The VAR Guy

June 26, 2007

4 Min Read
Getting to Know ZaReason's CEO

Sure, Dell is new to the Ubuntu PC market. But plenty of smaller PC suppliers have long supported Ubuntu. One prime example: ZaReason Inc., a PC maker made up of volunteers. I reached out to Cathy Malmrose, CEO of ZaReason, to get a feel for the company’s customer base and market position, and to get her views on Ubuntu’s longer-term prospects. Here’s a look at our conversation as it occurred over email.

Len (Works With U): How would you describe your customer base?

Cathy (ZaReason): Intelligent people.

You ask, “How can you siphon off only the most knowledgeable users as your customer base?” Good question; easy answer. Non-open source users typically use price as a factor in their decision. They think that a more expensive computer will be faster, more sturdy, and will last longer. That’s not necessarily true. It is definitely not true in software and it is becoming less true in hardware.

The more savvy users are attracted to our site because they recognize the actual parts we use and compare them to what other companies are using. They tend to be people fully in the FOSS mindset who have moved past the idea that cost = quality. We build high-end systems for a smaller price and they are capable of recognizing quality.

Len (Works With U): Are you selling mostly to individual Ubuntu fans or do you see any small businesses and consumers in your customer mix?

Cathy (ZaReason): Mostly individuals although we do have a few bulk purchasers. Perhaps our favorite customer is in Asia. It strikes us as highly humorous that we would sell to any part of Asia.

Approximately 60% of our customers are knowledgeable enough to build their own systems if they had the time, access to the Tier 1 suppliers, and again, the time to do the research, acquire the parts, return parts that did not work, and try again. They appreciate that we have already done the work and can build a solid system for the same price they would have paid had they done it themselves.

Another 20% is familiar with Ubuntu, but not hardware. The remaining 20% are newbies. Each percentage group contributes value to ZaReason in its own way.

Len (Works With U): How would you describe ZaReason’s business at this point? Are you still a start-up? A growing small business?

Cathy (ZaReason): We’re a growing small business with a business plan that is built to last. While we spent our careers in the trenches, we are now surrounded by Econ professors and PhDs here in Berkeley and get plenty of unsolicited advice on how to follow this unique business plan that is fully entrenched in FOSS principles. Our goal is to serve the open source community. Period. Focus. No other agendas.

We believe that all our other worthy goals (such as gaining market share for Linux) will be accomplished best by a myopic, utterly self-absorbed focus on solid hardware and honest customer support.

Len (Works With U): How do you see the Ubuntu market evolving over the next six to 12 months?

Cathy (ZaReason):

a. We anticipate another OEM jumping into the fray.

b. We anticipate more viral youtube videos about Ubuntu, Edubuntu, and Kubuntu. Videos have tremendous power to convert new users.
c. We anticipate Ubuntu getting more eye candy such as a stable Compiz Fusion (Beryl).

Len (Works With U): Have you seen Ubuntu gain any traction in particular vertical markets, such as K-12 schools or universities?

Cathy (ZaReason): Yes, we have seen a significant interest in Edubuntu even though Edubuntu is in the earliest fledgling state, i.e. the community has not been built out yet.

Hardware for the K12 market is on a mass-scale tipping point. We will be the first to stock the e3PC. It looks like it will break into the OLPC [one laptop per child] market [MIT’s Nicholas] Negroponte created through his persistent international press releases. Thank you Nicholas. You taught the world to expect a fully equipped laptop for $140.

While it is a little repetitious to have to explain to non-techies why there is such a big discrepancy between price points, Negroponte did effectively push hardware manufacturers to innovate and for that we are appreciative.

Len (Works With U): What are the biggest challenges facing Ubuntu for the next year?

Cathy (ZaReason): Losing focus. Forgetting what the project is about. If [Mark] Shuttleworth can keep focus, then Ubuntu is probably fine.

We have a clear focus on being loyal to FOSS principles. We built ZaReason on a model of volunteerism plus paid support, same as exists in the FOSS community. We needed to build a company that was not pure business and not pure non-profit — each is unstable in its own way. When you combine the two, you create a structure than can weather the changes and remain loyal.

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