Wine license change

Brett Glass brett at
Wed Feb 13 12:28:51 CST 2002

At 11:16 AM 2/13/2002, Ian Schmidt wrote:

>Actually, Cygnus has made good money for over 10 years doing GCC ports and
>paid support, and they're one of the reasons Red Hat was able to report a
>profit recently.

Interesting that you should say that. Cygnus was privately held and so 
it's hard to figure out if it was proftable or not, but it was definitely 
not "greatly profitable." However, it's easy to do a back-of-the-envelope 
calculation based on its $20M in annual revenues and 180 employees 
(reported by Red Hat at the time of the acquisition). The cost of 
maintaining 180 employees in a technology company in the SF Bay Area is 
more than $18M annually. And this is not counting other costs of doing 
business. So, if the company was profitable at all, it was just squeaking 
through. (And $20M in annual revenues after ten years of existence is no 
one's idea of "good money" for a company that size.)

Bill Barr, a former Cygnus employee, recently posted the following to a 
mailing list:

>The support model is marginally profitable, but far from lucrative. When 
>I worked at Cygnus Solutions, the company had experienced some really 
>tough years in the past and was trying to transition to a product model. 
>It's much harder to sell support than it is to sell a box. Moreover, the 
>overwhelming majority of revenues came from semi-conductor manufacturers 
>and embedded systems shops, not the desktop/server software development 
>community. Overall, trying to sell support for free software tools to 
>software developers was pretty much a complete bust.

Mandrake, too, is losing money. According to its financial disclosure, as 
imperfectly translated by BabelFish:

Since its creation in November 1998 the company recorded losses. The 
cumulated amount of the overdrawn turnover of the group accounts between 
September 30, 1999 and 31 March 2001 amounted to 13,7 MEuros is 
approximately three times the amount of the turnover over the period. In 
spite of a strong progression envisaged of its turnover, MANDRAKESOFT 
considers a benefit only at the end of the exercise closed at June 30 2003....

Red Hat has had a couple of quarters in which it reported earnings of 
pennies per share, mainly due to accounting tricks. But it has lost 
millions over its lifetime.

--Brett Glass

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