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French Linux company following Red Hat model

MandrakeSoft will begin selling a new version of its Linux software Monday, but the company is shifting away from product sales to a business model more like that of Red Hat.

MandrakeSoft will begin selling a new version of its Linux software Monday, but the company is shifting away from product sales to a business model more like that of Red Hat, the dominant Linux company.

The new version 7.2 of Linux Mandrake comes with features that are designed to appeal to the small and medium business market, chief executive Henri Poole said in an interview Friday. Poole, named CEO in August, is trying to expand Mandrake's customer base outside its French stronghold.

Among the new features are Drak Gateway, software that allows networks of computers to share a Mandrake computer's Internet connection. The new version also has the Cups printing system and lets people on the road synchronize files, he said.

Version 7.2 costs $29.95 for the basic version and $69.96 for the deluxe edition, which comes with additional software such as IBM's ViaVoice speech-recognition software. But in the longer term, just selling software isn't going to be enough for Mandrake, Poole said.

"It's very difficult to charge a lot of money for a product that's available for free," Poole said. "We expect most of our revenue in the long term to come from services."

Selling services is a standard business plan for companies trying to capitalize on the popularity of Linux and other open-source software, but it's not an easy one. Linuxcare has faltered, and even Red Hat, the first Linux company to go public and still the best established, has small revenue compared with many technology companies.

"It is very tough. There are issues of margins and scalability when you're in a services organization," Poole said. "Before I joined MandrakeSoft, I was in the professional services business. It took a long time to grow a company with 100 consultants in it."

Bolstering the services push will be an expanded product offering that includes more server features such as Web site hosting, protective firewalls and email. "That product requires training and professional services," he said, services that Mandrake offers in France and plans to bring to other parts of the world in 2001.

CNET's Linux Center Mandrake is opening a new office in Berkeley, Calif., and plans to employ a staff of 25 to 30 eventually.

Also helping Mandrake's services push is an agreement with IBM, which has embraced Linux more aggressively than any other established hardware company. IBM's global services division in France can call on Mandrake's personnel when Big Blue runs into a problem it can't handle on its own, Poole said.