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Canada's Corel Corp. Steadily Gaining In Market Share

By Elizabeth Corcoran Washington Post Staff Writer Thursday, October 24 1996; Page E03 The Washington Post

Who are the competitors that keep executives at personal computer software king Microsoft Corp. worried at night?

Netscape Communications Corp. surely is one. But at a recent financial analysts meeting, Microsoft Executive Vice President Steven A. Ballmer also named a cross-border invader, Corel Corp. of Ottawa, as high on his list.

Just a year ago, Corel was mostly known as an award-winning maker of graphics software. It was even a featured Microsoft partner at the splashy debut of the Windows 95 operating system, offering a version of its leading product ready to run on the new software.

But Corel has spent the past year carefully reconstructing itself to compete head-on with Microsoft in a core business: word processors, spreadsheets and database technology, the bread and butter of office software. "We think this is still a money maker for us," said Michael C.J. Cowpland, chief executive of Corel.

There is a daunting list of companies that Microsoft has bested in the office software market, including Lotus Development Corp. and Novell Inc. Why should Corel succeed where others have failed? Established in 1985, Corel has a strong track record of selling graphics products through retail stores. "I can't think of a company that has done as good a job in a very, very difficult market as Corel," said Eric Brown, an analyst with Forrester Research in Cambridge, Mass.

But Corel -- and Cowpland -- have bigger ambitions. By some savvy shopping, Corel has picked up strong technologies at relatively modest prices and is prepared to use its strength in graphics to support its quest to gain shares in other markets.

In March Corel surprised analysts by snapping up what many industry watchers had dismissed as a doomed family of products -- the WordPerfect word processor and QuattroPro spreadsheet -- from Novell.

This past week, another piece clicked into place when Corel announced that it was assuming control of Borland Corp.'s database software, called Paradox. (Rather than buy the Paradox business outright, Corel has assumed an indefinite license to use, market and further develop the technology. Corel will pay Borland license fees and royalties on future sales. The firms did not disclose specific details of the deal.)

Corel sells the programs in various combinations as part of its Corel WordPerfect Suite and Corel Office Professional packages, which compete against versions of Microsoft Office.

It also has taken a page from Microsoft's strategy sheet and priced its products aggressively. For instance, a call to one software retailer indicated that Corel's WordPerfect Suite could be had for roughly $250 while Microsoft Office was listed at $370.

Those moves seem to be paying off. According to data collected by PC Data of Reston, Corel's suite nosed ahead of Microsoft's in numbers of units sold at retail stores in July -- and seems to have stayed ahead.

"It appears that they have literally turned a sow's ear into a silk purse," said Richard Piotrowski, an analyst with securities firm Levesque Beaubien Geoffrion Inc. in Toronto. Although Piotrowski originally criticized Corel's decision to buy WordPerfect, the company is now on his "buy" list.

Corel "is doing smart things at retail," said Chris Le Tocq, an analyst with the San Jose-based market research firm Dataquest Inc. "While you can't say that Microsoft is on the run, Corel is making its presence felt and causing Microsoft to take an interest in them."

Analysts are quick to point out that Corel's gains are still merely scuff marks on Microsoft. "Microsoft is clearly watching it -- and Corel's product is worth looking at," said Tim Bajarin, president of Creative Strategies Consulting in San Jose. The Corel suite "is a great value buy. . . . Will it cause people to throw out Microsoft Word and go back to WordPerfect? I don't think so," he said.

For starters, Microsoft sells much of its office software to corporations and ships products already installed on new computers -- neither of which is counted in the retail sales tally. In addition, many customers may be delaying purchases of office software until January, when Microsoft is scheduled to release its next version of the product, Office 97, said Forrester's Brown.

Even so, Corel also is charting its next moves. To woo companies, Corel recently offered another opportunity: Firms can pay one price and install the Corel office suite on any number of desktop computers. Corel also is scrambling to improve both WordPerfect technology and the Paradox database. "We have about 400 developers dedicated entirely to moving WordPerfect forward," Cowpland added.

What intrigues analysts most, however, are the products that Corel is building based on Internet technology. Corel is translating its office software to work with Sun Microsystems Inc.'s hot new "Java" technology for Internet software. It aims to release prototype, or "beta" software by December and products in early 1997, said Chris Biber, a "technology evangelist" at Corel.

"In the turf war with Microsoft, we're establishing new turf," he said.

Still, only when those products are fully available will the market learn just how formidable a competitor Corel will be, said Cathryn Baskin, editor in chief of PC World magazine, in San Francisco. "Corel's intentions are far more than bluster," she said. It is "a company extremely interested in offering alternatives to the Microsoft monopoly."

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© Copyright 1996 The Washington Post Company

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