LinuxPlanet: On Linuxcare; Firm Announces Layoffs, Cancellation of IPO

“It saddens me when a Linux company is going through financial
woes, especially high-profile firms like Linuxcare, which announced
yesterday that it was laying off staff members and downsizing to 70
employees. At the same time, Linuxcare withdrew its application for
an IPO, leaving the company’s future in serious doubt; don’t be
surprised if Linuxcare is sold in firesale fashion to Red Hat
Software or VA Linux.”

“But I hate to admit that this development is not surprising.
Anyone who hung around the Linux world could see that Linuxcare was
burning through a lot of cash in some dubious ways: last year
Linuxcare lost $21 million and generated just $3 million in
revenues. The original idea behind Linuxcare was sound: provide
Linux expertise to corporations that had none. Good idea, but one
that requires a sales infrastructure to go into these corporations
and make the sale. Somewhere between concept and execution the need
for sales expertise was ignored, and it seemed as through the
company felt that if they put out a cool Web site there was no need
for an aggressive sales force; customers would just flock to
Linuxcare.”

“…Linuxcare seems to be a lot of ideas that don’t necessarily
add up to a business plan. One problem with Linuxcare is that a
sales force would have a hard time finding something tangible to
sell, since all Linuxcare seemed to offer was general Linux
expertise. By trying to offer a variety of services and
excelling in none, Linuxcare diluted its brand. Is Linuxcare a
software-development firm, a training firm, an outsourced support
firm, a certification firm, or a Linux system-integration firm? A
company of 130 employees just can’t be all of the
above…”

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