Sun's Star deal reverses Corel, Applix stock surge

Sun Microsystems' adoption of a new office software suite might be a good thing for Linux users, but it hasn't been so good for the makers of competing products.

Sun Microsystems' adoption of a new office software suite might be a good thing for Linux users, but it hasn't been so good for the makers of competing products.

Shares of Applix and Corel, two makers of software that runs on Linux and other operating systems, lost many of their gains in the last few days. Applix dropped more than 20 percent to about 15, and Corel dropped 9.3 percent to about 5.5.

Sun shares, meanwhile, rose to an all-time high of more than 79 today.

Sun today announced its acquisition of Star Division's StarOffice software, saying that it would be downloadable for free and would figure into Sun's effort to turn all kinds of software into a service that runs over the Web.

StarOffice, which includes a word processor, spreadsheet, graphics editor, and other software similar to Microsoft Office, is available for Windows, Linux, IBM's OS/2, and Sun's Solaris.

Microsoft said yesterday it wasn't threatened by the acquisition, and Sun executives made it clear they weren't going to worry about a battle to sell "fat client" versions of the software that run on local computers. Corel and IBM have lost such battles with Microsoft with their WordPerfect and Lotus SmartSuite office packages, respectively.

"We remain bullish on Sun as a pure Internet computing vendor," said Merrill Lynch analyst Steve Milunovich in a report today. Texas Instruments, which makes Sun's UltraSparc chips, has caught up with demand, a factor that should help Sun clear up a backlog of server orders, Milunovich added.

Though Sun chief executive Scott McNealy and others downplayed the Microsoft competition, Sun clearly would lose little sleep if StarOffice helped to undermine Microsoft's position of strength.

"There is a lock between Microsoft Office, Windows, and Intel," said Gene Banman, general manager of Sun's information appliances and application software group. "I need an alternative to that lock."

The StarOffice plan gives Sun a way to spread office software to information appliances on the desktop, cars, and other areas "that don't rely on that lock," Banman said.

Sun will ship 100,000 copies of StarOffice to schools around North America, Banman said.

In addition to the free 65-megabyte download, Sun will sell basic CDs with the software for $9.95 and a deluxe version with an instruction manual for $39.95, Banman said.

It's also possible that America Online could distribute Star Office on its CDs, McNealy said. "AOL is excited about this opportunity," he said, and is talking about offering customers access to the Web-centric version of StarOffice, called StarPortal.

Computer makers such as IBM, Compaq Computer, Dell Computer, and Gateway will be able to bundle the StarOffice software in their PCs without having to pay Sun, the company's chief operating officer, Ed Zander, said.

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