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Eazel: The Honeymoon's Over

Posted by timothy on Tue Mar 13, 2001 09:59 PM
from the say-it-ain't-so dept.
Linux Business
OdinHuntr writes: "Newsforge has an article detailing Eazel's layoff of over 50% of its workforce. Quite a day, eh?" And GrokSoup writes: "According to News.com, Eazel laid off 40 employees today -- or more than half of its staff. The company says it is trying to get its "... burn rate and business plan in line with the more sober economic environment," but we all know what that means. Don't we?" Update: 03/14 03:20 AM by T : And on a slightly more positive note, Dan Gillmor writes: "Hey, I stopped by Eazel today and Andy H showed me a nifty (but as yet unreleased) RSS viewer that's an intelligent icon on the Nautilus desktop ... I posted a screen shot in today's weblog."
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  • This is absolutely true. If you have ever taken a macroeconomics course, you have heard of the term "competitive advantage". That is exactly how companies like Red Hat survive. It is essentially trade. This does not apply to individual, hobbyist computer users, because as a hobbyist you are not trying to make money -- spending a lot of your spare time on a problem does not reduce your income, because that time would not have generated income for you anyway.
  • Well, I just came accross this story [zdnet.com] on ZDNN which related to your doubt about Redhat. And they're one of the lucky guys around, they split their share while it was very high and now they have enough money in the bank and market share. They profit forcast for profitablity of Redhat probably even next quater. As for others - SuSE are doing very well in Europe. Not very well in U.S.
  • And thats a new feature???

    with MS explorer 4 you had it turned on as default long time ago

    KDE had it since KDE 2.1 beta 1 but with a twist: you can put a web page as a desktop wallpaper, or better - ANY GUI application as a wallpaper!

  • So I'm reading Dan Gillmor's comments on Nautilus, and this paragraph strikes me.

    Let's focus on the positive side first. The Linux community has been touting the combination of the OS and Nautilus, a GUI plus Internet services, as a Microsoft killer. That seems presumptuous, to put it mildly.

    Now, I don't know about anyone else, but I'm pretty sure the Linux community at large has never pushed Nautilus as anything more than a gmc replacement. So where did this guy's impression that Nautilus was this big, phenomonal thing come from?
  • As a number of other people have mentioned, this was not a layoff of Nautilus developers. But if they go down (and that's a very big if), the code is way past the bootstrap stage and is certain to remain alive. Compare it to the complexity of the entire GNOME project or the Linux kernel. Nautilus is big but not rocket science, and it's not Mozilla - something that was 2 years away from working and thus didn't attract developers.

    Bruce

  • Deirdre,

    They are an acquisition target, as are a number of other companies we both know well. There are some big boys out there who want to buy Linux expertise in a working company today, rather than build it. That is why Eazel is not laying off the key developers - they know where their value is.

    If I had to guess, I'd say they will end up part of Dell, which already holds substantial equity.

    I don't know much about SiteRock, but can't be surprised that some companies could not make a go of it. I've liquidated a few myself. This is a very difficult game and in the present situation, cash and patience will win.

    Thanks

    Bruce

  • You've obviously never purchased a VA box. VA's stuff is much more than just a box that will run Linux. It's a box that will run Linux _wonderfully_. VA's problem was that they made too many assumptions about market growth. Their servers are worth every penny you pay. Lots of speed and reliability. How many hardware distributors do you know that

    a) ship a custom version of RedHat for their hardware
    b) use teflon cabling for their SCSI drives
    c) do extensive QA on their prototypes so they discover minor memory problems on exceptional conditions, so they don't ship such things to their customers

    VA makes a great server product.
  • Isn't that always the way, though? The market seldom behaves rationally.

    I'm invested in two oil companies that have been turning ever-greater record profits for the past eight quarters. They should be trading at CDN$60. It's only recently come up over $40, which isn't much more than they've ever done.

    Why aren't these stocks skyrocketing? Because of the market is fascinated with gambling their investments on long-shot high-tech companies that have never turned a profit and, in all likelihood, never will.

    Thank god the tech market is crashing. Perhaps people will finally gain a freaking clue about *investing* as opposed to *gambling.* Which, in turn, can only help me: I only purchase stocks that have real value behind them...

    --
  • Software companies have a number of levels of support - first line support filters calls and answers the 'turn your PC on' type ones; second line solves the more difficult problems involving some troubleshooting; and third line is often the developers, particularly in smaller companies, who debug the nastiest problems.

    As Red Hat is already a fair size, I would expect it has this sort of structure already, so that Alan Cox et al only get bothered when there's a serious problem that nobody else can debug. They probably also do a lot of new development drive by particular customers, which may count as 'support' in a sense.
  • But if they go down (and that's a very big if), the code is way past the bootstrap stage and is certain to remain alive.

    Oh Bruce, give it a rest. They've never had a viable revenue model -- even their developers know that (and geeks are not the most finance-savvy community).

    The only reason they're still around at all is that they got funding just before it got hard to get.

    I expect they'll go the way of several other companies (like SiteRock formerly CapTech) and pull back on some of the core open source/free software (pick your terminology of choice) stuff they're doing because It Does Not Fulfill The Investor's Requirements For Profit.

    _Deirdre

  • Too many companies think that the way to make it is to go public. What is wrong with a privately held, privately run group? No shareholders to appease, the freedom to do what you feel is really important, the ability to maintain control. Many private companies are often more tight-knit, smaller but very agile. Too many want to jump on the good-ole IPO bnadwagon.

    First, a misconcepton: even private companies have shareholders. Being private does not mean the founders are in control. Quite the contrary, as anyone from Linuxcare could tell you. It all depends on how one financed the startup and what one had to give away in terms of equity to get there.

    Most of the "dot com" strategy in terms of financing was to grow to the point where there was a significant economy of scale.

    One problem: growing a company is very expensive. It's virtually impossible to grow significantly AND turn a profit. You'll note a lot of profitable times come after scaling back. There's good reasons for that.

    So really the IPO bit is about growing to the point where one can make significant profit easier. Sure, it's a gamble. It's often a really bad idea.

    In summary, it's already way too late for Eazel on these matters: they likely already gave away most of the control for VC funding.

    _Deirdre

  • They are an acquisition target, as are a number of other companies we both know well. There are some big boys out there who want to buy Linux expertise in a working company today, rather than build it. That is why Eazel is not laying off the key developers - they know where their value is.

    In order to be a viable acquisition target, the expected added benefits have to exceed the expected added costs. And I don't see that they do in Eazel's case. Or any of several other cases.

    As a friend pointed out after one company laid off people, "well, we'll still get about 70% of the benefit of his work regardless." This is a part of the problem, you see: for a normal coder, a business gets 100% of the benefit of their work. There's a much greater disincentive to keep open source developers if one is paying market rates (especially in Silicon Valley) and only reaping an additional 30% over what one would have gotten without spending a dime.

    So, you see, those coders may be worth, to any acquisition targets, about 30% of what they're being paid. That, plus Eazel's business model wasn't making sense to even people in-house, well the two of those together spell doom and gloom to me. But then I'm a cheery sort.

    _Deirdre

  • Will their software go on? I mean, really?

    I look at the enormous work going into something like Mozilla-- literally dozens of programmers working 24-7 on something like that. Lots of systems, lots of coordination.

    I just have to wonder whether when funding on something like Mozilla or Nautilus gets pulled, does development continue? Does the software go on, realistically?

    W
    -------------------
  • Here's my scenario...

    AOL pulls finding. Mozilla shuts down or becomes volunteer only.

    The focus would shift from the Mozilla "platform" to the Mozilla "browser", starting with Galeon and its brethren.

    There'd probably be enough energy to wrap gecko in a browser shell for each of the major OSs.

    Anything more substantial than that would really shock me.
    -------------------
  • As the other guy said, even privately held companies have shareholders though usually a smaller number of them than a public company. If you need a large influx of cash and don't want to make a public offering you're going to look to a single group for said capital. Often times that group will give you capital if you give them voting stock which means they have a say in how your company is run. You can also get a large influx of capital by offering public common stock, owners of such stock hope you do things to make their investment worth something but they don't get to tell you what to do.
  • You've made two very good points. A Linux bandwagon got started because before Redhat decided to go public no one gave a fuck about Linux. Then they overcompensate by throwing money around like mad. If they had been forced to use the product they were supporting for a week rather than listen to some geeks describe the euphoria they get from writing C code they would have put their money in better business plans.

  • IIRC SuSE is already turning a profit, RedHat (if current trends continue) should be turning a profit by next year. While this isn't the goldrush of last year, and there probably isn't currently room for a lot of large Linux-only players, there is plenty of money to be had.

  • That means keep your day job while developing your next product.

    Hell yes. I am currently getting towards the eventual conclusion of developing a product, and this leads me to think of the one piece of advice I'd give to someone at the start of the road I'm at the end of. Keep your day job. Your employer pays you because you have something they want. Think about this in terms of being a business. You're also going to need an 'in' to various places - your current employer is probably as good a place to start as any other.

    Mind you, I hated my employer at the time :)

    One more thing: This alleged next product - make sure someone with a shedload of money needs it. Like, they cannot live without it quantities of need.

    Enough ranting.
    Dave
  • 20 or so years ago Jerry Pournelle, writing in Byte, said that in the future (i.e. now) the money wouldn't be in selling software, it would be in selling support (like Red Hat) and documentation (like O'Reilly). He was right.

    Yeah, Microsoft is just begging for a cash infusion from the Juggernauts that are O'Reilly and RedHat.
  • Good troll. Starts off sounding reasonable and informative, to draw people in, then goes into the heavy flamage. Well done!
  • Of course I'm being facetious. In fact, I can't think of a stupider time to start laying off people. I swung by their website and dl'd the super-duper install program in the hopes of installing Nautilus, but the install program would get only so far into downloading packages and then segfault. Repeatedly. It's not like I'd be able to fix the install program, I couldn't find the sources to it in that maze they call a website.

    `No problem,' I thought. `I can just download the rpm's and install them by hand!' Yeah. Right. I downloaded the rpm's they had listed on the Redhat 7.0 page; the links for some of which were just plain broken and I had to cut and paste from Mozilla and use wget and some editing of the URL's to get the packages.

    This does NOT make for good first impressions.

    That pages also informs me that I should make sure my GNOME is up to date, but I'll be damned if I can get ximian's damned install program to download. (http://go-gnome.com piped through /bin/sh *would* work, i'm sure, if the site weren't seemingly down. I don't blame the Ximian guys, hell who knows why their web server is unavailable.)

    I'm just hoping these guys haven't laid off any of the web developers because they must realize that for a company which writes software mainly available on the WWW, the first thing a user is going to interact with is the web site. It doesn't matter if this application they're writing is going to change computing forever, bring about world peace and exile Bill Gates to the math departpment at Wassamatta U; if the UI of the website is braindead, that's doesn't say much for the applications the website's gatekeeping or or the support they're going to want to sell to the public.

    I thought these people were supposed to be user interface wizards, or something. Quite frankly, I'm not impressed.

    So they have a website which has broken links and an install program which chokes for no apparent reason. (Don't even let me go into the registration system which didn't work.)

    Let me tell you, nothing pisses me off than wasting an afternoon running around in circles.

  • And the little companies that do succeed are going to be the ones that keep their expenses way down until they are profitable, rather than ride the more extravagant venture capital road.

    Wow, you mean like real companies that make products and sell them? As if that would ever work.

  • Sheesh man. People put their lives, their hopes and dreams and fortunes into these companies. They failed because the market is hostile. To most people that doesnt mean much. So I'll put it more clearly: They failed because they cannot sell their product and they can't sell their product because of the GPL. So the question you have to ask yourself is: do I want to exploit people to get my software? Talk about slave labour.
  • Personally, i won't install this thing. Just running Mozilla (Konqueror just segfaults on startup for me) uses most of the free RAM on this 128MB P3-500.

    However, i'd be interested to know how far the developers have got with regard to improving the speed of Nautilus.

    I'm optimistic about Linux as a desktop environment, but we have a long, hard road to travel to get the windowing environment and applications anywhere near the snappiness of Windows.

  • Redhat is following the rule that companies don't pay for software, they pay for solutions. They want someone to come in and set up everything for them so they don't need to think, or hire people to be experts. That's what Redhat does for a living, and they are about to make a profit from it.

    I don't know how Eazel is planning to make money. When Andy H spoke at Monterey last year, I got the distinct impression that he didn't know either. I keep hearing about "subscription services", but no details.

  • What would be even better is if everyone could get beyond the buzz words and marketing hype and talk about the technology for a minute. Active desktop and other such phenomenon (remember pointcast and the castanet push craze?) are usually based on sound concepts which are then implemented poorly. Integrating network access into applications is a great idea -- extending this to fetching recent information over the Internet is very valuable. Doing this as applications that just work as applications, instead of trying to hide their implementation is stupid. What's the difference between an active desktop window showing me the weather and a buttonless browser window showing me the same rdf/xml/html/php page? Nothing. Lets implement xml, rdf, etc. well in browser backend software and then give the user the option of how to be presented with that information.
  • But for the average user, or business, Red Hat is probably the solution for support. That's in the USA.

    Most of the average users or business don't use Red Hat Linux, however. The average users are using Windows, and the average business are using NT or a high-end UNIX. And generally put, when the average person or business decides to deploy a UNIX, they've got people on staff to help them, or in the case of the individual, they can help themselves.

    So no, Red Hat's model won't cut it- they have to beat out users who know what they are doing, newsgroups/mailinglists/IRC channels, and people who have on-staff geeks to fix this kinda thing.

    Oh, and I've been hearing that all of the .coms are "on their way to making a profit" for quite some time now..

  • Yeah, that whole idea that the larger the userbase the more active the development is largely untrue at programs of any complexity.

    It's not like bugs can be fixed in five minutes of work by someone who isn't comfortable with the source- if they were that simple, they probably would have been corrected before leaving.

    JWZ summarized it pretty well when he quit. http://www.jwz.org/gruntle/nomo.html [jwz.org]

    And being the manager of a small open source project, I can tell you first hand- a very small percentage of the users do 99% of the work. Tough rap, eh?

  • I'm not an MBA either; perhaps that's why I occasionally buy bottled water.

    All your event [openschedule.org] are belong to us.
  • I agree 100 percent. Read my post from several days ago for a personal insight into this.

    http://slashdot.org/comments.pl?sid=01/03/08/03292 48&cid=270
  • Active desktop is not defunct, it's just not touted or used much. You can still have a web page sitting on your desktop (nothing like RSS in my opinion). Active Desktop is what makes it possible for users to only have to single click on desktop icons instead of double clicking (yeah, big deal I know, but it saves a click).

    RSS on the other hand appears to be alot less heavy unlike active desktop. Active desktop would slow a machine down if it has a web page on it. This looks like all it's doing is grabbing a jpg and a list of links. Nothing heavy there. While on the desktop you may not want this, but with the rss in Nautilus it looks as if you can store these little snippets in any folder in your home directory. That would be handy.

    as for my other comments on Nautilus, I think there's LOTS Nautilus is doing that has been done and some that hasn't been done before. This is the first time I can remember being able to tag files with those little tags (on Linux anyway). Others may have done what Nautilus is doing, but, to me, Eazel is combining alot of handy features into one app. No one app has ever done as much as Nautilus is doing, IMHO.

  • I advised them to not Open Source OpenMail until we were ready to throw it away. I want HP to produce lots of Free Software, but that means they have to make some money, too, or they will make no free software at all. I thought there was still more potential to make money with OpenMail as a proprietary product, and that we could do better things for the Free Software community with the money. That did not work out.

    There is one real philosophical difference between RMS and me. RMS believes that all software should be free. I want to see Free Software and proprietary software compete on a fair playing field, and there are some areas where I insist on software being free, like the infrastructure that everybody uses. So, having a proprietary product is not anathema to me.

    Thanks

    Bruce

  • Shakeout (Score:3)

    by IGnatius T Foobar (4328) on Tuesday March 13 2001, @05:13PM (#365439) Homepage Journal
    This is something to take at face value. Most of us knew that there was going to be a shakeout. Those remaining will be the ones offering real value -- possibly through consolidation. In fact, the Linux companies that can offer end-to-end solutions will do well.

    I can easily see Eazel and Ximian merging -- their business plans overlap in so many areas that it just makes sense. There's even some overlap with Red Hat (cf. their new services network).

    This isn't the end for Linux. It's the end of the hype. We'll live through it.
    --

  • Open Source Model and profits (Score:3)

    by ACK!! (10229) on Tuesday March 13 2001, @06:51PM (#365440) Journal
    1. Make a product a lot of people want and put it out for free on the web.
    2. Package the same product in an easily installable format with loads of docs and a support plan.
    3. Give great support.
    4. Put together a serious training program and peddle it hard.
    5. Make your corporate support a subscribition or contract program to ensure future cash flow and to show future investors that you have a future.
    6. Keep overhead low. Cheap digs simple easy-to-navigate site and few employees full-time.
    a) A couple of programmers.
    b) A small but solid support staff.
    c) A couple of trainers.
    d) A syadmin/network admin guy with a junior.
    e) Office Manager and a receptionist.
    f) A small sales staff.
    g) A leader with lots of charisma and the willingness to close the sale.
    7. Design your program for the corporate backoffice aspects staying away from the dead e-commerce buzzwords for now.
    8. Sell to your firms and then re-sale when necessary but don't base your profits from milking off of existing customers, keep selling. A year wihout new clients is a dead, wasted year.

    I worked for a great small firm that designed closed software for lawyers (some of the pickiest customers ever).

    They had one leader, no sysadmin/network guy (the lead programmers filled dual task), Office Manager, Receptionist, Support Manager/Corporate Trainer, two support people/part-time Q&A, 3 programmers, and one Q&A guy full-time. They made money. They have remained solvent.

    The big rule. Don't get a big head. Don't expand too quick but keep a keen eye on improvement and natural expansion. Know your customers, what they want and what they need. Give it to them.

    It is tough. Look at your self as a small business owner before you start seeing yourself as the next big thing. I have never seen my niche. That point where I felt I had an idea to sell where I felt comfortable enough to start my own company. I have seen a small software company survive without insane IPOs and huge falls.

    It can be done.

  • Now if I can only figure out how to set my damn homepage in Konqueror...

    Since Konqueror is a multi-use viewer, it has multiple homepages (called Profiles). When launched as a http navigator, it's in the profile "Web Browsing". You can change the homepage by clicking on Window, and then "Save View Profile 'Web Browsing'".

    When launched as a file browser, it's in "File Management" Profile, and you can change that hame page as well, the same way. I've added the linked term window to my standard File Management profile, so I always have a full command line available in whatever directory I am graphically browsing ("rm *.o" is far easier than clicking and hitting delete on each).

    Since you can add as many Profiles as you want, you can open up your Bookmarks in a left hand side frame, link it to your right window, and broswe that way as well. I have that saved as "Opera Style". One nifty thing is that this also saves the size of the window, so I have a link on my toolbar for a small browser (for looking up things on php.net for instance) and another as a full screen browser (well, one of the two screens I run on).

    --
    Evan

  • Not worried at all. (Score:3)

    by Zapdos (70654) on Tuesday March 13 2001, @05:58PM (#365442)
    Partnered with Sun, Redhat, and Dell.. I am surprised they kept a sales force this long. With these they are going to get their product to 80% of the market. They are now going to be waiting for the product to start shipping. After and only after it starts shipping will there be endusers to buy services.

  • Learn to read the memory output ... (Score:3)

    by tjwhaynes (114792) on Wednesday March 14 2001, @04:27AM (#365443)

    Too bad they can't trim 50% off of Nautilus' memory footprint. For being a file manager, it's pretty pathetic to be grabbing 138 megs of system memory just to sit there.

    I guess you're one of those people who thinks that X uses 200MB+? Reading the output of top or ps isn't going to tell you how much memory the process is using - it merely tells you how much is mapped. The problem is that two or more threads may have mapped the same memory area several times, making it look like an 800lb gorilla rather than a marmot. For example, Mozilla has around 20-30 threads active all the time. Chances are pretty good that all you are seeing is the same memory used by multiple threads in Nautilus as well.

    Cheers,

    Toby Haynes

  • Yes Microsoft was a huge corporate juggernaut in it's first 5 years too. It was started with billions of dollars and all Bill had to do was sit there. If either O'Reilly or RedHat reach 25 years (and I can see O'Reilly doing it) then they won't exactly be short of money either.

  • Re:Some strategy (for us...) (Score:3)

    by influensa (267570) on Tuesday March 13 2001, @06:08PM (#365445) Homepage
    I never thought I'd consider this, but I think I'm going to boycott Eazel.

    I'm not going to get militant about it, aside from this post on /. I'm probably not going to do much more than just not use Nautilus specifically to avoid using the Eazel services.

    It's downright unfair and dishonourable to develop a product and a brand identification, and then once the product is out, lay off more than 1/2 the staff that had been necessary for developing it. Don't forget it's not just the coding that goes into something like Eazel (and developers were dismissed) but also the product strategy and marketing that must've gone into developing the idea behind something like the Eazal Services that they plan to offer.

    This way of thinking is exploitative of workers (coders are workers too) and perhaps I was naive thinking that an open source company would be above this. I guess this happens all the time, at open source companies too, and this is just the eye-openner for me.

    But to make a 1.0 release of a much anticipated product (would it have been anticipated w/o the efforts of the marketing types released?) and that very day and then turn around and fire half your staff is not the behaviour of a company that I think deserves my patronage, free product or not.

    This is why employee loyalty no longer exists, because of stories like this.

  • New Linux slogan (Score:3)

    by l-crowe (322408) on Tuesday March 13 2001, @05:21PM (#365446)

    "Where do you want to cash your unemployment check today?"

  • consulting, not startups (Score:3)

    by janpod66 (323734) on Tuesday March 13 2001, @05:53PM (#365447)
    I think the right business model for free software is consulting and contracting, not startups.

    Consultants and contractors are directly paid to do a good job. They have a reputation to protect in their line of work. They are professionals that are in it for the long run because it's their own career. Because they are in it for the long run, they have an interest in doing the right thing, cleaning things up, and maintaining things.

    Startups are a kind of hit-and-run business: investors want to get high returns on investment by any means, and if that can be done over a six months by hyping and without delivering quality, that's just fine with them. Much of the technologies that startups are based on (and busily patenting) wasn't even financed by the investors but by research grants (unfair as it seems, it may still be a good deal for society, since a lot of that comes back in taxes if the company succeeds).

    So, no, I don't see much of a future in open source software startup companies. After those companies have extracted the excess value that free software has, they have nowhere to go, and I don't think in a startup climate they create the right kinds of long-term foundations for themselves to prosper. But I see a bright future in open source software consulting, contracting, and teaching.

    Don't cry for the people at Eazel or Ximian or whatever, though. They are bright, they knew what they were getting into. If their companies fail, they didn't lose, they just didn't win big. They'll get by just fine as consultants or back in the fold at a big company.

  • 50% of what? (Score:4)

    by Angst Badger (8636) on Tuesday March 13 2001, @06:57PM (#365448)
    "Newsforge has an article detailing Eazel's layoff of over 50% of its workforce.

    Too bad they can't trim 50% off of Nautilus' memory footprint. For being a file manager, it's pretty pathetic to be grabbing 138 megs of system memory just to sit there.

    --

  • economic reality and GNU (Score:4)

    by Elivs (43960) on Tuesday March 13 2001, @05:24PM (#365449)
    With the stupid levels of development capital that was around the last few years many compaines (eg MS) got alot of money in the bank. Others grew, then lost it all.

    Now that money has gone GNU also did well out of the boom.

    We got lots of code under the GPL !!!

    This is as good or better than a wad of cash in the bank. The shrinking and loss of these opensource firms is not so bad as it is for other groups. Normally when a frim shrinks or goes under the code stagnaties or dies. The GNU licence on the code is an asset for the community to weather the downturn and for other developers to use when times are lean. Elivs PS- I'd still like the open source firms to prosper, but with the GPL its no where near as important for the future of opensource.

  • Irrational Pessimism (Score:4)

    by Alien54 (180860) on Tuesday March 13 2001, @06:21PM (#365450) Journal
    A few years ago the chairman of the federal reserve muttered comments about "irrational exuburence".

    An awful lot of the economy is in fact based on the attitudes of the public at large. Are they confident in the future, or are they victimised by FUD?

    An awfull lot of what has happened over the past 6 months in terms of layoffs is part of the internet bubble shakeout. BUT a lot of it is not.

    Alot of it is based on Fear, Uncertainty, and Doubt. Certain national politicians have muttered phrases generating Fear, Uncertainty, and Doubt. They have down this to cover themselves in case they mess up, and to sell their own agendas.

    But what this has led to is a self fulfilling prophecy. Because part of what leads to a downturn is fear, uncertainty, and doubt, especially when there are not other factors changing the market, such as a new technology, etc.

    You can call it an irrational pessimism, which is what I have seen in some posts here. I swear, you would think that people would have learned to recognize FUD when they see it.

  • A lot of us went into business with very high expectations, and yes, that was because of how high Netscape went on its IPO, etc. Those expectations are very different now.

    Fortunately, unlike most software businesses: if Eazel doesn't make it, their software will go on.

    There is a lot of money to be made in Linux and Free Software. But that does not change the fact that being a start-up now really sucks. Because of that, a lot of the money is going to be made by old-line companies with a lot of cash and the patience to weather bad economic times, like IBM and (if I can do anything about it) HP. And the little companies that do succeed are going to be the ones that keep their expenses way down until they are profitable, rather than ride the more extravagant venture capital road. That means keep your day job while developing your next product.

    Thanks

    Bruce

  • I don't know about VA, but Red Hat is actually doing OK. They're on track to make a profit this year. By paying people to develop software, they have the knowledge in house to provide superior support. Their people don't need to grovel over the code because they wrote it. Now, most of the people who post here probably don't need tech support, we do it ourselves. But for the average user, or business, Red Hat is probably the solution for support. That's in the USA. I imagine that it's Mandrake or SuSe in Europe, TurboLinux in Asia.

    20 or so years ago Jerry Pournelle, writing in Byte, said that in the future (i.e. now) the money wouldn't be in selling software, it would be in selling support (like Red Hat) and documentation (like O'Reilly). He was right.

  • Support is not a 900 number to call for technical support. Support is not for end users. End users buy a pretty little box with Wizards when they want "support". Support refers to business support.

    What does this entail?

    I'm developing a UNIX application aimed for Enterprise clients. I know that one of the platforms that I want to support includes Redhat Linux. I could count on my programmers spare time knowledge of Linux, but then it costs me a fortune in lost time if there is a problem. As a result, I pay them $20,000 for their special documentation which includes known bugs, etc., and a live number to talk to one of their kernel hackers to find out the problem.

    Next scenario, I decide to migrate my expensive, but aging, HP-UX system to a modern, inexpensive system. I see that VA Linux will sell me a server for about the same price as Dell. VA Linux, however, will send out a technician (who as access to their knowledge base) and migrate my system for $6,000 including server. Otherwise, I risk losing my system for a few days while they iron out bugs.

    Final scenario, I have 15 servers up and running, with a sysadmin that manages them including server side support for my IT guys. My IT team is writing software to improve our core business. However, they need DB support, etc. My sysadmin, however, spends 4 hours/day reading Slashdot/following bug news, applying patches, etc. That means that half his day is spent not aiding my core business.

    As a solution? I could get another Sysadmin ($80k/year), or I pay Redhat $1000/server/year and they provide me with their enterprise system. Each of my servers are setup in their system, and all updates/bug fixes are automatically applied. I pay them $15,000, and I save the $40,000 of half a sysadmin.

    That's support.

    As a hobbyist, I don't mind spending 15 hours playing with my system until it's right. As a consultant, if I spend 15 hours on a problem, my company lost the ability to make $1500, and if a $500 or $1000 solution solves it? Well, we'll open the checkbook.

    Alex
  • I have always puzzled over the business plans of companies like VA Linux, RedHat, Eazel, Ximian and the like that plan to make money of selling comodity software. Specifically I'd like to know how they justified their plans for IPOing or spending millions in VC money from peddling GPL software.

    I'm not an MBA but it is painfully obvious to me that GPLed software is unfavorable towards reaping rich financial rewards. Take software for instance. Lets say RedHat spends $1 million on paying kernel hackers and writing GPLed software and plans to make up for this in support. The fact of the matter is since RedHat's software is free of licensing costs and is GPLed, anyone can create a value added service from their software and spend less than they do but provide better support and/or extensions to their software by working off what RedHat has already done without having to invest the same amount of money.

    The same is true of hardware. VA Linux thought it could become big time selling Linux servers but failed to realize that anyone can put together a Linux box and sell it. Once Dell, IBM, Compaq, etc decided to invest their considerable experience, market knowledge and distribution chains into the Linux server market it simply became who could afford to spend the most to make the most (just like Walmart vs. your local grocery store).

    What I'd like to know is exactly how people were convinced that these companies could make money? If you work or have worked for one of these companies, please can you explain to me how they planned to make a profit?

    PS: I am pro-Open Source and have worked on Free Software and plan to give away a considerable amount of software (20,000 code application in a few months) but I can't see the sense in believing that Open Source translates into corporate profits unless you plan to use Open Source products as a hook to selling your actual product (e.g. IBM).

  • Just in case people take this wrong, it really was a hard situation. It wasn't really like "good job, you've finished 1.0 and now you are expendable". Things are really cranky in the market. In my case it was probably because I'm part-time and it was more important to hang onto full-time engineers. It hurts of course, but situations can be really hard.

    Also, in a way Eazel showed that Nautilus development is its core. Most of the cuts happened in areas other than Nautilus development. A few of the people at the VP have turned their salaries off, etc. Things are really tight, but for the sake of GNOME and Linux on the desktop I honestly still hope Eazel will pull through (and of course, I will continue to work on Nautilus).

    Here's to better days :-/

    -Seth

  • what it really means (Score:5)

    by unformed (225214) on Tuesday March 13 2001, @05:06PM (#365456)
    "... burn rate and business plan in line with the more sober economic environment," but we all know what that means. Don't we?"

    yep, gotta start drug testing.....and that's why they had to lay off half the workforce

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