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What’s what with Xandros buying Linspire


t’s safe to say that no one saw Xandros, the oldest of the desktop Linux companies thanks to its Corel Linux ancestry, buying Linspire, the desktop Linux perhaps best known for being the first Linux to openly embrace proprietary software. So how did this deal happen? Why did it happen? Here’s what Xandros CEO Andreas Typaldos had to say about the surprising deal.

First, Typaldos explained during a call and in a e-mail memo that Xandros was indeed acquiring Linspire lock, stock and barrel. Xandros will own “the CNR software distribution facility, and the Linspire and Freespire Linux desktop operating systems.”

Why make this deal when Xandros, thanks to its Asus partnership, appeared to be gaining users at a quick rate. According to Xandros, his company made the “acquisition will provide an exploding number of mobile Linux customers with one-click software delivery to update and enhance their platform.”

Linspire’s CNR (Click ‘N Run) software installation system, in its most recent incarnation, is designed to make it easy for Linspire, Freespire, Ubuntu and Mint desktop users to find and install software.

So, to Typaldos it was a great match up of where Xandros was and where Linspire had been trying to go. “Products like the ASUS Eee PC have demonstrated the huge potential market for Linux-based OEM netbook solutions and other emerging mobile Linux platforms. The Linspire CNR technologies provide the fourth “E” as in ‘easy to maintain.’ including on-demand delivery of a growing number of Linux utilities and games.”

This success, “along with the development of the related netbook market segment have created both the opportunity, as well as need, to facilitate third party development of richer and more digital applications and for one-click delivery of their content,” added Typaldos.

Typaldos went on to say that “The acquisition combines the expertise and technologies of the two pioneers of easy-to-use Windows-compatible Debian-based Linux products.” In its most recent versions, Linspire has been using Ubuntu for both Linspire and Freespire. “It also combines the expertise and technologies of the only two Linux companies to offer similar but unique facilities — Xandros Networks and Linspire’s CNR — that let you download and install both free and commercial applications with a single mouse click. This combination of XN-based delivery solutions with Linspire’s CNR technologies will speed Xandros’ expansion into the applications and content space, which is critical for facilitating Linux adoption,” said Typaldos.

Thus, this combination will help “fulfill Xandros’ mission of becoming a powerful one-stop Linux solutions company. It helps fulfill Xandros’ vision of offering a full product line for the consumer, OEM, and enterprise markets, ranging from desktops to servers; from management tools to mission critical email and collaboration solutions,” said Typaldos.

For now, Linspire will retain a degree of independence. Typaldos said, “Linspire’s current product and technology development will continue, and will in fact accelerate, based on the same and even expanded vision and roadmap that was historically planned, and so that future versions may continue to appear as seamless upgrades.”

So, “Linspire will continue to operate independently, as a wholly owned subsidiary of Xandros,” declared Typaldos. “As such, it will have the parent company’s full corporate commitment, and access to its much larger financial and engineering resources and significant new technologies. Customers will benefit from strengthened global 24/7 support for their critical e-mail and collaboration solutions, provided through a larger combined reseller and partner network.”

According to Typaldos, this deal has long been in the air. Typaldos says, “A: Xandros and Linspire have had talks at the CEO level over the years about the possibility of a combination given their historically similar Debian-based roots and complementary product lines. Such talks accelerated in late 2007 and culminated in the current agreement.”

Never-the-less, this is an acquisition, not a merger. “The financial terms of the agreement are not being disclosed,” Typaldos says. Former Linspire CEO, Kevin Carmony, who left the San Diego-based Linux distributor in July 2007, has publicly sneered at the deal on his blog. “Before Linspire and Xandros try to spin this into something actually positive, I’d like to offer my Linspire shares to either Michael or Andy Typaldos (Xandros’ CEO) for $.10 a share. That’s 80% less than what it was worth just ten months ago. If this transaction happened at a good valuation, then I’m sure Michael and/or Andy will be all over my offer, right? I’ll post here when they accept my offer. Don’t hold your breath,” wrote Carmony.

While there’s disagreement on what this will mean for the other stockholders of the privately owned Linspire, Typaldos was quick to say that All of Linspire’s engineering, support, and key sales staff have been retained, apart from a small number of administrative and related resources, given redundancy with Xandros in a number of such areas.” Xandros will also continue to operate out of its San Diego office.

Linspire CEO Larry Kettler and other Linspire managers will be joining Xandros management team. Kettler will be moving into the slot of VP of Business Development for the combined desktop Linux company.

And, while Carmony sees both companies in serious trouble, Typaldos did say that “Xandros has been on a fast growth path for the last couple of years; has an aggressive headcount and revenue growth plan at this time; and is currently in heavy hiring mode. We believe that at this point Xandros is already the third largest Linux Company in the world, and that we may already be the largest private Linux Company in the world.” If true this would mean that Xandros is bigger than Canonical, the company behind Ubuntu. Red Hat and Novell are both publicly owned companies.

Looking ahead, Xandros plans to maintain separate Xandros and Linspire/Freespire lines of desktop products for at least the time being. Xandros is not ready, at this time, to explain how it will combine their different desktop technologies. The one exception to this is that CNR software management will be made available to Xandros users in July 2008.

Typaldos also wanted to make it clear that this deal is not related to last year’s agreement between Xandros and Microsoft. This deal has nothgin to do with “our Microsoft relationship,” said Typaldos.

So, from where Typaldos sits, this deal is a win both for Xandros and desktop Linux. “With the acquisition of Linspire, Xandros not only enhances its product, its advanced development organization, and leadership position, but also becomes better able to develop its own applications and content strength and delivery capability, as well as to support and accelerate third-party applications and content development. These additional capabilities will help extend Xandros’ competitive advantages in delivering advanced and easy-to-use and deploy and support OEM Linux solutions, to meet current burgeoning mass market demands, as well as to further accelerate the mass market adoption of Linux that began with the Asus Eee PC.”

As for Camony, he dismisses Typaldos points in detail in another blog posting. So, is this deal a boon for desktop Linux or just a boondoggle? At this point, it’s too early to tell.