Corel backs Linux despite Microsoft deal

Desktop applications software vendor Corel said its commitment to Linux remains strong despite last week's $135m investment by Microsoft, the Linux community's biggest competitor.

Last week Microsoft surprised the industry when it announced plans to pump cash into the Canadian vendor, which produces Windows-based software such as Wordperfect that competes with the Redmond giant's own desktop products. Corel has also ported many of its applications to Linux and also distributes the open source operating system.

Speaking to vnunet.com, Derek Burney, who assumed the chief executive position at Corel full time just after the announcement was made, admitted that the company has had its "ups and downs" with Microsoft. However, the alliance will "enhance our efforts for web services. Both companies will get a lot out of it", he said.

As part of the investment, Corel will use Microsoft .Net as a development platform to help it web-enable both its Linux and Windows-based applications. Corel hopes this will allow it to improve its so-called apps-for-rent and electronic software distribution strategies.

Both vendors will also work together to support the development, testing and marketing of new products related to the .Net platform.

A Corel spokesman said: "Our Linux strategy hasn't changed at all [following Microsoft's investment]. We're committed to Linux. In our eyes, Microsoft's investment is a tremendous help to our efforts to integrate Linux and our other apps with the web. Microsoft doesn't have any influence over us or the way we do business."

Burney said Corel's future lies in the internet and believes there are some interesting web-related technologies that have yet to be created. "What you want to do is have an application designed to run on the internet from the beginning," he said.

"Our most recent work has focused on strategies to move our applications, including CorelDraw and Wordperfect, as well as Corel Linux OS, on to the web."

However, some analysts have questioned the motives of Microsoft's investment. The Redmond giant has also signed .Net initiatives with software competitors IBM and Ariba.

Charles King, senior analyst at Zona Research, said: "Why try to shove Microsoft Office down every consumer's throat when you can cut a deal, make some friends, bring happy users of Wordperfect and CorelDraw inside an ever-widening web-enabled tent, and shove a stick into the eyes of myriad critics who claim Microsoft can't play nice with the competition?"

Corel is expected to release version 10 of its CorelDraw graphics software next month, which will represent one of the product's biggest upgrades. The next version of Wordperfect Office Suite is scheduled to be released in 2001. The company also expects to add server and enterprise editions of Linux to its version of the operating system optimised for desktops.

Corel has been in financial trouble since a proposed merger with Inprise/Borland, which had $240m in cash reserves, was called off in May this year when Inprise shareholders balked at the terms of the deal. In August, founder and former chief executive Michael Cowpland resigned from the company.

Things started to look bright for Corel in September when it announced that an unidentified institutional investor planned to buy about 20 per cent of its stock for more than $50m.

The software maker also embarked on a scheme last month to cut costs by $40m a year. The plan affected 139 jobs in its engineering operations in Dublin, which it has consolidated with its headquarters in Ottawa, Canada. Professional services, manufacturing and distribution have remained in Dublin.