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Corel Corporation is a computer software company headquartered in Ottawa, Ontario, Canada.
History It was founded by Michael Cowpland in 1985, who intended it to be a research laboratory ("Corel" is an abbreviation of "Cowpland Research Laboratory"). The company saw great success early in the high-tech boom of the nineties with the product CorelDraw, and became, for a time, the biggest software company in Canada. Corel made many early investors very wealthy, but its strong growth did not last. It attempted to compete with Microsoft after acquiring the WordPerfect software in 1996, but it failed badly. Corel was forced to lay-off large numbers of employees and Cowpland came under investigation by the Ontario Securities Commission for insider trading. Concerning the WordPerfect acquisition, Cowpland believed that WordPerfect could be the "Pepsi to Microsoft's Coke". This was a classical marketing perspective, but fundamentally flawed, perhaps reflecting Cowpland's lack of expertise in the software industry. Unlike food items, software programs have strong compatibility dependencies, which make entrenched applications much harder to compete against. Even if WordPerfect were better and marketed strongly, there would also need to be a compelling reason for existing Microsoft Word users to switch, and new users generally want to be compatible with existing users. Corel also failed to stop Microsoft from pushing pre-loaded copies of Word onto new computers, a strategy which eroded WordPerfect's higher market share. However, as the company is no longer subject to the same rules governing publicly traded corporations now, these claims can be difficult to verify. It should also be noted that many WordPerfect users received their software as a preload on their new computer. Corel generally charges the hardware manufacturer very little per copy for the bundled software. The WordPerfect acquisition also changed the nature of Corel itself. Whereas Adobe Systems remained in the graphics and publishing software business, Corel was suddenly no longer solely within that sphere. A barrage of new projects, such as Corel Video, Barista (a Java-based office suite), Corel Computer, and Corel Linux, fueled speculation that Corel was trying to reinvent itself but wasn't sure how, or that they were "throwing stuff at the walls and looking to see what would stick." Cowpland eventually left Corel in August 2000 and a new board of directors immediately sought to stabilize operations, promising a renewed focus on the firm's core competencies. Unfortunately, an ambitious attempt to revitalize product branding under the new president Derek Burney (with the help of consultants from McKinsey & Company) turned into a series of missteps. With great fanfare, Burney announced that the product line would be split into five brands. A few months later, it was to be three brands (DeepWhite, Procreate and Corel). And finally, after much delay and expense, it was decided that the company would go back to using "Corel" as the company's only brand. In October 2000, Corel announced that it was forming what it called "a strategic alliance" with Microsoft and that Microsoft would be investing $135 million in Corel. In August 2003, Corel was wholly acquired by Vector Capital, a private equity firm, for a price of $1 a share (slightly more than the cash in the company). The company was voluntarily delisted from the NASDAQ and Toronto stock exchanges. Some U.S. shareholders alleged the management benefited from the buyout personally while the buyout price was too low. A lawsuit was filed in the U.S. to stop the buyout and was unsuccessful. Some believe this contributed to the cold reception in the investment community in the 2006 IPO. In March 2005 Corel announced that the US Justice Dept purchased 50,000 licences of WordPerfect (adding to the worldwide user base of 20 million) and that WordPerfect was adding 4 million new users per year thanks to bundling deals with Dell Computer. Corel contends that WordPerfect is the only viable alternative to Microsoft Office with sales 70 times Lotus's SmartSuite and 300 times Sun's StarOffice. On April 26, 2006, Corel completed its return to the public market with an initial public offering on NASDAQ. *. Vector Capital still owns approximately 72% of the company. On August 28, 2006, Corel announced that they will acquire multimedia software provider InterVideo for about $196 million. * Corel Products - Past and Present See also | |||||||||||||||||||||||||||
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