Back to Basics

Corel draws a familiar picture.

Its time to turn back the clock at Corel. The embattled software company has a new survival plan: Surrender its forays into the Linux distribution business and return to its roots in end-user application development.

Derek J. Burney, Corels new president and CEO, believes in the "power of Linux" and wants the company to move forward with its Linux applications, not its distribution of Linux. He contends Corel has garnered 14 percent of the Linux marketplace.

Specifically, Burney would only say that Corel is in talks to sell its Linux distribution business and hardware certification lab. Sources close to the proposed deal, however, reveal that Linux Global Partners (LGP), a small New York holding company, will buy 80 percent of Corels Linux business for approximately $5 million in Q1.

The sources also say that Corel is trying to sell off the entire Linux distribution engine, because the Canadian company no longer has any interest in the operating-system business.

As a holding company, LGP already has its fingers in the pies of such important Linux startup companies as Helix Code, the company behind the Gnome desktop; Code Weavers, the major Windows-to-Linux application porting firm; and Heimdall Linux, a Linux distributor thats hard at work building Linux for federal government agencies.

It is not clear at this time exactly where LGP would place Corel Linux, according to sources.

The sources add that because some facilities, like Corels Linux hardware certification labs, are part of the deal, LGP may create a new company for Corels end-user-friendly version of the Debian Linux distribution.

Instead of spending its efforts on the Linux OS or building ASP-enabled versions of its programs, Corel will focus on delivering OS-agnostic applications for Windows, MacOS 9 and OS X, and Linux.

In particular, Corel is reemphasizing its family of graphics programs for the Macintosh, Burney says. WordPerfect for the Mac will not be upgraded in the near future. Instead, WordPerfect Office (WPO) 2002 will be aimed at the Windows and Linux platforms.

Burney adds that it is pointless for WPO to compete with Microsoft Office.

Corel plans to work on its existing customer base. It will aim the WPO upgrade at traditional customers, including law firms, government agencies and small-to-midsize businesses.

Though it wont be seen this year, Microsofts .Net initiative also has garnered enthusiasm from Burney. After all, Microsoft invested $135 million in Corel in its darkest hours last year. Burney hopes to have .Net-enabled WPO out by the end of this year or the beginning of 2002.

He says there would be no more reorganizations or employee cutbacks at Corel. Instead, with the companys renewed emphasis on applications—especially in the Mac space—Burney hopes to see Corel return to profitability in the third quarter.

Though Corel is going back to its roots, it must keep looking ahead. Even Microsoft knows the desktop software market is saturated.