Corel Pins Hopes on WordPerfect

By Peter Galli  |  Posted 2004-05-10

Corel Pins Hopes on WordPerfect

Corel Corp.s new owners are turning to that old standby, WordPerfect Office, to lead the company back, but its going to take a lot to convince the industry.

The Ottawa company, which was sold to San Francisco-based Vector Capital last summer, is now being run by Amish Mehta, a Vector Capital principal. The plan is to become once again a force in the desktop arena, with the help of increased funding to boost WordPerfects growth rate and market share and leverage its 17 million users.

But some users have been alienated by the roller-coaster ride in Corels fortunes over the past few years and its lack of focus on WordPerfect, which they saw as one of its mainstay products. Some have turned instead to Sun Microsystems Inc.s StarOffice or OpenOffice.orgs free distribution.

Click here to find out why Rob Enderle believes WordPerfect Office is the real No. 2 office suite.

Matthew Rice, a partner at Starnix Inc., of Thornhill, Ontario, said Corel will have to show long-term commitment to its products. "They will have to pick their user niches very carefully," Rice said. "They just cannot compete toe-to-toe with Microsoft [Corp.] at this point."

Corel has learned from past mistakes and will not be pursuing a line of Linux-based products until demand is there, said Mehta. While there is a lot of interest centered on Linux, particularly from governments, he said that "in two to three years out, we anticipate it to be a more meaningful source of revenue [for Corel]. But we are now fighting the Linux culture and the expectation that things should be free, as well as the immaturity of the Linux platform, which will change as more customers demand alternatives to Microsoft products."

Rice disputes that, saying Linux users are buying, and Corel has to be serious about WordPerfect on Linux and offer more than the current "proof of concept" version it is selling. "One of my customers moving from Microsoft Office chose to buy 1,000 copies of StarOffice rather than go to the free distribution," Rice said.

Corel has sold off or closed many of its other divisions and products in the past six to nine months to focus its resources on its WordPerfect and CorelDraw Graphics divisions. "We are now a 450-person company focused on these two product lines," Mehta said.

Next page: Corels target WordPerfect market.

Page Two

Mehta is also very clear about Corels target WordPerfect market: value-conscious customers, small and midsize businesses, and the government and legal communities. "Our value proposition to them is feature-rich, highly compatible software," he said. "Some 90 percent-plus of the tasks and documents a user will ever have to create can be done at 40 percent of what it would cost to do business with Microsoft. We are not the solution for large global enterprises and investment banks and those kinds of entities that have a superhigh level of technology requirements from their word processing solutions."

Margaret Brost, who runs her own legal business specializing in family law in Olympia, Wash., has been using WordPerfect since 1991, when it was the standard for law firms. "My area of practice is very document-intensive, and the administrator of the courts has mandated the specific formats to be used in all family-law cases. I was able to set up a Template Merge system that allowed me to merge these into documents and actually code within WordPerfect to automate our document production," Brost said.

Many law firms now use Microsoft Office and WordPerfect products simultaneously, Brost said, adding that WordPerfect 12, which was released last month, allows her to work in a familiar environment yet still interact with Microsoft users.

Mehta said Sun does not have the OEM and VAR distribution channels to match Corels. "Certainly, I am not writing them off, and we will make sure to remain three steps ahead of them. But, from a product, pricing and OEM perspective, Sun has not gained traction in the marketplace, and this links back to the compatibility and feature[s] of their product," he said.

Sun has distributed StarOffice software primarily through traditional retail and volume licensing outlets at a flat price, and it is included in the Santa Clara, Calif., companys Java Desktop System, which is available for an annual subscription.

Curtis Sasaki, Suns vice president of desktop solutions, said that OEM volume data shows that StarOffice and combined have surpassed 10 percent market share. "Most of the enterprise customers we talk to are comparing Microsoft Office 2003 versus StarOffice and making value judgments that way," Sasaki said.

In 2002, both Hewlett-Packard Co. and Dell Inc. agreed to offer Corels word processing package and spreadsheet application with some of their computer lines. Earlier that year, Sony Corp. also agreed to ship WordPerfect on a range of its PCs. But some of those deals have changed.

An HP spokeswoman said productivity software is not shipped with build-to-order notebooks, but Microsoft Office could be ordered with configure-to-order notebooks and is also available with HPs commercial desktops. The Palo Alto, Calif., company offers in Latin America. "HP also ships a very limited amount of commercial desktops with Corel WordPerfect," the spokeswoman said, declining to say if HP was considering changing its offerings.

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