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Applix spins off ApplixWare Linux division

Subsidiary changes name, goes open source (sort of) in bid to turn business around

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Loss-making Applix is to spin off its ApplixWare operation into a separate company to be called VistaSource. And it's opening - to a degree - the source code for its Linux-based office productivity software into the bargain. Applix's scheme here is to allow it to focus on its core e-business planning, customer management and help-desk applications. ApplixWare was always something of a minor adjunct to this much larger-scale operation, and spinning it off, along with a new name, should help it tackle the office suite market more effectively than it can as the bland Applix Linux Division. And since ApplixWare runs on other platforms than Linux, a new name is doubly necessary. According to VistaSource president Bernie Thompson, cited by CNet, Applix will pump $6 million into the spin-off, which will then have to go off and seek further finance itself. Thompson said it would IPO late 2000/early 2001. VistaSource's business model will focus more on Applix's AnyWhere technology than ApplixWare per se. AnyWhere allows ApplixWare modules to be served centrally, and that, it hopes, will allow it to tackle the emerging and, it hopes, highly lucrative Application Service Provider (ASP) market. It needs to. For the quarter ended 31 March, its first of fiscal 2000, Applix's Linux Division saw revenues fall from the $4.7 million it recorded in the same period last year to $3.1 million this time round. New business revenues for the division were $526,000 for quarter, an increase of 38 per cent over Q1 1999, showing that while it's winning customers few of the old ones are buying upgrades. On the other hand, Applix's e-business operation saw revenues grow 12.5 per cent from $8.2 million to $9.3 million. Overall, the company lost $797,000, compared to net income of $395,000 during the year-ago quarter. In these circumstances, you can see why it wants to get rid of ApplixWare and focus on the sector that's bringing the most money into the company. But can VistaSource turn itself around? By focusing on the Linux market, it's entering an arena where users expect - and usually get - software that's free. And this could be a problem. VistaSource hasn't quite gone down the open source route - it's still charging for ApplixWare, but at least buyers can now examine the source code, and it's released its SHELF rapid application development system under a limited version of the GPL. But that still leaves it competing with Sun's free StarOffice and the upcoming KDE Office. Hence the focus on ASPs. ®

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