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This means they have come begging only twice as often as MandrakeSoft during the last year.
I have a problem with this. I don't mind being guilt-tripped into forking over a little dough to my local public radio station. After all, where else will you hear a music marathon featuring the Portsmouth Symphonia? Certainly not on commercial radio.
I do have a problem with making regular contributions to the folks at MandrakeSoft, not that they have stopped asking. About a year ago, they were warning everyone that they were having trouble making ends meet, and were effectively soliciting contributions. Last summer the company put together a multimillion dollar IPO of sorts, selling off 20% of the company for a little under $4 million dollars.
That was nearly $4 million raised despite the fact that MandrakeSoft had nothing in the way of decent financial prospects, and no obvious business plan that would ever turn the company into a promising investment.
I cheered them on. Last May, I suggested that there was a good case to be made for Mandrake, although not a particularly good financial case. I did think the company might be able to keep its burn rate under control until executives there figured out a way to run the company as a business.
Before the end of the year, Mandrake was asking enthusiasts to chip in $5 dollars a month to join something called the Mandrake Club. By the beginning of this week, the company was back louder than ever, stating that, the "Mandrake Linux distribution's short-term future is in jeopardy due to a simple factor: money." The newest fund-raising gimmick? Corporate club memberships, with fees ranging from $2,500 to $100,000. Among the perks: direct downloads from Mandrake servers.
MandrakeSoft is assuring users that its current financial straits are temporary. The company is about to release version 8.2 of Linux Mandrake. The company expects to be profitable in 90 days.
Of course, the company also planned to be profitable 90 days ago.
This really wouldn't be a problem if MandrakeSoft was a little more like National Public Radio. No one ever figured that NPR would become self sufficient. Likewise, MandrakeSoft was originally set up as a non-profit. It began its existence as a volunteer project to upgrade and localize Red Hat's version of Linux, combined with the KDE user interface. Almost from the day the company declared itself a profit-seeking corporation, observers have had trouble figuring out how the firm expected to make money, although MandrakeSoft leaders keep insisting they are going to try.
And that's silly. In some ways, the company is a lot like your local public radio station. Public radio puts out a reasonably good product and owns the top income demographics in most markets. However, it has no means of forcing its user base to pay for its services. MandrakeSoft, more than most Linux firms, has the same problem. There's a reason that Linux firms like Red Hat walked away from the end-user, desktop business. Setting up and managing a massive server farm at companies like AOL requires plenty of onsite support and more than a little custom development. There's a potential revenue stream and an obvious market. By comparison, MandrakeSoft's desktop Linux is a shrinkwrapped product. No matter how good it is, there's little need for support and there's no reason that a company should ever have to fork over cash for anything other than the minimum single license to run an entire floor of workstations.
One important difference is that NPR is supposed to be a non-profit. MandrakeSoft isn't. The company is backed by firms like AXA and ABN Amro -- both gigantic financial service companies. Since when did you send a love offering to your local bank? In addition, the company has yet to float 80% of its stock. Last I checked, the current trading price was still trading at around $3.50. If MandrakeSoft needs to raise a little cash, it could always sell some of the remaining stock.
If selling stock or heading to the bank is not an option for Mandrake, the firm may have to face the fact that it may not be viable as a for-profit entity. It may be painful, but it's not the end of the world. Other firms have restructured. Plenty of private schools, water and sewer companies, hospitals and real-estate holding companies have made the transition to becoming non-profit institutions. There's no reason a software developer couldn't do the same thing.
And when MandrakeSoft does, I'll mail it a nice contribution.