Equity Firm to Squeeze Profit Out of WinZip

 
 
By Lisa Vaas  |  Posted 2005-07-18 Email Print this article Print
 
 
 
 
 
 
 

Vector Capital purchases WinZip, maker of the ubiquitous file compression download that ranks near the top of the list of most popular downloads and that even predates the Internet itself.

Vector Capital announced on Monday that it has purchased WinZip Computing Inc., maker of the ubiquitous file compression download that ranks near the top of the list of most popular downloads and that even predates the Internet itself. Chris Nicholson, a partner at San Francisco-based Vector Capital, said WinZip gets downloaded some 500,000 times a week. It has been downloaded a total of about 149 million times, and its customer base is estimated to number more than 100 million worldwide. But WinZip, while profitable, has a lamentable amount of customers who abide by the companys honor system and shell out $29 after the 30-day free trial, Nicholson said. "Not many people as a percentage of users actually pay," he said.
A major part of the equity firms strategy to turn WinZip into a more profitable company is to strongly emphasize that the software is not free and that, if users like it, they should pay. "Its one of those ubiquitous things, one of these things everybodys got on their desktops. But its not free. I have to shout from the rooftops, its not free," Nicholson said.
The other part of the firms two-pronged strategy is to add functionality to upcoming versions so that customers feel it will be worthwhile to pay for more features. Vector is a private equity boutique that specializes in buying up companies that have established customer bases and then improving their performance. An example of its past work is its investment in Corel Corp., maker of WordPerfect, CorelDraw and Paint Shop software. Vector turned Corel from a company that had been leaking money into a profitable shop by doing things like adding other acquired technology to its mix, such as the formerly shareware program Paint Shop Pro, from Jasc.
Likewise, Vector has already been working to enhance WinZip. Vector purchased WinZip in January and since then has quietly been improving basic compression functionality to make files smaller. Vector has also added automation and scripting to make repetitive actions faster. A major upgrade is expected "real soon now," Nicholson said. Nicholson said that the purchase agreement with WinZips previous owners stipulated that Vector had to keep things quiet to ensure a smooth transition with the user base, the management team and employees of the small company. Based in Mansfield, Conn., WinZip was founded in 1991. It has fewer than 50 employees. The equity firm has also released a new product called WinZip Companion for Outlook 1.0. It automatically compresses attachments to Outlook e-mail, saving users "bandwidth and time and annoyed messages from IT saying your in-box is too full," Nicholson said. Outlook Companion is a "simple idea, but if everybody used it, the world would be a better place," he said. Vector has also inked a co-marketing deal with Google Inc. to enhance both companies distribution. The agreement calls for WinZip to distribute Googles toolbar and desktop search. Check out eWEEK.coms for the latest news, reviews and analysis on enterprise and small business storage hardware and software.
 
 
 
 
Lisa Vaas is News Editor/Operations for eWEEK.com and also serves as editor of the Database topic center. Since 1995, she has also been a Webcast news show anchorperson and a reporter covering the IT industry. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on eWEEK.com, and in the startup IT magazine PC Connection. Prior to becoming a journalist, Vaas experienced an array of eye-opening careers, including driving a cab in Boston, photographing cranky babies in shopping malls, selling cameras, typography and computer training. She stopped a hair short of finishing an M.A. in English at the University of Massachusetts in Boston. She earned a B.S. in Communications from Emerson College. She runs two open-mic reading series in Boston and currently keeps bees in her home in Mashpee, Mass.
 
 
 
 
 
 
 

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