The company has a vested interest in the improvement of Linux, the open-source operating system that comes with VA computers, and has hired several key programmers from the Linux community to ensure continued development. But VA can't be too controlling, or else the open source community that's the heart of Linux development will turn against VA, chief executive Larry Augustin says.
VA will demonstrate some of the fruits of its work this week at the LinuxWorld Conference and Expo in San Jose, California. The company will show new servers that can be stacked in dense configurations, new management software to make it easier to administer dozens or hundreds of Linux computers, and perhaps most significantly, a version of Linux running on Intel's simulator of its next-generation 64-bit chip, Merced.
The programming situation mirrors that of Red Hat, which has just as strong an interest in the future of Linux and has hired its own bunch of core Linux programmers. Red Hat chief executive Bob Young assures people that the company's motives are just to enable the programmers to work on Linux all the time instead of some other project.
Staking a business on competitors' employees might be unusual, but it's not deterring VA from growing and going public. The company raised $5.4 million from Intel and Sequoia Capital in October 1998 and another $25 million from SGI, Intel, Sequoia Capital, and others in June 1999. Next, VA plans to go public--sooner rather than later, Augustin said.
Toward that end, the company is trying to remake its image as more than just a computer manufacturer, even though now most revenue comes from computer sales. "A lot of people look at us and say, 'Oh, you're just a box company.' That's really an impression we're working to correct," Augustin said. "We do a lot of software development, a lot of service, a lot of support, all around Linux. Our business is to deliver Linux technical and market expertise."
For that expertise--and therefore VA's IPO--the company needs its open source programmers. Augustin talked about his company's balancing act in an interview with News.com this week.
CNET News.com: A lot of the key Linux developers are fairly hot
commodities these days, being hired by you or Red Hat or Caldera Systems or
others. How do you see that affecting the community?
Augustin: People in the community are happy to have these people working full time on Linux. What's important is that they not get co-opted into making decisions that are not technically based. As soon as you get into the area of making technical decisions, that's when you begin to have problems with the model.
Q: How do you keep the community spirit alive as Linux becomes a
A: You have to look at what's good for the business. Our business model depends heavily on the support of this Linux community. What's good for Linux is good for the business. As long as you stay focused on doing what's right by Linux, I think you can maintain that. I also think that open source in the business model is self-correcting. If you do things that don't do right by Linux and millions of Internet developers out there, they won't support you as a company, and then you won't be successful.
In order to be able to offer the full service and support for people, we have to be a center for Linux development. And we have to be in a place where if the customer has a problem, whether it's hardware or it's software, we have to be able to handle that. We have a variety of key people who are experts in areas, and those people can respond to customer needs and work with people on the Internet to make sure those fixes make it into Linux in general.
Some of the people we employ in that area are well-known names in the Linux open source world. Leonard Zubkoff, my chief technical officer, does a lot of core kernel work. We do NFS work, which is H.J. Lu. We've got a couple of the core Debian developers [Joey Hess and Sean Perry] and the guys who do the Enlightenment window managers, [Geoff "Mandrake" Harrison and Carsten "Raster" Haitzler]
Q: What happens when you're doing work with Intel under a non-disclosure agreement? Do those
people still feel like they're a part of the Linux community?
A: The important thing is that the work that they do is eventually publicly released. We've guaranteed that with IA-64 and Merced. You'll find that many Linux developers have worked under time-limited or other types of short-restriction NDAs. All of the information that we're working with, when the chip is available and is public, will be out there and public. By working under NDA, we're getting a head start. That's the tradeoff we make to be out there on day 1.
Q: That's a situation where you have Linux developers who are a benefit
to you but not to the rest of the Linux community. It gets to the entire
community eventually, but you get the first benefit.
A: That's one of the ways we maintain our differentiation. We can be first to market.
Q: I heard Intel wasn't happy with the pace of IA-64 development at VA,
and they were looking to increase the quality and quantity of that
A: I think that statement was true four months ago. We crossed some boundaries. It got off to a slower start than we intended, but I think it's ahead of where we expected it to be now. I think they're pretty happy with what's going on. At LinuxWorld we'll be showing Linux on the IA-64 [simulator]
Q: When are you going public? When's an S-1 getting filed with the Securities and Exchange Commission?
A: Yeah, like there's any way to answer that question, even if I knew! We haven't picked a date or anything like that. We have a pretty definite strategy, although the timing isn't announced.
Q: Is it likely to be 1999 versus 2000?
A: It's likely to be near term rather than long term. We're watching very carefully what Red Hat does. I should thank them for going out first. We're very friendly with them. We've learned lots of things. I think they've had some glitches they've hit around E*Trade. We want to look at that say, is there a way we can do that better?
Q: So you'll be the second Linux IPO?
A: I think so.
Q: Where do VA's revenues come from?
A: Most of our revenues come from our systems business. That's where we came from, and also it's the easiest thing to grow quickly. So most of our revenues come from our systems, with support and professional services just beginning to generate revenues now.
Q: How does the Linux.com portal fit into the business plan?
A: Our goal is this: If you do the right thing by Linux, the company does well. So we don't sell advertising on Linux.com. We don't make it into an explicitly VA site. We think that just by building up a great Linux site and having our logo as the guys behind it, helps associate us with Linux. It's an indirect effect. I don't think people would accept anything more direct.
Q: How do you see it comparing to Red Hat's Linux portal play?
A: We have clearly have a lot of visitors, about 11 million page views a month right now. Linux.com is clearly the leading Linux site. We're not going to sell advertising on it, I think Red Hat is. We're not going to make it an explicitly VA site and I think Red Hat's is very much a Red Hat site. We tend to push things out to the Linux community to provide the content.
Q: Is that likely to change? The portal at Red Hat is an explicit part
of their business strategy.
A: We will continue to increase the amount of resources we put behind Linux.com. I don't think it's ever a good business for us to make it explicit revenue-generating site. We built up the site with a model of community participation, so we don't want to take advantage of that people. We have six full-time people running the site at VA, but we've got 100 volunteers.
Q: How do you see the pace of Linux development?
A: I think the pace is speeding up, but we're working on harder things. The rate at which new features appear stays the same, but each new feature gets more and more complicated. We're starting to get into these more complex things that Linux hasn't done in the past: high availability, the journaling file system.
Q: How about Linux in consumer markets?
A: I think Linux is going to be a significant player in the consumer appliance markets.
Q: Are you planning on doing anything in the consumer space?
A: There's a lot of interesting things happening there. We're going to look at it, but we have no specific plans right now.