MandrakeSoft files for bankruptcy protection


16 January 2003 MandrakeSoft, the developer of one of the most popular distributions of Linux, has filed for protection from its creditors in a French bankruptcy court.

The Paris-based maker of the open-source Mandrake Linux distribution, which issued an extraordinary public appeal for cash last month, said that mounting losses had forced it to seek Chapter 11-style bankruptcy protection.

But day-to-day operations will continue and version 9.1 of its software will be released in April as planned, it added.

Mandrake and other versions of Linux are widely referred to as ‘free’ software, an often-misunderstood term that refers to the right of any user to copy and alter the source code. Finding a way to make users pay for improvements has proved an elusive goal for most ‘open-source’ proponents.

Even the acknowledged market leader, US company Red Hat, only recently reported its first pre-tax profit since floating in 1999, recording gross income of $300,000 on revenues of $24 million for its latest quarter.

MandrakeSoft made a desperate cash plea on its web site in December, despite a 31% growth in revenue for the year to September 2002. “We have a very big short-term cash issue. If you are concerned about MandrakeSoft’s future, this is the time to mobilise,” the company said. MandrakeSoft hoped to raise $4 million.

More specifically, it wanted investors to buy shares in the company and customers to join its MandrakeClub programme, in which members get access to a wider range of software products and quicker downloads, or to upgrade their existing memberships.

Only last week, the company’s co-founder, Gael Duval, said that despite the short-term cash problems “the business has never been as good as it is now.”

However, over the past two years MandrakeSoft has faced intense competition from Red Hat and SuSE, a German Linux distributor. Red Hat, in particular, has undermined MandrakeSoft’s claim to have the easiest Linux to use, with a new Windows XP interface for its own distribution.

To compound MandrakeSoft’s problems, hardware suppliers Hewlett-Packard and IBM actively support rival software versions from Red Hat and United Linux, an alliance of four open-source companies, while offering only half-hearted support to the Mandrake Linux distribution.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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