Corel Sells XMetal, Exits Web Services Tool Market

Amish Mehta, chief executive of Corel, said in a statement that the sale would enable the Canadian software company to "sharpen its focus" on its core desktop products, graphics tool CorelDraw and the WordPerfect Office productivity suite.

Terms of the deal, which is expected to be completed in several days, were not released. Both companies are privately held.

XMetal, which Corel acquired in 2001 with the purchase of SoftQuad Software, is an authoring tool that uses extensible markup language to define data elements on a Web page and create business-to-business documents. XML is a key technology in web services, an umbrella term for a set of emerging specifications for building applications that can communicate over the Internet using standardized interfaces.

The need for standalone XML tools has narrowed over the last several years, as makers of full-featured integrated development environments, such as IBM, Borland, Sybase, Sun Microsystems and Microsoft, have added authoring capabilities.

In exiting the market, Corel leaves XML authoring for the desktop to Microsoft and Adobe Systems, which also sell competing products to WordPerfect and CorelDraw, respectively.

"I don't think they've gotten any real traction with their ability to sell XML," Ronald Schmelzer, analyst for market researcher ZapThink LLC, said of Corel.

While failing to find a lot of customers for XMetal, Corel has also struggled to compete with far larger rivals Microsoft and Adobe.

"I think they're really trying to find their way," Schmelzer said.

In acquiring XMetal, Canadian firm Blast Radius joins companies like Novell, Digital Evolution and Infravio in combining professional services with tools. XMetal customers, however, probably would be better served if the product line had gone to a software company that's in the business of developing and selling products, Schmelzer said.

"(XMetal) gives them an edge from a consulting perspective, not from a product perspective," he said. To support XMetal like a software company, Blast Radius would have to change its business model.

Blast Radius Chief Executive Gurval Caer, however, said in a statement that the company intended to "fully support XMetal, continue its development and support emerging XML standards such as XBRL."

XBRL, or extensible business reporting language is a specification for publishing financial information in the XML format. It is designed to provide a standard set of XML tags for exchanging accounting information and financial statements between companies and analysts.

According to Corel, XMetal customers include CIBC World Markets and KBC Bank and Insurance.

Corel went private last year following a $98 million buyout by venture capital firm Vector Capital, which said it would concentrate on the company's core products. Vector laid off 18 percent of Corel's already reduced staff.