LinuxOne At It Again?

Anonymous Coward writes "Check out the recent LinuxOne news release. LinuxOne reports a $500,000 software order from Power Source. Its interesting how Power Source seems to be only a recursive add link without any substance. I couldn't quite figure out, beyond self proclamation, how LinuxOne is one of the fastest growing software distributors in the world. Go figure." At least the LinuxOne Web site is a little more fleshed-out than it was when we first saw it. And they're hiring, too. Check it out!

Comments

Sound the alarms!!!

[Mr Donkey]

What needs to be done is that somehow the "general public" should be informed of what a fraud LinuxOne is.

There is much evidence:
- the SEC S-1 xerox of Redhat's
- they have no real product
- their web site runs a stock copy of RedHat, and probably doesn't contain any of the patches - i.e. can be rooted relatively easily
- it's imaginary customer "Power Source"

Sometype of mainstream discussion; that is out of ./; a column in Wired? a column in a paper?

Whatever can possibly be done, so that the good name of all that is Linux is not brought down by these fly-by-night, wannabe IPO, frauds.

We've got to get the word out!

[Bruce Perens]

In a recent press release, LinuxOne announced a $500,000 software order from "Power Source" of El Cerrito, California.

What LinuxOne didn't mention is that Power Source runs out of a tiny storefront, and their "distributors in 130 countries", an exaggeration, run flea market tables. One of these distributors is usually seen at the Livermore Ham Radio Flea Market here in California, where he occupies one of the $10 tables.

While Power Source appears to be a legitimate business, it is extremely unlikely that they could have $500,000 cash to pay to LinuxOne. Rather, they probably made a deal to sell $500,000 worth of product, when and if they can, without pre-paying for much of it at all. But you would not have realized that from the LinuxOne press release.

There's a pattern here. LinuxOne persists in posing as a company with bright prospects in Linux, but look at what they have done: They are completely unknown in the Linux community, their officers are newcomers to Linux, and nobody known in the Linux community is on their technical staff (if they really have one). The founder of LinuxOne was previously behind NetUSA, which is trading around 60 cents a share, one tenth of its value a year ago. LinuxOne copied Red Hat's S-1 form (the form submitted when making a public stock offering) almost word-for-word, claiming that they have the prospects of Red Hat, a company that entered Linux 5 years before LinuxOne and employs hundreds of people, including some of the best programmers in the Linux world. LinuxOne's products so far appear to be mock-ups: their Linux CD is Red Hat's CD with the words Red Hat removed and LinuxOne filled in. Their "Linux on a disk" product is a Linux CD that someone installed on a hard disk, probably in a single day, and then they copied the disk. A claimed Linux system that runs on top of Windows called LinuxLite appears to be misrepresented in its functionality if it exists at all. LinuxOne staff have not written any significant Linux software to date that I can find, the only software they appear to have written is a program that displays a clock on the X window system.

And this is the company that has registered the stock symbol LINX and is going to take $23 Million from investors who don't know better, any day now. I think it's a really bad investment. But I'm prejudiced: I happen to have a Linux company too. Fortunately, you can hear the same message from other respectable people in the Linux world. For example, read this article in The Register by Rick Moen, a respected, long-time participant in the Linux community.

I've been a Unix operating system kernel programmer since 1981, and have worked on Linux since 1994. Another employee of my company has been working on Linux since 1993 when he started one of the best-respected Linux distributions. We're hiring other people with similar backgrounds. We have paid our dues and we have a proven performance record in the Linux world. There are a number of new companies similar to ours in the bacgrounds of their founders and their technical staff. These companies are not going public until they have real products, and when they do go public, they have some reasonable prospects for success. In contrast, I don't feel that LinuxOne has any prospects, I think they've been very sleazy in their press and promotion, and while it is remotely possible that anyone could build a real Linux software company with that $23M, it makes sense to invest in people with more skill and background than LinuxOne.

I can't save those investors from having their money go down the drain. Some people tell me that I shouldn't feel sorry for people who make poorly-researched investments, but I feel horrible about this. It's going to make Linux look bad and a lot of innocent people who don't have someone experienced in Linux to warn them are going to be hurt.

Somebody has to speak out. Please tell your friends. Tell everyone you know.

Bruce Perens

Re:We've got to get the word out!

[Bruce Perens]

Part of the problem is that some people are being meek about this because:

1. They want to be bending-over-backwards fair in giving them the benefit of the doubt and seeing if they'll be for real or not once they have the money.
2. They are afraid that they'll get sued.
3. They simply refuse to say anything negative about a Linux business.

Certainly you should get every outlet to research this issue and publish something about it. But don't stop when some of them refuse - in the end, it is up to the community to get this word out.

Thanks

Bruce

Re:We've got to get the word out!

[Felinoid]

Yes Media outlets are careful about such advice considering they are not technical experts or experts on the stock market.
It would be wiser to feed this situation to the financal community. They of all people would know how to sniff out a fraud and for LinuxOne the sent is pritty strong.
I doupt anyone experenced in the stock market would dare recomend a company that IPOs so soon after start up.
They should also learn that the Linux/Open Source community is not pleased with this company.

After that let the experts in that community handle it.. they'll know how to make it know.. sometimes a larg media blast isn't a good idea anyway..
Then the word can get out.. even if in a trunicated form.. such as a warning about IPOs soon after startup or companys with no real product or companys who have a bad community standing..
The finantal experts won't spindoctor.. they want to help the avrage investor and they have been dealing with finantal unsavy investors much longer than we have been dealling with tech unsavy computer users. They'll know how to deal with it.

The people who are investing in LinuxOne are not knowladgeable. They see the words "Linux" and "IPO" and they buy. Linux is a hot property and in some ways this scam is a testement to that fact.
But a big LinuxOne scandal could also set us back... [or it may push us forword]
Most investors do more research and would know LinuxOne has IPOed to soon to be of any real value.

I'm guessing if a scandle dose break lose and we have done our "thing" people will see that the Linux community is also a force to recon with.
That we do work together to any goal we belive needs to be reached.
Resistence is fulte.. Do not mess with the Penguin :)

Re:We've got to get the word out!

[Jon Peterson]

Bruce wrote: "They are completely unknown in the Linux community, their officers are newcomers to Linux, and nobody known in the Linux community is on their technical staff (if they really have one)."

While I broadly agree with you that LinuxOne appear to be a fraud, and a sleezly one at that, I can't let this comment get away.

You seem to me to be suggesting that companies wishing to base a business on Linux should somehow serve an apprenticeship in 'the community' where they will recieve the benevolent blessing of the 'known figures' of the community, and they can then trade acceptably.

This is not a bazaar. This is a situation remarkably similar to the late medieval trade guilds in northern Europe, which did an excellent job of serving their own interests and stifling competition, all in the name of maintaining standards.

To hell with the ESRs, ACs, and the other figures of our supposed worship and gratitude. If I one day have a great idea for a new kind of folding chair, do I need to grovel before the established figures of the chair industry? Do I need to play the game of being a good little manufacturer that doesn't push their luck? Do I need to employ some 'well known' chair designers to establish my credibility in the market place?

The hell I do. I get my capital together, I go out there, and I try to prove my products and ideas in the marketplace.

Likewise with Linux. If one day I say "That's it!!" "I've just figured out a create way to do package management!", do I then need to prove my worthiness by hanging around on some RPM mailing list and demonstrating on my CV that I've contributed to previous package management projects?

No, I do not. I write my code, and I go out there and say fair and square "This is a better way of doing it. You've never heared of me, you don't know I am, I don't employ any 'known figures' but I've got a new product that frankly works a hell of alot better than the old ones. Please use it".

Employ known figures indeed. Sounds like some of the famous traders in the old bazaar don't want too many newcomers setting up stalls unless they pay their dues.

Pah (with respect, but Pah, nonetheless)

Re:We've got to get the word out!

[Roblimo]

"Employ known figures indeed. Sounds like some of the famous traders in the old bazaar don't want too many newcomers setting up stalls unless they pay their dues."

What's wrong with that? In the "pure" Open Source business model, for-profit companies are living on the backs of the community. They need to give a little back in order to have any cred.

Even on the journalistic side, everybody at Slashdot (including me) did a lot of FREE writing and reporting before making any money at it, and Andover.net quietly ran the freecode.com site long before most of the other Open Source code indexes and repositories came along.

As far as employing "known figures," I doubt that Bruce is thinking "known" in the "heavily quoted" sense. I can think of many excellent developers and project organizers who get little or no public attention but are respected by kernel maintainers and other free software developers. I'm sure Bruce would consider these unsung ones to be valid hires for a company that wanted to make a splash in the Linux or Open Source world.

If you came up with a better package management system, you would be a "known" developer as soon as three other people tried it and liked it, whether they found out about your product through an RPM mailing list or through a company you set up to distribute your work. The point is that you would have *done something* instead of purely riding on others' backs.

And VA Linux? They actually *do* somthing. They have Linux-based hardware products you can order and have delivered, and they "give back" to the community in many ways both visible and invisible without directly asking for anything in return.

It's a fine edge, isn't it?

But then, I'm an old-fashioned person who believes it's better to earn your money by working hard than by selling chaff as wheat, so maybe I'm not the best person to listen to on this subject; my attitude is obviously not in tune with current financial and stock market thinking.

- Robin

Re:Hostile TakeOver and run em into the ground

[Bruce Perens]

This isn't the way the market works. It would be the underwriter who would get stuck, but before that happened trading would be halted on the stock. There would also be an investigation afterward and collusion to tank a stock is no doubt a violation of securities law.

No, I think get the word out is the right way to do it. I would prefer to see other people making their own investigations, and posting what they have found out firsthand, so that it's not just me. Actually, I was reluctant to say as much as I did today - I wrote that posting this evening for Technocrat.net, because I simply could in good conscience let the situation go on any longer without my saying something forceful about it. But I would feel more comfortable if someone who isn't doing his own IPO, and thus has less appearance of prejudice, would take the "point" on this issue.

Thanks

Bruce

Educate and Complain!

[mdb31]

I have to agree that this is going way too far: there is a thin line between IPO optimism and fraud, but it seems quite clear that LinuxOne does not have the best interests of investors in mind. (Nevermind the Linux community: whatever will happen here will have a bad reflection on it...)

But anyway, what can you do? Linking to one of the more recent in The Register from your web site or in your .sig is probably a good idea.

If you're a US citizen, also complain to the SEC, the government organization overseeing everything related to stock trading. Their web page is here, and makes it quite clear that what LinuxOne is doing is potentially illegal:

For example, it is unlawful in certain situations for someone to sell securities to you while withholding important information that could affect your investment decision, such as selling you stock in a company but not disclosing to you that the business has no existing operations or selling a stock to you for ten dollars per share when the seller knows the stock is worthless.

I'd say they'd at least take a good look at LinuxOne if enough people complain...

Re:Power Source web site

[aqua]

Dig their meta tags:

<META NAME="KEYWORDS" CONTENT="CD-ROM, CDROM, CD, CD-R, VideoCD, Software, Discs, Drinks, Gold, Nintendo, Spice, Play Station, Sega, Games, Breasts, Tits,Red Alert, shopping, Office, Access, Visual Basic, Sex, Girls, Nude, Cheats, Cheat Codes, Food, Ships, Boats, Discs"> <META NAME="AUTHOR" CONTENT="Captain John"> <META NAME="ROBOTS" CONTENT="ALL">

dammit Rob, fix the &special symbols...

OT: Interface Design

[orcrist]

With the frequency of such occurences, maybe it would be a good idea for Rob to put the Submit and Preview buttons on opposite sides of the Plain Old Text/etc. button, instead of right next to each other?

Chris

The LinuxOne world, according to Chas.

[Chas]

Here's what I see.

1. Shady history of the founder, and a past venture that now exists at 1/10th the initial valuation.
2. A "linux company" that was, until very recently, completely unheard of within the Linux community. One with NO known factors from that community.
3. A "linux company" with no real product. Incorporated in Nevada so that they were not subject to the full disclosure (Like "Uhh. We have no real product") required by other states.
4. A "linux company" who's supposedly forthcoming product is basically RedHat (or Mandrake) with all the names and serial numbers filed off.
5. A "linux company" whose open source soloution is "get it from Mandrake", in clear violation of existing licensing.
6. A "linux company" that photocopies another company's IPO, save for underwriter support. The IPO service they're going with is extremely low profile and extremely green in the market.
7. A share price set, not by estimating value on an existing product (since one doesn't exist), but on an arbitrary "this is what we thing the stock is worth" guesstimate from the "people" who run the "company".
8. A "half million dollar contract" from a little storefront that wishes it was Walnut Creek. The announcement of which is almost certainly a violation of the SEC-imposed quiet period.
9. A storefront with a Hotmail account as it's business contact. Hosted by a provider whose own site is barely more than an "under construction" sign.
10. A storefront whose main customers appear to be small computer shows and flea markets.

Now, for some reason, this inspires ZERO confidence in me (not sure if there's such a thing as a negative level of confidence, so I won't go that far).

In fact. The only thing it inspires is haiku.

Big Ripoff I See
Their business profile screams SCAM!!!
No dough shall I waste


Chas - The one, the only.
THANK GOD!!!

Re:what goes around comes around

[sterno]

It isn't dependent on the bottom line of any company. Welcome to the elegance of the GPL. If any of the Linux organizations start taking a direction that you don't want, you have the power to ignore them and go your own way.

Actually, what I suspect is going to happen with Linux is a sort of fragmentation. Most of the big players right now are interested in developing Linux to be more valuable to businesses. This means that development will likely slow down and focus on stability rather than innovation. Those people out there who came into their own as "linux hackers" will wear the hat of "linux developer" now, trying to look more reputable and trying to get some compensation for their years of hard work.

As the main Linux distributions become more mainstream and corporatized, a new underground version of Linux will begin to evolve. As the old Linux bloats and slow under the weight of legacy compatibility, this new hacker off shoot will come into its own, just like the current Linux has. And so on and so on...

Or maybe all the hackers will just start playing with Hurd :).

---Steve

---

Re:VA Linux S-1 filing greated with scepticism

[lordsutch]

Here are the prospectuses; judge for yourself:

• RHAT
• LNUX
• LINX

Bear in mind that all prospectuses will be similar in form; however, they should not (normally) be word-for-word copies.

Power Source and Linux

[Adam J. Richter]

I believe that in late 1992 or early 1993, the Power Source store in El Cerrito became the first reseller on the planet to carry a Linux CD when they picked up our "Linux/GNU/X alpha release", which later became Plug-and-Play Linux. I remember visiting PowerSource to test the distribution on some of their machines. I have not had occasion to visit Power Source since I moved Yggdrasil to Silicon Valley six years ago, but, at least back then, I really appreciated Power Source's focus on people on a budget with their bins of used computer parts and their extensive printed catalog of really cheap computer hardware that they were importing from Taiwan that had not yet made its way into most "white box" PC's in typical computer stores (for example, motherboards with smaller form factors come to mind). If you wanted to get hardware that seemed only to be available in computer flea markets, but there was no flea market in town, Power Source was the place to go. They may not have been Dell or Compaq, but I could see then that PowerSource had a bit more infrastructure than your average independent computer retail store and an interesting angle. Come to think of it, there is still some computer hardware in a back room at Yggdrasil that I remember buying from Julius at Power Source. I don't feel I have enough information yet to comment on Linux One or how substantive their relationship may be with Power Source, but I can say that, based on my experience with Power Source of several years ago, they're good people. Adam J. Richter President Yggdrasil Computing, Inc.

Re:Power Source web site

[jeremy f]

The hilarity continues!

I called the phone number -- it's 8:55 am EST here, so it's just about 6 am over there. Someone answered the phone, and sounded VERY sleepy.

Ya think this is being run out of a bedroom? =)

Forget LinuxOne!

[dattaway]

That's right, man, you can see through everything! Up until now, I've had a well paying daytime job doing electrical work and Linux was just my hobby. But now, all this hype is making me consider running my own IPO too. No FUD at the moment, but just the facts:

Announcing LinuxTwo IPO:

We plan to sell twice as much bogus software as LinuxOne.

We use a proven S-1 form, with our name inserted over LinuxOne's.

We hire software programmer icons for free, and just like LinuxOne, to cut costs.

We do not waste gas traveling to those educational conferences, such as the Atlanta Linux Showcase and rub shoulders with the caffeinated programmers that can make keyboards smoke.

And LinuxTwo's web page is served through a dialup connection, which offers the same speed as LinuxOne's. Coincidence?

OK, I'll shut up. But my point is that I use Linux and am offended by a cheap knock off that has apparently nothing to contribute, besides being an apparent 100% fluff machine. I sure don't want bullshit to be worth $23,000,000 dollars. That's a lot of bullshit that's going to come from the sky.

I'd benefit from investments that actually have a chance of helping people who are known to put effort and acheive results. Linuxone is mighty secretive and I don't think they have anything concrete they are hiding.

Sounds a bit like Zooooom to me....

[Randy Rathbun]

I seem to remember this company called Zoooom back in the 1980s that was all the rage on Wall Street. It ended up being a front for some big organized crime scam.

They had big press releases, got written up favorably by everyone. Then they got busted and a few folks went to jail.

What really really really bothers me about this is if this LinuxOne outfit pulls a Zooooom (see - I still can't remember how many o's are in the name!) I have a horrid feeling that it is going to come back to haunt all of Linux - not just the investors that get screwed.

My confidence has been restored

[drix]

Well they've got it all now - a website, a big cheesy red logo, a domain name with the word "open" in it, and a link to Google on their front page. Shucks, guys, they must be a big important Linux company, right? Forget beer, forget pizza, forget toilet paper - I'm saving everything I can and dumping it into LINX. You guys knock them now, but in six months, I'll be laughing all the way to the bank!

;)


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