Moreton Bay Ventures, a 15-person company in Brisbane, Australia, specializes in using Linux for virtual private networks (VPNs), encrypted communication channels across the Internet. The company also has experience with translation of Linux for Motorola's ColdFire chips, a key feature in Lineo's plans for powering handheld gadgets.
However, Moreton Bay Ventures' own product line, servers that can set up VPNs and handle several network security tasks, will eventually be phased out because Lineo is focusing more on software than hardware. "In the long run, we won't be doing hardware. We wish to be software suppliers to hardware manufacturers," chief executive Bryan Sparks said in an interview. "We don't want to be a competitor to our customers."
Linux is a Unix-based operating system with a stronghold in servers. Companies such as Lineo, Red Hat, Transmeta, TurboLinux and MontaVista Software are pushing it into a gadgets, special-purpose machines, set-top boxes and other devices. For example, Kerbango and Penguin Radio are building Linux-based Internet radios, Kerbango's based on MontaVista's Hard Hat Linux.
Linux in this "embedded" area competes with established operating systems as well as newcomers such as Windows NT. While Linux is flexible and its royalty costs are lower than with proprietary operating systems, it's also a relatively new arrival and requires major surgery to trim it for use in small devices.
The acquisition of Moreton Bay Ventures is the fourth in a series of deals by Lineo. Sparks said there are more planned.
Though Lineo's first customers are for set-top boxes and makers of routers and other network hardware, the company expects that to change in the next year. "Going forward, there seems to be a trend toward smaller and more capable wireless handheld devices," Sparks said. A year from now, "We're going to be making more money off those than other areas."
Lineo is working hard to squeeze Linux so it will work on devices with the smallest possible amount of memory, Sparks said. A current version runs in less than 200 kilobytes and can be embedded in read-only memory (ROM) chips, he said. "You have to manipulate the kernel quite a bit to make sure you can run it in very tight spaces," he said.
One of those tight spaces is mobile phones. Lineo and startup Coresoft will work to jointly provide customers with a version of Lineo's Linux software for phones by the end of June.
Lineo sells hardware manufacturers a customized version of Linux and accompanying software, including a Web browser and programming tools. Though Linux itself can be obtained for free, that principle doesn't necessarily apply to higher-level software. For example, Lineo will charge hardware makers more money if they want to use the VPN software, Sparks said.
The VPN software from Moreton Bay Ventures will be used in networking equipment for setting up Internet connections through DSL, frame relay and T-1 technology, Sparks said.
Also today, Lineo announced that Bill Barnett of the Stanford University School of Business, has joined Lineo's board of directors. Lineo is expected to go public later this year.