Microsoft Floats Ailing Corel -- Redmondmag.com

Microsoft Floats Ailing Corel

By Scott Bekker
10/03/2000

If you can’t beat them, hope your competitor makes a multi-million dollar investment to keep you in business. Yesterday the financially ailing Corel Corp. received a $135 million investment from Microsoft Corp., joining Apple Computer Corp. as a Microsoft competitor bailed out by the software giant.

Both Microsoft and Corel describe the investment and agreement as a joint partnership. Corel plans to aid Microsoft in the development of their .NET platform. Corel has experience in creating client software, as well as network enabled office productivity software. In addition, Microsoft may be able to benefit from Corel’s experience from their popular Corel Draw and Corel Paint graphics packages.

In addition, Microsoft and Corel have settled some of the legal battles between them.

Presently, Corel competes with Microsoft on two fronts: office productivity software and desktop operating systems.

Corel develops and maintains WordPerfect, which was once the dominant word processor in the PC world. WordPerfect is now an entire office suite that competes with Microsoft Office on the Windows, Linux and MacOS platforms.

Corel has also launched a flavor of Linux, Corel Linux, designed specifically for desktop users. Based on the Debian version of Linux and the KDE desktop environment, Corel Linux is GUI focused, helping new users navigate the sometimes-tricky operating system.

Once a successful player in the graphics market, Corel has fallen on its share of hard times. Its investments in developing its Linux distribution, as well as its Java flavor of WordPerfect for network use, failed to materialize into profitable products. This summer, Corel suffered two major blows: its proposed merger with Borland/Inprise, a vendor of developer tools, was called off, and Michael Cowpland, its outspoken CEO, resigned. Due to additional difficulties, Corel was expected to run out of cash by the year’s end.

Corel later announced that Interim President and CEO Derrick J. Burney would be permanently appointed to the role. Burney has moved through the ranks at Corel, last serving as Chief Technology Officer before taking the helm.

This is not the first time Microsoft has made a large investment in an ailing competitor. Microsoft shocked the industry in August 1997 by investing $150 million in Apple, then a bitter rival of Microsoft. – Christopher McConnell

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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