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VA Linux quits hardware ahead of PC bloodbath

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When we heard rumours late last week that VA Linux would be pulling back from the hardware business, we scoffed. Instead we mused what kind of new and freaky hardware VA would move into next, and who would take the expensive and peripheral OSDN websites off its hands, and for how much? But with a PC price war looming, the boys that billed themselves as the premier Linux PC hardware company read the runes, took a long lunch and bolted.

As of today, VA's mission statement declares that it's "a provider of application software", with er, SourceForge the application in question. (It's an open source PVCS on steroids, for you old Unix hands).

Customers have four short weeks to place their final orders for VA hardware. VA retains OSDN intact, we're delighted to say, but this most dramatic of business flips sees redundancies fall brutally on over 150 staff - 35 per cent of the current workforce.

VA has been a hardware company since its inception eight years ago, and CEO Larry Augustin, most folk forget, is a microprocessor grad, so you can say that hardware runs through the company from the top down.But now those 'peripheral' businesses become central to VA's hopes of survival. However, with SourceForge still in its infancy - and to be honest, unproven as a long-term, cast-iron money maker - and the ad market hitting the OSDN sites hard - VA acknowledges that its income will plummet as it casts around for a hit.

It's playing the consultancy card too, and VA adds that it will retain a "speculative" interest in building embedded appliance servers... which sounds like a firm commitment to remaining Armchair Revolutionaries to us. Not something that will rally the troops round the flag - or even out of the pub, and that's a great shame.

Oh, we've bored you all silly before by praising the genuinely subversive potential of plug-in file and print or NAS appliances based on free software. Despite employing both SAMBA project leads, VA has neglected to exploit its expertise. The margins on this kind of business - just ask NAI or Sun's Cobalt team - are wafer thin. But equally it lends itself to a high-volume OEM model - and no one's really tried that either.

VA says it expects its revenues to decline steeply - with its burn rate cut to $8 million a quarter. On that reckoning, its $70 million cash pile expires by early next year, and it remains to be seen if VA will by then be attractive enough to be acquired by one of the more Linux-clueless commodity box shifters such as Dell, or as an in-house development team for one of the big five consultancies.

Officially VA was trumpeting the move as a win for the wildly diverse network of classy geek sites that fall under the OSDN umbrella, the most famous of which is Slashdot. They're free to take hardware adverts - which you'll notice have been conspicuously absent so far - from all comers now. If we were investors, we'd wager on which names start appearing above the Slashdot masthead as leading VA predators. Never miss the obvious. (As we just did). ®

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