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Commentary: Corel faces uncertain future after CEO departure

The resignation of Michael Cowpland as chairman, CEO and president is a watershed for Corel, according to Gartner.

    By Chris Le Tocq, Gartner Analyst

    The resignation of Michael Cowpland as chairman, CEO and president is a watershed for Corel. Cowpland and Corel have been virtually synonymous since he founded the company in 1985.

    Corel's successes and failures have largely stemmed from decisions Cowpland made. The company succeeded with its CorelDraw product and developed a large customer base.

    However, Corel has not succeeded in transitioning those customers to the Web. The company's competitors, such as Adobe Systems, have considered the Web to be essential.

    See news story:
    Corel shares climb on news of CEO's resignation
    Likewise, Corel scored a coup with its purchase of WordPerfect from Novell in 1996 at a fire-sale price. But although Corel has been able to maintain this product for its large audience, it again has not succeeded in the transition to the Web.

    More recently, Cowpland and Corel placed a large bet on moving the company's applications to Linux on the desktop. In North America, at least, Linux on the desktop has been a non-starter.

    This strategy may have received its heaviest blow yesterday, when several large vendors--Compaq Computer, Hewlett-Packard, IBM and Sun Microsystems--announced support for the Gnome Foundation's Linux desktop project. Key parts of this open-source interface are productivity applications that run on top of Unix and Linux. The Gnome Foundation likely has further reduced whatever revenue opportunity Corel had in this area.

    This setback comes at a bad time for Corel. Gartner believes Corel's failed attempt to acquire Inprise/Borland earlier this year was driven by Corel's need to solve its cash flow problems by obtaining Inprise's large cash reserves.

    These troubles and the exit of the company's dynamic leader make Corel a likely acquisition target. It retains its large base of WordPerfect users, which will prove attractive for any company looking to move those people to the Web and perhaps transition them to its own Web-based productivity services.

    (For related commentary on the open-source software opportunity for vendors, including Corel, see registration required.)

    Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.