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Corel CEO: Half of revenue from Linux in next 5 years

Corel's chief executive is looking to put his firm's software struggles in the past and is banking the company's future on the Linux operating system.

Corel's chief executive is looking to put his firm's software struggles in the past and is banking the future on the Linux operating system.

Corel, a software maker based in Ottawa, Canada, is one of several firms riding the wave of Linux mania, driven in part by the blockbuster initial public offering of VA Linux Systems last week. Corel ended the day up 8.40 percent to 33.06 in trading, after earlier touching 44.5.

In the next five years, "half of our revenue will be coming from Linux," CEO Michael Cowpland told CNET News.com in a wide-ranging interview. "We will continue to work with Windows, but we hope to be the company that bridges the gap for users who want products for both Windows and Linux."

Linux is a Unix-like operating system collectively developed by Linus Torvalds and countless other programmers. It's getting more popular in server computers, and is used by 10 million to 12 million people, according to estimates. Some companies believe Linux will compete in the desktop computers where Microsoft Windows currently prevails.

Corel, facing unrelenting competition from Microsoft, hopes that Linux will provide the salvation that Java didn't. The company began but then abandoned an effort to translate its software to the Sun Microsystems Java environment, a move that would have allowed Corel's software to circumvent Windows and run on any Java-enabled computer.

But that effort faltered, and now the company believes hitching itself to the rising Linux star will carry Corel past Microsoft. Battling with Microsoft is nothing new for the firm. Years ago, Corel bolstered its software effort with the acquisition of the WordPerfect suite. WordPerfect, the leading word processor in the days of DOS, lost its market share to Microsoft with the ascendance of Windows.

Back in the Linux realm, Cowpland also dismissed rumors that North Carolina-based Linux supplier Red Hat is looking at Corel as a possible acquisition.

"We have a phenomenal user base, and we're bringing that to Linux. We've got five times more Linux developers than Red Hat. There are no negotiations going on with Red Hat," he said.

Cowpland also briefly commented on allegations that he took part in insider trading.

Canada's most powerful market regulator charged Cowpland with three counts of violating securities law and laid another charge against his personal holding company. If found guilty, he faces up to two years in jail, a fine of up to C$1 million (US$0.67 million) and also possible payment of three times any profit made.

"This is a legal issue between my lawyers and the OSC lawyers. It's a background issue that's been around for over two years. It's not a distraction to our business. My lawyers are lodging a vigorous defense and I look forward to finally having a chance to clear my name," he said.

The legal tussle is clearly not slowing the company down. Corel launched its version Tune in to CNET News.com TV's IPO Forecast of the Linux operating system for desktop computers last month at Comdex, the massive industry trade show held in Las Vegas.

Corel is aiming its Linux version at the average user, not the usual, more technically sophisticated Linux user. The company is basing the OS on the non-profit Debian version and hopes to use it to sell its WordPerfect Office suite of programs.

Regardless which version of the OS is used, Cowpland said the market is ripe, and he sees plenty of room for Corel and Red Hat to coexist. "We see Red Hat on the server and us on the desktop. We don't consider them a competitor. They're an ally."

Corel's recent stock surge has more to do with the company's business plans than any rumors about the company's potential acquisition, he said.

"Simple fact is Linux is the hottest thing right now. We have more Linux products out there than any other company, so I think Wall Street is catching on to that."

Cowpland said Corel is looking at providing Linux software for the Internet appliance and handheld device markets.

In addition to Linux, he said his firm is making moves in the hosted applications market as a way to find new non-traditional buyers for its software, like small- and medium-size businesses.

"We see a lot of interest in ASPs because of the low cost of ownership. We have made partnerships with application service provider Futurelink. And Corel owns 20 percent of GraphOn."

GraphOn develops server-based software to centralize and simplify enterprise computing and enable efficient network deployment of applications to display devices and platforms. GraphOn markets its Web-enabling software to application service providers and independent software vendors.