Mandriva was once one of the most popular GNU/Linux distribution. It has been around since 1998, but the company and the project went through hard times in the last two years. The company got forked then reached the brink of being sold. However, this resilient company faced hardship bravely and is now making a comeback with a concrete business plan. Could this be the 'Red Hat' move by Mandriva, turning the company into a 'billion' dollar revenue earning company?

Let's see what their plans are.

Mandriva is no more a consumer desktop OS, targeting individual customers. It does cater to such user-base and offers desktop OS but only through OEMs to specific segments, such as education, or in specific regions such as South America. Beyond that, Mandriva is now a pure enterprise solution to empower a market which makes up a majority of our economy and yet its needs are under-addressed.

Mandriva is now targeting small and medium enterprises (SMEs) and SOHO customers.

What are SMEs?

SMEs are mainly family run small businesses which are essential to our economy. One of the typical characteristics of an SME is that it's run by its owner who also happens to be the CEO, CTO and the IT admin. This person is the sole decision maker yet in majority of cases is clueless about technology. To this person, IT means Windows or iPads. So an IT company trying to sell solutions to an SME is basically dealing with a person who may not even understand what a CMS is. All they understandand care about is how much is it going to cost and can it meet their requirements.

The question arises: why would someone like Mandriva care about such a customer? The answer is – it's a huge but under-addressed market.

How big is the SME segment?

According to a Europa report for 2012:

Small and Medium-sized Enterprises (SMEs) form the backbone of the EU economy – accounting for 99.8 per cent of non-financial enterprises in 2012, which equates to 20.7 million businesses. The overwhelming majority (92.2 per cent) are micro-enterprises, defined as those with fewer than ten employees. Some 6.5 per cent of SMEs in the EU are classified as small enterprises (employing between 10 and 49 people) and 1.1 per cent are medium-sized (50-249 employees). Large businesses, with more than 250 employees, account for just 0.2 of enterprises in the EU’s non- financial sector.

In employment terms, SMEs provided an estimated 67.4 per cent of jobs in the non-financial business economy in 2012, almost identical to 2011 (67,4 per cent) but up from 66.9 per cent in 2010, although SMEs provided a slightly smaller share of GVA in the EU in 2011 and 2012 (58.1 per cent).

That's huge, and this market is a gold-mine yet to be tapped.

According to SpiceWorks a recent survey says that “ SMBs are continuing to expand IT budgets, which now average $152,000 per year."

It's a gold-mine.

That's the market Mandriva is targeting. One big challenge of SMEs is that they all have their own niche needs which can't be addressed by very large software vendors such as IBM or Microsoft. Most of the time these SMEs end up using Microsoft technologies because of their omnipresence (monopoly) and so-called ease of use though the familiar interface. But it also means heavy costs, expensive security and maintenance, and unbreakable vendor-lock which makes the total cost of ownership extremely high over time.

Instead of going after the 'traditional' server market that Linux players like Red Hat or SUSE dominate, Mandriva is going for this Microsoft market with more to offer.

As I stated above these customers are usually not very tech-savvy and they find it easy to deal with Windows's GUI based servers. That's where Mandriva is trying to make it easier for these users by totally getting away from the command line (which makes it harder for businesses to use Debian or Red Hat severs).

Catering to what customers need

Charles-H. Schulz tells me, “We have created a set of solutions for a market which doesn’t have the resources, knowledge, nor trained people to handle these kinds of traditional enterprise Linux products.”

He explains this market as the “the long tail of enterprise which very large software vendors have problem targeting because this market is not about scaling up, it's about scaling down to these companies who are going to have very specific needs and the volume of business is simply is not just big enough to accommodate the mobilization of sales representatives or specific marketing teams to delivering special price ratio etc."

This under-addressed market is facing more challenges in these tough economic conditions when they look for easy and effective solutions at an affordable cost. This is not only a challenge for SMEs but also the solution providers.

Mandriva, due to its open source base and long experience, is in a unique position. They have identified the needs of this market and deliver perfect solution.

Schulz tells me that "Mandriva's Business Server (MBS) has a different approach. It has an entire graphic environment that does not rely on Xorg and basically allows non trained people to configure all they need."

"But", Schulz adds, "MBS doesn't stop at server installation, it offers several services that can work (almost) out of the box, such as file sharing, SAMBA, mail server, roundcube, jabber server, Asterisk, VPN management, directory server, Apache, etc."

Building a chain

Having solution itself is not enough. You need to reach out to such a vast and fragmented market. To do so Mandriva is relying on re-sellers and 3rd party vendors but they are also building a chain or OEMs and distributors.

The communication that a customer gets from Mandriva is “... we tell them that we provide them with integrated and complete solution. We offer them what they need to power the most essential service of their IT infrastructure, such as document storage, file sharing, print, network management directories, websites and, of course, the entire security stack."

Mandriva has ensured that all these services can be configured and deployed through clear and user friendly interfaces so even the owner of a small company can do things with greater ease without any knowledge in that field.

However, the company doesn't offer everything. Schulz clarifies that, “At the same time we don't go very far and we don't pretend to do account solutions but you can get out of the box VoIP solution, instant messaging server based on Jabber. So we cater to the essential yet basic services that they need."

Why Mandriva over Windows?

It's a no brainier. MBS have two clear advantages over Microsoft's Windows – one is it's open source so you get all the benefits of open source, most notable being no vendor-lock.

Talking about the second advantage, Schulz says, “What you get when you have windows servers – you get ease of use due to the familiar interface and you can do things even if you are not trained, but unless you buy the full edition of Windows servers you will find yourself to be very limited and for the money that you are paying for this windows solution it actually gets worse."

He continued, “In 2012 MS made a decision to shuffle their windows server edition in a way that we believe is completely unappealing for SMEs so what we offer them is no limits on features – you can use everything you want. What we offer is the very easy interface which you can use to deploy your enterprise solution with greater ease."

Mandriva not only brings down the total cost of owner but also offers much more for the same (actually less) price.

SOHO is one area where Microsoft can't compete with MBS. SOHO customer can get the Mandriva Business Server for free of cost and can be used for up to 5 users. These users can then scale up as and when they grow.

Schulz says, “Our strategy has shifted towards the professional enterprise market. We have been working in it for several months that who we are and where we want to go it's not just about taking a brand and pretending that somehow we are going to be able to monetize on it – it's about thinking what we do the best. And what our core values are – our core values are ease of use, simplicity, things that just work. What we did in last century for the desktop we are trying to do the same in the server space in this century.”

Mandriva has made a promising come-back with a very clear focus. Can it repeat the success of Red Hat?

Time will tell.