If the latest conventional wisdom on Microsoft's dominance is correct--namely, that the biggest asset of the Microsoft empire is Office, not Windows--then the Corel Corporation's recent agreement with GraphOn may be the most significant initiative by the Canadian software maker since it first shipped its own Linux distribution in 1999.

Corel Corporation (NASDAQ: CORL) recently announced a licensing agreement with GraphOn Corporation (NASDAQ: GOJO), a company whose Bridges software allows any display device to run any application over any type of connection, from dial-up to low-bandwidth to wireless. According to representatives from Corel, this agreement will make Corel Linux the first Linux distribution to run Windows applications "seamlessly" over any type of connection. While options such as dual booting have allowed Linux users to keep their Windows applications intact and operable on their otherwise open-source boxes, the integration of GraphOn Bridges into the Corel Linux package makes it increasingly simple for computer users to take advantage of the Linux OS without abandoning their favorite (and familiar) Windows applications.

Said Michael Cowpland, president and chief executive officer of Corel Corporation, "The beginning of the new millennium is a perfect time for Linux to surge forward a true alternative to Windows on the desktop, and the new Corel Linux/GraphOn technology will accelerate this process ... This will enable organizations to mix Linux and Windows desktops seamlessly, which is a prime goal of Corel in our Linux development."

According to Corel, a version of Corel Linux containing both Linux client and Windows NT server licenses for GraphOn Bridges is scheduled to ship by the middle of this year. Users will be able to access most Windows applications on a Windows NT server through the Corel Linux desktop without needing any additional third-party software. The Corel-GraphOn arrangement is an extension of an earlier agreement through which Corel was allowed to run its own Windows applications on Corel Linux.

From the perspective of GraphOn, winning Corel as a client for its Bridges software is a fairly major coup for the connectivity software maker, whose most recent success was a Bridges-related agreement with original equipment manufacturers (OEMs) in China. GraphOn also has development and licensing agreements with Sun Microsystems to provide its Solaris client for JavaStation and a similar development and licensing agreement with IBM for its GO-Joe, Java-to-UNIX thin client. Nonetheless, applying GraphOn's connectivity software to the Windows-on-Linux could represent, at the least, a spur to further development of thin servers and other software that will allow Linux and Windows to peaceably (or even profitably) co-exist.

"Linux has been embraced as a truly viable, powerful and stable alternative to Windows, but the market still has a large investment in Windows applications," according to CEO and president of GraphOn Corporation, Walt Keller. "Corel and GraphOn are taking Corel Linux to the next level by giving users the freedom to adopt Linux on their desktop while still using their familiar Windows applications ... It's no longer a matter of one OS or the other. GraphOn Bridges and Corel Linux let users have it all."

The Bridges host portion of the software resides on the server alongside the desired Windows applications. The Bridges Linux client allows the desktop PC to run the Windows applications over the Internet, a network or through a dial-up connection. Even though the Windows applications run on a different PC, the applications appear and operate as though they are running on the user's local desktop.

In many ways, Corel Corporation has been the Rodney Dangerfield of the major software companies. Even in the face of favorable reviews from CNET for its Linux distribution, and the company's continued resilience in the face of competition from Microsoft, Corel is talked about as a takeover prospect as often as it is mentioned as a major software maker in its own right.

For example, rumors in late 1999 that Red Hat, the major U.S. Linux distribution, was considering an acquisition of Corel sent the share price of Corel Corporation on a wild ride before the speculation ended. What is most unfortunate from a Corel perspective is the fact that Corel had been making a variety of industry moves: from acquiring an ownership stake in LinuxForce, a "full-range" technical services and support group, to partnerships with S3's Professional Graphics Division and Creative Technology Ltd. in December. Yet it took a rumor that the company was soon to be in another company's hands for investors to begin smiling on Corel again--smiles that soon faded as the rumors proved false.

Additionally, top-tier departures--executive vice president for sales and marketing, Jim Orban, left at the end of 1999 after four years, and executive vice president for finance and Chief Financial Officer, Michael O'Reilly, who has announced his resignation after two years at Corel--have only added fuel to the "what's-wrong-with-Corel?" rumor mill. The absence of a resolution to charges of insider trading against Corel CEO Michael Cowpland is also widely seen as a significant investor distraction.