Corel's Hidden Open Source Potential: $1 billion?

By Dan Orzech

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In a letter to Corel shareholders, an open source advocate has suggested that the company release as open source the code to its WordPerfect office suite.

But first, says Tony Stanco, founding director of the Washington-based Center of Open Source & Government, Corel should sell a pre-set amount of WordPerfect, perhaps as much as $500 million.

That can be accomplished, according to Stanco, by putting the code for WordPerfect into escrow until a sales threshold, to be determined by Corel itself, is met. Once the pre-determined amount of sales has been reached, the escrow breaks and the code is released as open source.

The Center of Open Source & Government has established a code escrow program, called Open Source Threshold Escrow Program, or O-STEP, designed to be used for this purpose by commercial software companies.

While software vendors are selling the current version of their products, of course, they can be working on future versions, which can be in turn be escrowed and released as open source.

This gives the vendor a year or two lead over competitors who might use the source code for their own products.

Corel may be the perfect company to take advantage of the open source escrow approach, according to Stanco.

Corel's WordPerfect office productivity suite, which includes the WordPerfect word processor and Quattro Pro spreadsheet programs, is already on the upswing, after cutting deals last year with hardware vendors to offer WordPerfect on their PCs.

Dell Computer began offering WordPerfect last summer as the standard office productivity software on its Inspiron notebook computers and Dimension desktop PCs, which are aimed at the home and small business markets. Substituting Microsoft's Office XP Professional 2 software would boost the cost of those systems by more than $300.

HP and Gateway have also signed similar deals with Corel.

Besides the price advantage, Stanco says many organizations are interested in alternatives to Microsoft's Office software because of concerns about being locked in to proprietary software.

Microsoft has cornered an estimated 85% of the office productivity software market.

Organizations are "tired of being locked-in to Microsoft Windows, and they're looking for replacements," Stanco says. "But they're not going to buy Corel just to replace one lock-in with another."

By going open source with WordPerfect, Stanco suggest, Corel can benefit from users' distaste for being locked in to proprietary software, and potentially gain up to $1 billion in stock value in the next couple of years.

"Corel has the potential to leverage the growing Open Source momentum like no other company," he says.

San Francisco-based venture capital group Vector Capital has been negotiating to purchase Corel for several months.