January 23, 2001

Corel to sell off Linux distribution

Author: JT Smith

- By Dan Berkes -
Corel answered some of the questions surrounding its plans for Linux this morning at a press conference in Ottawa: Corel Linux will be sold off, but flagship applications WordPerfect and CorelDraw will remain.
Company CEO Derek Burney revealed Corel's new plans, a back-to-basics approach designed to bring the company to profitability by the third quarter of 2001.

Corel believes it can best accomplish these goals in the Linux arena by shedding its Corel Linux distribution, and focusing on the creation and improvement of "platform neutral" projects, including core cash generators WordPerfect and CorelDraw.

Citing Corel Linux's desktop market of 14% and the company's commitment to focus on products and strategies that provide maximum value to shareholders, Burney said, "We won't be in the operating system business any longer."

Burney's comment seems to be in conflict with Corel's official press release announcing the changes, which states that the company wants to merely "spin off" its Linux distribution, at the same time "retaining an interest" in the new prospective company.

Part of Corel's continued interest in Linux may actually involve Microsoft's .NET strategy. In October, the Redmond software giant invested $135 million in Corel in a deal that could partially involve blending Linux and its product base into the .NET platforms.

Furthermore, Burney announced the company would ease away from competing head-to-head against Microsoft in the office applications market. The new strategy will focus on the existing WordPerfect user base of 22 million users, including many government, medical, and legal users who have long preferred Corel's offering. Those users can expect to see new versions of their favorite word processing application that include tighter Internet integration.

Although a source inside the company insists that a sell-off of Corel's Linux distribution and other key assets to Linux Global Partners is virtually a done deal, Burney stated the company is still considering prospective buyers and strategies. When pressed for comment, Burney said, "There is no deal, and if there was, we would have announced it."

In other areas, Corel announced its plans to offer its creative products on the Macintosh platform, offering new versions of Corel Painter, Bryce, KPT, and KnockOut for Apple's new UNIX operating system, Mac OS X.

When discussing long-term plans for new markets, CEO Burney hinted that the company would consider delivering its creative products as Web services, giving some credibility to the rumors that Corel might enter the application service provider business.

Finally, Corel said it was also looking into the realm of wireless imaging products, possibly through acquisition of other companies. Further details were not available, as Burney stated that the company was more interested in "making the right decisions, and not quick decisions."

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