Ottawa’s tony Rockcliffe Park was still ankle-deep in autumn leaves when Michael Cowpland, founder and CEO of Corel Corp., offered to take a visiting journalist for an afternoon spin in his white $400,000 Lamborghini Diablo.
Leisurely the drive was not. Pulling out of his 10-car garage, Cowpland stomped on the gas and the car shot forward like a runaway cruise missile. At the end of the block he braked suddenly, then cranked the leathercovered steering wheel hard to the right. Another shot of fuel, a sharp left turn, a violent blast from the 492-horsepower engine and another neck-snapping burst of acceleration.
Cowpland loves speed, and he loves those abrupt changes in direction. You can tell from the way he drives—and from the way he runs his Ottawa-based software company.
Last month, he did it again, throwing Corel into another dizzying, 90-degree turn. On the same day that the company reported its first quarterly profit in two years, Cowpland announced that Corel was selling off its most promising new product in a decade, a clever little device called the NetWinder computer.
The product of two years and at least $10 million worth of research and development, the NetWinder packs the capabilities of a full-sized network server—a machine that stores files on the Internet or on a corporate network—into a box no bigger than a hardcover book. At $2,000 to $3,000, depending on options, the NetWinder is thousands of dollars cheaper than many conventional servers. What’s inside is impressive, too: instead of using Windows NT or some other expensive commercial operating system, the NetWinder is designed to run on Linux, the freely distributed operating system that is rapidly gaining popularity among technology professionals because of its stability and almost limitless flexibility.
Corel planned to launch the NetWinder in early 1998, but technical glitches pushed the introduction back to the fall. Nevertheless, the early reviews were enthusiastic. An industry publication, Linux Journal, named it the year’s best new hardware product. On the Microsoft/NBC Web site, technology writer Gary Krakow called the NetWinder “wonderful” and suggested that it could prove as popular with PC users as Apple’s new iMac has become among fans of the Macintosh. Naturally, all that good press helped to in-
vigorate Corel’s shares, which jumped in price from $1.65 last September to a 52-week high of $7.70 in mid-January—making Corel the best-performing company on the Toronto Stock Exchange in that period.
And then, without warning, came the decision to change course. In typical Cowpland fashion, the announcement came out of the blue, catching everyone off guard. Among the most surprised was Ron McNab, the executive in charge of Corel’s hardware division. He was honeymooning in Fiji when Cowpland decided to shut down the division and unload its proudest asset. Before Mc-
Nab could get back to Canada, a deal had been struck with Nepean, Ont.-based Hardware Canada Computing Inc., a small but rapidly growing company that builds, resells and services computers on behalf of corporate clients. Under the agreement, Corel will surrender all rights to the NetWinder in return for a 25-per-cent stake in HCC. McNab and many of his 60-odd employees will lose their jobs, although most will likely be offered similar positions at HCC.
What does it all mean? Corel investors are still scratching their heads. Bay Street and Wall Street analysts, who can rarely see beyond the next quarter, applauded the company’s declared intention to focus on its core brands, the CorelDRAW graphics suite and WordPerfect office software. (Within a few weeks, Corel expects to announce the sale of its videoconferencing properties to a company based in Western Canada. Another
new product, known as jBridge, was spun off in December to GraphOn Corp. of Campbell, Calif.) Always skeptical of Cowpland’s ability to stick with one strategy, the analysts were worried that Corel was about to blow a ton of money creating a North American sales force for what, at the moment, is still an unproven market.
Others argue that Corel, in its haste to curry favour with the big brokerages, has walked away from a potentially huge and lucrative opportunity. “I don’t care what the analysts or the bean counters think— I’m still ticked off that Corel didn’t keep the NetWinder and execute,” one U.S. shareholder wrote on an Internet message board for Corel investors.
One theory, popular with small investors, is that Cowpland’s recent moves are intended to clean up the company’s books for a potential takeover by another company. Holders of this view can’t imagine a risk-taker like Cowpland being satisfied as the CEO of a stable but boring software company, now entirely dependent on two aging products with shrinking profit margins. Adding to the
speculation is the impending departure from the company of chief technologist Pat Beirne, the engineering brains behind many of Cowpland’s most successful products at Corel and, before that, at telephone equipment-maker Mitel Corp. For 23 years, the two men have been inseparable. Beirne says he will continue to advise Corel on a parttime basis, but henceforth most of his time will go to helping HCC with the NetWinder.
For the record, Cowpland swears he’s not going anywhere. CorelDRAW and WordPerfect, he says, still have loads of untapped potential, and Corel is moving forward with plans to sell Linux versions of both products. But veteran Corel watchers have learned not to put too much faith in such pronouncements. The day Cowpland sticks to one strategy, and stops veering off in new directions, will be the day he sells that Lamborghini.
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