Additional benefits will be developed based on the suggestions of Club members.

How many employees work for MandrakeSoft and what are their job functions?

MandrakeSoft currently employs over 100 individuals:

13 employees work full-time on various Internet services such as MandrakeLinux.com, MandrakeUser.org, MandrakeForum.com, the weekly newsletter, and building & maintaining good relationships with the Linux community.

43 employees work in Research and Development. These are the people who work specifically on developing the Mandrake Linux distribution; they: select, test, improve and package the various free software components; develop the DrakX installation program and Mandrake-specific configuration tools; test the system on various hardware configurations; manage translations and create documentation. They also port the distribution to other architectures such as PPC and IA64.

The result of their work is then made available for free in easy to use formats (ISO images, printable documentation, etc.) with Open Source licenses -- this means than everyone is free to download, duplicate, improve and even resell the product.

Several other employees work on external projects such as the Linux Kernel, KDE, KOffice, and others. These paid employees do not provide a direct benefit to the Mandrake Linux distribution, but sponsoring them is part of our ongoing commitment to the Free Software community.

The remainder of the employees focus on business-related areas or with the administration of the company. This includes work on commercial packages, marketing, and providing services such as training, support and consulting.

How does MandrakeSoft receive revenue?

Most of the company's revenue (85%) results from the direct sale of boxed products such as the Mandrake Linux PowerPack. The PowerPack is a retail version of the distribution that includes documentation, support and third party software. The remaining revenue comes from services (support, training, consulting). A potential source of revenue are our "e-services" (MandrakeExpert, MandrakeOnline), but as yet they do not provide significant revenue for the company.

What is MandrakeSoft's business model?

This question boils down to: "Why does MandrakeSoft release, for free, a product that was costly to produce yet which allows others to copy, modify and resell it?" It does seem a rather curious way to run a business, but there are important reasons for doing so.

From an ethical point of view, much of MandrakeSoft's success is directly attributable to the Free Software community. The Mandrake Linux distribution is composed of thousands of Free Software applications, so it is normal for us to contribute back to the community of developers & users by providing the source code and even the entire distribution. The advantage of this is based on MandrakeSoft becoming an important part of the community -- when community members benefit, they enthusiastically promote the distribution thereby allowing Free Software to flourish even more.

From a business point of view, the Free Software approach has important advantages for the long term. With an attractive product, easy availability and positive word of mouth, it is possible to quickly acquire a large base of users. This approach has allowed Mandrake Linux to quickly become well-known and one of the most popular Linux distributions used throughout the world. The Free Software model requires a much smaller initial investment and much less time to produce results than with more traditional approaches.

Several recent surveys have shown that this is a smart technique:

Linux.ie (Ireland) - July 2001
Which distribution do you prefer?
http://www.linux.ie/polls/pollresults.php?recount_pollId=1
1. Mandrake: 35%
2. Debian: 23%
3. Redhat: 18%
4. Suse: 18%
5. Caldera: 1%
6. Corel: 1%
7. Others: 1%

PCMag.com (US) - 8 October 2001
http://www.pcmag.com/poll_archive/0,3044,p%253D1035%2526bn%253D1,00.asp

What's your favorite Linux distro?
1. Mandrake: 43.78%
2. Redhat: 27.9%
3. Suse: 15.41%
4. Libranet: 1.42%
5. Other: 11.49%

Linux.com (US) - 24 September 2001
http://www.linux.com/polls/index.phtml?pid=128
Best distribution for beginners
1. Mandrake - 36.7%
2. Redhat - 33.5%
3. Suse -13.5%
4. Slackware - 5.6%
5. Debian - 4.6%
6. Caldera - 3.7%

A powerful community (including both the end-user and company) offers both non-financial and financial advantages.

The non-financial advantage are...

A user base populated with experts who freely contribute to improving the distribution. Also, happy users readily promote Mandrake Linux to friends, family and employers. These advantages significantly lower the cost of development & promotion needed for a product.

And the financial advantages...

A good portion of the user base isn't satisfied with just a Linux distribution that is available for free... they want more. Historically, Linux companies were created so that they could provide official commercial products with support, documentation and third party software. Other services were then offered -- mostly for corporations -- such as extended support, training and consulting. MandrakeSoft's revenue model is based on fulfilling the needs of its users (end user or corporate) by providing the appropriate solutions directly or with the assistance of a partner. This is why MandrakeSoft has recently launched MandrakeExpert, MandrakeOnline and MandrakeStore, and is currently working on developing other potential revenue streams.

The bottom line: We believe it is much easier (and satisfying) to turn a happy user into a customer, than it is to directly acquire a new customer.

Is MandrakeSoft profitable?

As with most young corporations, MandrakeSoft has invested a great deal of money and resources to develop its products and services. The early stages of a company are always costly; this initial cost is later offset by a growth in revenue. MandrakeSoft has not yet reached the "break-even" point; however, we have taken necessary steps to reach this point in early 2002 by increasing revenue and reducing costs.

Why a Mandrake Linux User Club?

The Club provides an attractive answer to a simple issue: MandrakeSoft needs to have its costs covered by revenue. With the current economic slowdown and recent world events, companies are finding it much more difficult to sell software, provide money-generating services, and to find funding. This means that MandrakeSoft's revenue growth will take more time than was previously planned.

MandrakeSoft already has several million users. Of these users, only a small percentage have purchased products or services from MandrakeSoft. However, most of these users are very happy with the distribution and our online family of websites. Are these users ready to contribute financially in order to preserve these great benefits?

For the short term, the Mandrake Linux Users Club is the most efficient and convenient way to directly support the Free Software activities of MandrakeSoft; this will avert the company's need to cut costs in areas that are not directly related to business ventures which would thereby lower the level of service to the large base of "Free" users of Mandrake Linux.

I already purchased a Mandrake pack, so why am I not a member of the Club?

Funds generated by the sale of commercial products, such as the PowerPack, are distributed through many channels: the retailer, the wholesaler, the shipper, the printer, the CD manufacturer, the package assembler, the support-line, retail salespeople, and others. So in the end, a very small portion remains to fund research & development of the distribution.

Take an active role in the Mandrake Linux adventure as we build a worldwide technology solution that is attractive, open and free for all. Join the Mandrake Linux Users Club today!