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Corel Abandoning the Operating System Market, Focusing on Core Money-makers

Jan 23, 2001, 17:23 (23 Talkback[s])
(Other stories by Michael Hall)

By Michael Hall, LinuxToday

At a press conference today, Corel CEO Derek Burney revealed little solid news on the future of Corel Linux except to confirm the broad details of widely circulated reports that the company will be spinning off its consumer-oriented distribution in the near future.

Burney's comments were made as part of a press conference designed to reveal the company's plans to return to profitability by the third quarter of this year. Corel has faced rough times, and Burney has faced the challenge of reviving a company that has endured heavy losses and layoffs.

According to Burney, though his company retains a "commitment to the future of Linux," Corel's still in the process of examining how its Linux distribution will be spun off as the company focuses more on creative applications and its core money-makers: CorelDRAW and WordPerfect. Burney refused to admit that Corel is in talks with a particular company, saying it's too early to project its distribution's fate. New York's Linux Global Partners has been widely identified as likely to purchase a large portion of Corel's Linux OS division for $5 million.

"We won't be in the operating system business any longer is what it boils down to," said Burney.

Burney also said that Corel will retain control of the two existing Linux applications it has produced to date: WordPerfect and CorelDraw, but that its spinoff of its Linux distribution reflects a desire to provide an "end to end solution where the Corel distribution is a building block to something much bigger."

In the broader picture, Burney also revealed that Corel is shifting emphasis toward "evangelizing the Macintosh to prove that [Corel does] 'think different,'" and backing away from head-to-head competition in the office applications space by focusing instead on the existing WordPerfect user base, placed at 22 million users. Burney said efforts will be directed toward moving WordPerfect to Microsoft's .NET platform, and that product changes reflecting that shift should begin to appear by the end of this year. According to Burney, Microsoft Word represents too large a segment of the market to compete with directly.

Taken in conjunction with the news that Corel will be expanding its graphical design product line with new releases of CorelDraw 10, Kai Powertools, and Corel KnockOut, it seems clear that Corel has been given an opening and room to operate in a space where Microsoft is relatively weak.

In October, Microsoft invested $135 million in Corel in a deal that supposedly had no strings attached. Later documents revealed that Corel committed, at least in part, to researching how to integrate Linux into Microsoft's .NET platform.

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