A little over two years on from its flirtation with collapse, and the company, now known as Mandriva after its February purchase of Latin American Linux distributor Conectiva, has just announced its second acquisition in five months, this time snapping up desktop Linux specialist Lycoris.

The company has come a long way in a short time, and has been consistently profitable since its first quarter of fiscal 2004, which ended December 31, 2003, shortly before it exited bankruptcy protection.

The acquisitions of Conectiva and Lycoris demonstrate that it has the ambition to grow even further, but it still has a long way to go before it can challenge the big Linux distributors Red Hat and Novell. Novell has not yet completed a full financial year since its acquisition of German Linux vendor SUSE Linux for $210 million in early 2004, but in its last four quarters has announced a total of $46 million in revenue from the SUSE Linux business.

In comparison, Mandriva brought in revenue of $6.3 million in full year 2004, and purchased Conectiva for $2.2 million, roughly equivalent to the Brazilian company’s fiscal sales. Adding those together puts the company well behind Novell’s SUSE Linux business, let alone market leader Red Hat, which dominates the market with $196.5 million in revenue in its financial year ended February 28, 2005.

With all due respect to Lycoris, it is probably fair to say that Mandriva did not buy the company’s assets for its current revenue but for its graphical desktop and usability expertise. Lycoris is one of many small Linux distributors around the world that had found a niche in which it could be successful.

Lycoris’s niche, driven by founder Joseph Cheek, was to make a Linux distribution that was easy to use and familiar to Windows users. This approach also led the company to be one of the few Linux distributors targeting tablet PC and Pocket PC hardware.

The company’s usability expertise could be invaluable as Mandriva looks to combine Desktop/LX with its own well-respected Discovery desktop product and take advantage of increased corporate interest in Linux on the desktop.

Red Hat and Novell are already operating in the desktop Linux space as well however, and Mandriva will have to work hard to break the dominant position that its two rivals hold when it comes to hardware and software partners.

The fewer Linux distributors that IHVs and ISVs have to work with the better, as far as they are concerned, and the difficult position that Mandriva faces was demonstrated by the attitude taken towards it by Hewlett-Packard in February.

While HP announced plans to preinstall the then MandrakeSoft’s Linux variants on its enterprise hardware in France, it also confirmed that it would be focusing on Red Hat and Novell SUSE on a worldwide basis, effectively demoting Mandrake from being the operating system provider for HP’s Linux-based business PC offerings.

If Mandriva is to pose any sort of realistic enterprise challenge to Red Hat and Novell, it will have to start attracting the sort of major hardware and software vendor support that was a characteristic of Novell’s first moves following its acquisition of SUSE Linux.