Corel may sell Linux business

In an interesting development given the company's recent bailout by Microsoft, Corel Corporation revealed this week that it might sell its Linux business in a bid to remain competitive. Corel, which once publicly announced that it sought to become a "Linux powerhouse," has seen sales of its Linux products reach less than half of the projected audience. And though Corel's recently ousted leader, ex-CEO Michael Cowpland, is seen as the root of its financial problems, the company is still reeling despite an influx of cash from OS competitor Microsoft. And while conspiracy theorists struggle to connect the Microsoft-Corel alliance to the failure of Corel Linux, the truth might be a bit more basic. In the post-Linux boom, it's not enough to sprinkle the word "Linux" in your business plan to be successful.

It's been a tough year for Corel. After aborting its merger with Inprise/Borland, the company lost millions of dollars and laid off over 20 percent of its staff. Corel's Linux business, which Cowpland said would make $20 million this year, managed only $6.1 million in the first nine months of 2000. And with bankruptcy hanging over its head, Corel accepted a $135 million investment from Microsoft, which can now require Corel to port the .NET technology to Linux at no cost. It was a heavy price for the struggling Canadian company, but it kept Corel afloat. And now Corel may have to jettison Linux, which the company had hoped would provide it with a second life.

But simply abandoning Linux may not be enough. The company has wasted years and millions of dollars of effort to port its mainstream applications--WordPerfect and CorelDraw--to the Linux platform. Unfortunately, these efforts didn't result in native Linux apps, but Windows applications that run on a Linux compatibility layer called WINE. The resulting Frankenstein-like products have been a mixed blessing for the Linux community, which praised Corel for bringing true Windows apps to their platform. But many users have also complained of frequent crashes, bugs, and an overall sluggishness to the apps. On the Windows side, Corel's business has been in a holding pattern during this time, and the company has essentially eschewed new sales and hoped that a decent number of existing users would upgrade. So Corel's share in the Windows application markets has declined rapidly while it attempted to gain a beachhead with Linux.

Corel will announce its decision on Linux by December, and it's still possible that the company may choose to acquire one or more small companies to bolster its presence in the Linux world. In the meantime, all signs point to one obvious conclusion: Corel needs to get back to basics to be successful, and that might not include Linux

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