Ten Bleeding-Edge Open Source Companies: Page 8

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8. Linux Networx

Founded: 2000

Location: Bluffdale, Utah

Product or Service: Linux Networx earned its stripes in the rarefied world of HPC (High Performance Computing), in which companies build the monolithic machines that make up the “Top 500” most powerful computers. Linux Networx has 17 entries on this list, having deployed multiple massive clusters for customers such as the Army Research Laboratory, Los Alamos National Laboratory, NASA, and Sandia National Laboratories.

Over the course of selling more than 500 Linux clusters to over 200 customers, Linux Networx has emerged as a major player in both the Opteron- and Xeon-based Linux cluster market. The company’s LS Series system configurations, featuring its Clusterworx software, are optimized to handle thorny problems in computational fluid dynamics, structures codes, and other disciplines that are beyond the scope of mere mortals. Later this year Linux Networx will release Clusterworx 4.0, which it claims will offer greater ease of use for the non-technical user, and integration into heterogeneous computing environments.

Funding: Backed by Oak Investment Partners and Tudor Ventures, Linux Networx has scored some sizeable funding wins recently. The company raised $10 million in a Series C funding round in early 2006, and scored an additional $37 million later in September 2006, including investments from Lehman Brothers and Canaccord Adams.

Competitive Landscape: Linux Networx is a company in transition. The company is moving away from building mega-machines, the “Top 500” that are built for government and university clients, and is expanding its focus in the industrial segment. Its customer list of industrial buyers includes Boeing, Northrop Grumman, John Deere, Audi, and Shell.

The industrial systems tend to be smaller (typically 128 to 256 nodes), and repeatable, instead of huge one-offs. In contrast to the four or five months the mega-systems need for installation and acceptance, Linux Networx sometimes completes on-site implementation in 4-5 days.

In terms of revenue growth, moving into this market makes sense: There are far more customers in the industrial sector. Research firm IDC has identified the industrial sector as the sweet spot for growth in supercomputing.

But Linux Networx faces challenges in this market. It remains a relatively small company, so it doesn’t have the economy of scale that big fish like IBM do; it lacks the mass production capacity that allows leeway with wholesale prices.

On the other hand, the company’s size can work to its advantage. It’s small enough to work with clients on a one-on-one basis. The company stresses the personalized nature of its solutions portfolio.

Side note: Recently, computer maker Silicon Graphics (which emerged from bankruptcy protection in October 2006) hired former Linux Networx CEO Bo Ewald to head the company. Will the fact that one of its competitors is now headed by a former CEO affect Linux Networx fortunes? It’s unclear.

Management Team: Jack Kenney, CEO, served as CEO of Everex Systems, UniSil Corporation, and Quantegy; Bobbi Hazard, Senior VP, Sales, was a VP at Cray and at nCube, and also worked at Dell and Sun; Dick Linville, VP, Strategic Relations, was a VP at Novell, and held management posts at Unisys, United Telecom, and Netwise-Microsoft; David Morton, VP, Research and Development, was technical director for the Maui High Performance Computer Center.

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