Corel Corp. strengthens its Linux base

When Ottawa-based software giant Corel Corp. announced on Feb. 7 it had purchased Inprise/Borland Corp., Kevin Cornell wondered if it meant he’d have to replace his business cards for the second time in 12 months.

The president of Markham, Ont.-based Inprise (Canada) Inc. – formerly called Borland Corp. and a subsidiary of Inprise Corp. in Scott Valley, Calif. – has seen his fair share of changes since joining the tools and services provider in January 1999. But he takes change in stride, noting that in the frenzied world of IT, adjustment is the nature of the beast.

“It’s been a hectic year, especially with the company [having] gone through some changes,” Cornell remarked candidly. “We spend half our time printing up new [business] cards…but that’s the industry.”

Corel bought Inprise/Borland in an all-stock deal for US$1.1 billion. The move is expected to boost Corel’s annual revenue by an estimated 72 per cent. The Linux market, in which both companies play, is expected to grow at an annual rate of 25 per cent through to 2003, according to International Data Corp. in Framingham, Mass.

Corel is renowned for its graphics applications, while Inprise/Borland is known for developer’s tools. Corel has said the union is aimed at accelerating the commercial mainstreaming of Linux technology as Corel plans to bolster its Linux portfolio, but the fact remains that the traditional offerings of each company and their respective user communities are different.

“Corel needed the cash and they got $200 million from the deal,” said Robert Schieck, president of MER Systems Inc. in Richmond Hill, Ont. “Borland is a tools developer, (so) what you have now is an applications developer (Corel) trying to absorb a tools developer. Nothing against Corel, they’re a great company, but [the deal] makes me nervous.”

MER Systems specializes in client/server development and training throughout North America using Delphi, C++Builder, JBuilder and InterBase, plus Oracle software. The Canadian company is also an Inprise Premier Partner and an Inprise Authorized Training Centre.

“For now it’s business as usual (for the two organizations),” Schieck continued, while considering whether or not the deal seems unusual. “It depends on your perspective – Corel is pitching it as two Linux powerhouses joining forces to target the end user. Borland is an Internet-based Linux powerhouse which is doing okay…I’m not sure if I consider [Corel] to be a ‘Linux powerhouse’ but the potential is certainly there.”

Schieck added there’s a need within the Linux environment for good developer’s tools and he believes Inprise/Borland could satisfy that requirement. Linux tools from Inprise/Borland include a recent free download of JBuilder 3 Foundation, a pure Java development environment.

Inprise Canada’s Cornell was hired to help elevate the company’s overall profile after the organization split into two separate entities – Borland and Inprise – with his primary focus on the company’s enterprise product line.

“We took a look at how we’d get the visibility up for the Borland brand because it had slipped…we had lost market share,” he said. “We had to take a look at how to reintroduce [the Borland shrink-wrapped products] back into the marketplace [and it was] made easier by bringing the Borland name back…as a physical corporate entity.”

Industry analyst Mark Driver at the Gartner Group in Stamford, Conn. said the merger puts Inprise/Borland in a precarious position.

“There isn’t a lot of synergy between the two organizations,” he said. “The merger is dependant on the success of Linux…I wouldn’t call them a Linux powerhouse, you have two organizations that are radically different and they’ll have to push the Linux angle very hard and it could be to their detriment.”

Driver said Inprise/Borland could feel the sting of a consumer disapproval if users are hesitant to jump onto the Linux platform. “I foresee a backlash of (Inprise) customers that might not want to move to Linux,” he said.

For his part, Cornell sees the Corel acquisition as a positive move.

“With the take over by Corel, there are a couple of benefits…one is they didn’t have the Inprise side, there’s nothing like that at Corel…there’s not a lot of overlap in terms of where we’re going with it. It should be a pretty good marriage, so there’s that, and the fact they’re a Canadian company,” Cornell said. “There’s a common focus in terms of trying to develop something that will deliver solutions to Linux.”