Mandriva Founder Laid Off, Starts New OS Project

Published: March 21, 2006

by Timothy Prickett Morgan

Gael Duval, the founder of the Mandrakesoft Linux distribution that dates from late 1998 and one of the key executives at commercial Linux distributor Mandriva was one of the employees laid off in a series of cost-cutting measures that Mandriva undertook after losing money in the final quarter of 2005. Duval is apparently suing Mandriva (which is also apparently not uncommon in France) and has started a new operating system project.

According to the financial reports posted by Mandriva, which is a public company that is traded on the Euronext Marche Libre stock exchange in Paris, the company's sales were actually up 10.4 percent to 1.59 million euros in the quarter. But operating costs were up as Mandriva brings out new products and deals with the costs of integrating the former Mandrakesoft and the former Conectiva companies that merged a little more than a year ago. Mandrakesoft was the dominant Linux distro in France, and Conectiva was dominant in Latin America, and the two companies combined to bulk up, get a broader product line, and present a single company that was a credible alternative to Red Hat and Novell. Costs went up as Mandriva Linux 2006 marketing got under way, conditions in Brazil softened, the ramp-up of OEM products is taking longer than expected, and sales of retail boxed products are going down as customers shift to Internet delivery. All of these factors contributed to lower than expected revenue. The good news is that enterprise services sales were up like a rocket, representing 42 percent of total sales in the quarter, compared to 24 percent in the first quarter of 2005. Investments in new products, like the Pulse administration tool for enterprises that is set to be announced any day now, increased costs in this area, however. When you add it up, Mandriva lost 590,000 euros in the quarter, compared to a net profit of 1.03 million euros this time last year.

So, the company cut out redundancies in France and Brazil--but did not say how many people were cut. A year ago, at the time of the merger, the combined company had about 130 employees, with about 70 of them being software engineers. (It is unclear if anything other than assets were acquired when Mandriva bought desktop Linux distro Lycoris in June of last year.)

Francois Bancilhon, Mandriva's chief executive officer and the man who will soon be its chairman of the board, wanted to downplay Duval's departure from the firm. In fact, Bancilhon issued a lengthy statement last Thursday after press reports came out saying that Duval was fired--implying bad blood or poor performance--when what Bancilhon says happened is that Duval was merely laid off to cut costs and that the fact that he is suing Mandriva is the kind of thing French employees do all the time. "France has labor laws that give strong protection to employees and make lay-offs long, expensive and complicated (but not impossible)," explained Bancilhon in his statement. "Many employees (about one out of four) sue their employer after a lay-off, most of the time to get the employer to pay extra cash on top of the "regular" severance package (about five months for people with some seniority)."

Duval contacted me and said he has set up a new open source operating system project called Ulteo, which looks to be an easy-to-use, desktop operating system based on the logo. Duval has not said what Ulteo is yet, but he has been working on it for more than a year in his spare time and Mandriva knew about it, according to Bancilhon's statement. Duval says that he will contribute a portion of the profits from Ulteo toward combating child malnutrition and helping in ecological disasters, which is a commendable gesture. But in the Linux world, profits are not easy to come by. The first beta of Ulteo is expected in May, and Duval is looking for contributors to help make the LiveCDs.

In the meantime, Bancilhon is basically taking control of Mandriva. Jacques Le Marois has stepped down as chairman of the board, and at the end of the month the board will meet and vote on his replacement, which Le Marois says should be Bancilhon.