolders by diluting the stock value for the gain of a few thieves :
EXCLUSIVE deal ***again*** , this is the mark of Jacques Le Marois and he is selling out the company futur once again for pennies ( from the same guy who brought in all the failed **exclusive** deals that lowered Mandriva worth and competitive advantage MACMILLAN !!! ) , 37cents on the dollars per share exactly , for 2 million euro they get to own a company who is worth billion but was valued at 35 Million euro before François Bancilhon did is JOB of lowering the company value. What a great deal !!! But there Strategy work obviously !!! Its not even market price either , the stock as not lowered to that level just yet so they are getting share at 1/3 of there current stock value , nice ….
https://mandriva.com/en/company/investors/newsletter/mandriva_to_get_a_new_reference_shareholder
https://mandriva.com/fr/company/investors/newsletter/mandriva_to_get_a_new_reference_shareholder
http://fr.biz.yahoo.com/17042007/17/mandriva-un-nouvel-investisseur-entre-au-capital.html
Occam Capital, un fonds d’investissement européen basé à Paris et à Londres, fait son entrée au capital de Mandriva (Paris: FR0004159382 - actualité) , une société qui édite et commercialise le système d’exploitation Mandrakelinux. Occam investira de l’ordre de 2 Millions d’Euros, devenant ainsi le premier actionnaire de la société. Deux représentants d’Occam siégeront au conseil d’administration de la société, une fois l’investissement réalisé. L’opération associera également des actionnaires historiques (Millennium Partners, Windhurst Participations, Jacques Le Marois et François Bancilhon) ainsi que tout actionnaire désirant y participer.
L’opération est structurée en deux phases :
la première phase est une augmentation de capital réservée au profit d’Occam. Elle porte sur un montant d’environ 1,65ME;
la deuxième phase est au minimum de 1,3ME. Elle est ouverte à tous les actionnaires. OCCAM et le groupe d’actionnaires existant en garantissent 75%.
Les deux opérations se feront à un prix de souscription de 0,34 euro l’action, soit une valorisation pre-monnaie de la société de 2ME.
L’augmentation de capital sera soumise au vote des actionnaires à la prochaine Assemblée Générale Mixte du 25 mai 2007.
Les fonds seront utilisés pour sortir de façon anticipée du plan de continuation (redressement judiciaire) en remboursant le passif résiduel. Ils serviront également à renforcer la trésorerie de la société et à financer l’acquisition de la société Linbox.
June 5th, 2007 at 1:33 pm
“we address both the consumer market and the corporate market”
Le marché “consumer” peut-être, le marché corporate, j’en doute… Mandriva est très peu supporté par les acteurs majeurs du marché comme HP, Dell, …
De plus, Mandriva a un réel problème de certifications auprès de nombreux éditeurs.
Quand on compare sur ces points Mandriva aux vrais acteurs comme RedHat ou Novell, on ne peut pas dire que Mandriva soit un acteur “corporate” sérieux.
Il est temps de réagir et de créer des liens avec les grans acteurs du marché corporate, ou d’arrêter d’afficher des prétentions irréalistes.