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Feature: Business

RIP, Levanta

By Steven J. Vaughan-Nichols on May 27, 2008 (9:00:00 PM)

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It seemed like such a great idea. Linux is moving from edge and departmental servers to the data center, so why not offer Linux data center automation, complete with virtualization Linux lifecycle management? Well, maybe it's still a great business idea, but Levanta wasn't able to make a go of it.

Officially, there's still no word that the San Mateo, Calif.-based company is out of business, but former employees say that the company laid them off on April 1. The list of those who were fired ranges from clerical support to Madhur Kohli, the company's former vice president of engineering.

According to sources close to the deceased company, what put the final nails in their coffin was that after accepting $8 million in second-round venture capital from vSpring Capital and Levensohn Venture Partners in October 2007, the company was unable to show that it could shift its focus to enterprise and data-center-sized Linux management projects.

The venture capital companies, which had already been supporting Levanta, were disappointed when the company's attempted shift from focusing on its Linux management appliances to becoming a full-time Linux data center automation company came to little. Or, as one former staffer put it, "We were never going to even be able to play in that market. There wasn't enough there, there."

In addition, the small company -- approximately 20 employees at the end -- had management problems. Levanta's former senior director of services, Michael Perry, who had been laid off in December 2006, said in his blog that "I will miss it and what it might have been; but I'll never miss a whole subset of the cast of characters who thought they were above the laws of space and time. No you were not as it turns out. You made the failure as much as if you drove the car. You simply cannot run the company like it's your personal kingdom. Sorry."

Another problem, a source said, was that as virtualization has grown to being an important part of any Linux server farm operation, Levanta's existing software didn't scale well to these new tasks. It did well as the basis for small to medium-sized business appliances. It didn't do half so well at enterprise-sized tasks.

Worse still, Levanta, as it tried to switch target audiences, found itself going up against strongly entrenched virtualization management companies like VMware. In addition, far better known companies such as Hewlett-Packard, IBM, and Sun were moving into data center and virtualization management.

A direct strike against Levanta, according to one source, came when major Linux distributor Novell bought PlateSpin, which already had a significant presence in the data center automation and virtualization market. This deal, which closed on March 30, gave Novell an immediate presence in Levanta's new market. Pouring salt into Levanta's wounds, PlateSpin also brought Novell its existing data center partnerships with Citrix, Microsoft, and Unisys.

This deal also left no room for Levanta with its Novell partnership. While Levanta still had partnerships with IBM, HP, and Red Hat and significant customer sales to mid-sized businesses such as ServerTweak, a server and co-location service provider, and Automated License Systems, a multi-state hunting license service, the company's product sales were not enough to keep Levanta in business.

Without enough revenue from its old appliance market and facing not only the old data center powers but Novell and PlateSpin as well, Levanta's backers decided to pull the plug. It was not a coincidence that the Novell news came just ahead of Levanta closing its door.

Today, the venture capitalists are still trying to sell the company's intellectual property, but the company itself seems destined to join its predecessor, Linuxcare -- the first major Linux support company -- in the pages of business history.

Steven J. Vaughan-Nichols has been writing about technology and the business of technology since CP/M-80 was the operating system of choice for PCs and 2BSD Unix was what the cool kids used on their computers.

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