Three Minutes With Derek Burney

Open-source software isn't a moneymaker. Microsoft's .Net strategy will change computing as we know it. Oddly enough, these comments came at LinuxWorld Expo, where PC World chatted with Derek Burney, president and chief executive officer of Corel, which has always had a somewhat rough time fitting into Penguinland. Some of Burney's thoughts on the nature of open source and the future of software are almost certainly unique, and uncommon at this event.

PC World: You've announced that WordPerfect Office 2002 will be released on the Windows platform midyear. When will we see it on Linux?

Derek Burney: We don't have a date set for it, but [we plan on porting] many of our major applications. Ideally we would like to have all of our applications running on Linux. We'll take that as it comes depending on what the business model looks like.

PCW: Regarding the Corel Linux distribution, what went wrong there, or what would you do differently if you had the chance?

Burney: I don't think distributions in general are profitable for anybody. Really, in what way can people make money at all on Linux? My belief is that people would be willing to pay, for lack of a better term, for an end-to-end solution. That way, a corporation can take their existing ... infrastructure and replace it with Linux.

To do that right now, you have to get a server version from some company, a desktop from somebody else, and utilities from a few other people, and it's not something that's going to happen, because [end users] don't want to trade 1 support call for 15. Your network goes down--who are you going to call? Is it the guys who gave you the Apache software? Or is it the actual network management stuff? So you end up making 15 calls and they're all pointing at each other.

So really, from Corel's perspective, it came down to: Do we really want to acquire the things that we're missing, or do we want to spin our component off to join something else that's already there? We did some back-of-the-envelope calculations, and making the appropriate acquisitions to fill in the holes would have cost us around $300 million. We thought "we don't want to go down that road" because we would really want to be focusing 100 percent on that endeavor, and we'd have to stop doing Corel Draw or WordPerfect. That's why we chose to spin Corel Linux off and let someone whose focus is basically on Linux run with it.

PCW: Was Corel's approach flawed from the beginning?

Burney: No, it was the perfect approach. If you remember, the first thing we announced was that our applications were going to be coming out on Linux. We were definitely headed down that road. But, at that time, there was not a single easy-to-use Linux distribution.... Rather than waiting for somebody to come up with [a distribution], we decided to do one ourselves. So really it was intended to be a vehicle for us to sell our applications. We were never really looking at the Linux OS as something that was going to generate tons and tons of revenue. It was simply a matter of giving our customers something they could use to run our apps. In that respect, it was a major success. It's harder than it looks.

PCW: How soon will we see an announcement about spinning off the distribution?

Burney: Our legal people have told me not to answer that question, which is unfortunate, but soon.

PCW: Microsoft recently invested $135 million in Corel. What are they getting for their money?

Burney: Microsoft bought a lot of shares. What they get out of the deal is value on the investment once we execute our strategy, but there is a contract, as part of it, that says we have to put the .Net framework into our major applications within six months of the release of .Net.

And a great thing about .Net is, it's not mutually exclusive with Linux. Basically .Net just means that some of your application runs on the desktop, and some on the server. There's no stipulation that the desktop has to be Windows. And in fact, the Corel Linux distribution is on the list to have .Net put in, to tie in to the Web. So I think it's great for the Linux community. It gives them access to the .Net Web services. It's also good for Microsoft, because it's a convenient way for them to accept the fact that Linux is here to stay, and [you can] still generate some revenue from it.

PCW: That would seem to dispel the notion that you decided to spin off the distribution as a result of Microsoft's investment.

Burney: Oh, the two are completely unrelated.

PCW: What does the Corel customer really stand to gain from .Net?

Burney: Let me give you some more specifics. In my opinion, one of the things Microsoft is good at is looking down the road a few years and talking about what that world is like. But sometimes, because it's so far away, the casual consumer doesn't understand what they're talking about because they've skipped a couple of years. So a whole lot of people really don't understand what .Net is, and how it can help them.

A simple example would be a spreadsheet, where you've got a bunch of numbers on the sheet, and then typically you want to apply some sort of formula. An average, a median, a sum--something like that. You go up in your menu, and there's a list of formulas. You pick one and go. In the .Net model, you select the menu item for a list of formulas, and it will go out on the Web and look at all the formulas that are residing on the Web, [giving you access to those]. When you click on a formula, all the information goes to the Web, they do the number crunching, and then the answer comes back.

Now in that story, the user doesn't get any advantage, but if you go back the next day, maybe there will be some more formulas there. You don't have to worry about whether you have the latest service pack, or whether you've updated this or downloaded that, since it's actually running off the Web, it's all automatic.

Some people resent paying for 150 formulas when they only use 5. In this Web model, you can change the way the applications run so that when you buy the application, or subscribe, or whatever it is you want to do, you can say "I only want 5" and that's all you pay for. Then you can pick the 5 you want to use. It's kind of like how you pick your [premium] cable channels.

PCW: Will we see a push toward a subscription model for these sorts of services?

Burney: I think it makes sense ... but some people are leery of the whole subscription model. So it's not one or the other. You can do both. I'm trying to encourage Microsoft to separate their messages of .Net and the subscription model. Because when they combine them, I think it scares a lot of people. The .Net environment itself is different, and so is the subscription model. So I would recommend to [Microsoft] that they do it one at a time.

Once people get comfortable with some of their applications running off the Web, then the next step would be "now that you know how it works, let's talk about picking and choosing which components you want to pay for." But the two don't go hand-in-hand, and even if Microsoft chooses to keep them together, Corel can always say we're going to use the .Net framework, and you get everything when you buy the application at the store. We can change the revenue model later if we want to do that.

What's even more exciting: Imagine that the APIs, or the calling conventions for those formulas, are made public. It means third parties can write formulas, shove them on their own Web site, and then Quattro Pro can call those. So it opens up the whole concept of a variety of programmers doing a plug-in kind of thing, and that gets really exciting.

PCW: In that sort of universe, couldn't we see open-source plug-ins for Quattro Pro?

Burney: Well, it's the open source concept, but one notch better, because the source wouldn't be open ... so the companies that write them can keep them and sell them, but from the user's perspective you get the benefit of open source because you can have the content coming from a variety of companies. So I see that model as being a nice bridge between proprietary software on one side and open source on the other.

Proprietary [software] is a good way to make money; with open source, there's no way [to make money] because you don't control your intellectual property. If you have your property but you also have some openness, where other companies can put in add-ons, it becomes really interesting. And if Microsoft published its API, and we did as well, we could combine them so that one formula would work on Quattro Pro or Excel. That really does change what software is.... But it is a couple of years out.