Giant Killer

Who would run an IT company? As if juggling product lines to meet the demands of an increasingly hungry marketplace and incorporating new technologies wasn?t enough, keeping shareholders and industry pundits happy has resulted in a high casualty rate at the top tables of IT companies. And if you?re in software, you?re pretty much assured of playing David to Microsoft?s Goliath.

But for Michael Cowpland, the British-born CEO of Canadian software corporation Corel, these problems are grist to the mill. Corel was once thought of as a one-product company with its market-leading PC graphics package, Corel Draw. But last year?s purchase of Wordperfect from Novell and Quattro Pro from Borland gave the company a new lease of life.

Armed with what he thinks could be leading products, Cowpland has steered the company into the world of Java and the network computer, and now feels ready to take on Bill Gates on his home turf.

One?s first impression of Cowpland is that he?s an unlikely giant killer. He comes across less like the CEO of a $400m-turnover company and more like a slightly nervous, if enthusiastic, salesman trying to sell you a copy of Wordperfect. Nevertheless, he still manages to pull off the role of a biblical David fearlessly loading his slingshot. Business Computer World caught up with him on the London leg of a tour of Corel?s operations across Europe.

QCorel built its reputation on one product, Corel Draw. Twelve years on from its inception, where is the company now?

AWe?re now positioned as the leading competitor to Microsoft in the office suite market, and that?s the most important segment to us; it?s getting close to being a $5bn market and we think we?ve got a viable, competitive alternative.

QThat product is Wordperfect Suite. Can it really shift Microsoft?s Office 97 off corporate desktops?

AWe?ve got a 26 million installed base for Wordperfect and it?s working very well for us ? we?ve restored confidence in the product. People can see we?ve pulled it around and we?re on the way up. The past 14 months have been phenomenal: we?ve introduced version 7, which has taken 52 per cent of the retail market in the US. And, in parallel with that, we?ve got Office for Java. We?ve also taken care of the 16-bit customers which is still a very important market for us.

QThe product is one thing. But what can a company like Corel do strategically to alter the balance of power? AWe?ve got the fastest development cycle, with version 8 coming out 12 months after version 7; Microsoft?s last development cycle was 24 months, Lotus?s was 36 months. We?re using our speed as a competitive edge. We?re now the company most focused on suites, because Microsoft is concentrating on developing NT, TV and going into satellites.

We?ve also got 1,000 developers now, which is enough to compete with Microsoft. And we?ve got big enough sales ? over $400m ? and 11 years of rapid growth.

The other thing you can do to win market share is to differentiate in terms of licensing programmes, because people hate the administration costs. We?ve come up with one called the Freedom Programme, which is really simple. You update it once a year; it?s dead easy and you don?t even have to count the people using it until the next year. That?s developed a lot of enthusiasm.

QSo you?re saying that Microsoft has missed whole angles of attack in the markets you are chasing? AMicrosoft is huge ? over 17,000 people ? and it can?t be that tightly focused, which is why it has such a long development cycle. And it stumbles. On this tour of Europe, we?ve found everybody is talking about the problems Microsoft has had with Office 97. Windows Magazine in the US has removed it from its recommended list, because of lock-ups in the system and tremendous incompatibilities between the file formats of 97 and 95. That?s given us a window of opportunity for our new version. People will say: ?It?s a hassle to move to Microsoft anyway, we may as well look at the competition which is less expensive and has significant new features as well.?

Also, the suite business is flat for Microsoft here on out. The company is getting 100 per cent growth from NT, so suites are of less importance.

QBut you can?t deny that it still has enormous clout in the applications market. Everyone else is just picking at the scraps.

AThere is a certain amount of tidying up the sweepings round the edge of the suite market. But the sweepings are huge. What could be a small loss for Microsoft can be a big gain for us. If you keep doing that you can end up with a Pepsi-Coke thing which can create a really good contest.

Microsoft?s approach now that it?s big is to go into corporates and say: ?Just buy us, it?s simpler, you all know our products?, and that?s a seductive argument. But why on earth would people buy into that? Nobody likes having one cable company or one phone company ? we all hate monopolies. So what?s the idea of giving the keys to your kingdom to one company?

Look across Europe at countries where that has happened; in France there?s almost no competition to Microsoft, and they?re paying double the price for Office as say in Holland where we?re very aggressively competing.

QIs there a danger that Corel will get that big and develop the same habits? Or that it might just fail altogether? AWe?ve focused ourselves more tightly. Where we had network computer and video technology, we have spun that off into a 100 per cent-owned subsidiary, Corel Computer Corporation.

We want to be focused on suites and graphics. We?re probably the first company to have won market share back from Microsoft, which is normally a one-way street. We believe we?re tremendously competitive ? that is how we managed to secure 80 per cent of the graphics market. But we still need people to look at the product and not buy in to Microsoft?s ?keep it simple? argument. Truthfully, we?re not worried about thoughts of beating Microsoft ? Microsoft will be impossible to beat.

QSales of office suites are slowing down. That must be a concern.

AIn some corporations we run into the problem where they say ?we?ve already got one, who cares?. The edge we?ve got is that, when we run into these problems, we can get installed with Office for Java. That?s our ace in the pack. On the Windows platform, we realise that there?s going to be pretty vicious competition to win market share against Microsoft ? which we can do, but it?s going to be a tough slog.

So we?re also making this other bet which is on a brand-new playing field. A new playing field can throw up a new leader and it?s more lucrative to be the leader than the number two. We?re already the leader in Office for Java so all we have to do is wait for Java to become the next platform and then Microsoft will be running behind us. And, since we are a faster developer, it?ll be tough to catch up with us.

QYou climbed on to the Java bandwagon very early on. But big question marks still hang over its adoption by the lucrative corporate markets.

AJava will take off. It has a tremendous buzz about it from a popular support point of view and a tremendous push behind it from the technical infrastructure point of view. People are ready for this new technology paradigm. And then you?ve got IBM, which is basically providing Java top to bottom, from the System 390 mainframe all the way down to OS/2. In some ways, because Microsoft has got so strong, it has forced the other giants to club together around a common standard.

QSo more than half of corporates are ?ready for Java?. But ready for what exactly?

AJava gives a new lease of life to all the other platforms. In fact, Java is probably the best hope for the Mac because Java can take care of all other software and Mac can then concentrate on what it?s good at, which is graphic arts. That?s why, as far as we?re concerned, the only two platforms we need to develop for are Java and Windows.

QAnd yet the Microsoft bugbear raises its head again with proprietary alternatives like ActiveX. AActiveX isn?t going to work because people have spotted that [you have to write a number of different versions for different machines] and so they?ve gone for 100 per cent pure Java. We were the first application to get that. Virtually every company is now looking at Java because of what it can save in terms of corporate connectivity.

Microsoft will become a player [in the Java market] too, because of its history of being flexible. One of its strengths is its agility. But Microsoft won?t own it and it will have to compete.

QYou?ve addressed some total cost of ownership (TCO) issues with server licences, Java applications and with Corel Computer Corporation. But it?s become such a big movement, surely everyone will have that angle soon. AIt?s interesting how Microsoft initially said [managing TCO] was bullshit. Now it?s offering two solutions: the Wintel PC and the NetPC. We?re finding that the people who are really interested in TCO are going all the way with NC Java machines. They?re not going half way with some patched-up Windows technology.

QMicrosoft would claim that Windows is tried-and-tested technology that will serve companies better; and then there?s the question of the number of applications already out there for the platform. Does this worry you?

AOffice for Java shows you what can be done ? that Java really is a workable platform. It reminds us, in a way, of when we were pioneering Windows, when Microsoft used to show off Corel Draw 1.0 to show how fast Windows could be. At that time, Windows had the same reputation that Java has today ? it was slow compared to Dos, and unstable.

QSo what does the future hold for Corel? AWe?re now known as a very aggressive, dynamic suite company as opposed to a ?nose-down heading-for-the-ground? company. We?re positioned in the most exciting parts of the industry. The most exciting area now is the office suite market where we?re competing very effectively and tenaciously and giving Microsoft a real headache ? which is good.

Apparently, Microsoft has got about six enemies and we?re number one ? which is excellent.

Corel?s Java adventure

Michael Cowpland?s Java evangelism is more than just hot air. To see what he?s on about, visit www.corel.com and download a demonstration copy of Corel?s network computer (NC) version of Wordperfect.

Effectively, this is an extremely ?lite? version of the software tailored to the Java-NC vision of the future. The suite opens as an HTML document. All the usual functions appear to be on offer, including spreadsheet formulae, word processing and presentation tools. However, after some tinkering, it becomes apparent that there are some fairly big drawbacks.

For example, it?s not possible to print to a local printer or save a file locally. And, if you?re a seasoned Wordperfect user, one of the first things you?ll notice is the lack of hotkey support.

The browser has complete control over the regular Windows menus, so hotkeys are out. (The full version of Office for Java ? available for installation on a server from a CD-ROM ? will overcome the problems with the Web demo version.)

The product is just a demonstration of the NC software concept, driven by the widespread dissatisfaction with bulky office software. The underlying idea is to cut the cost of ownership associated with PCs by providing limited features to users and simplifying administration by centralising the network model.

Users are left with a ?thin? client which allows them access only to the applications and functions that they require at any one time.

It?s the browser itself which provides the development layer for Java applications, and this is the key to understanding the hardware model which Java makes possible.

Because Java sits in a development layer all of its own and not directly on the operating system, it is completely platform-independent. The JVM (Java virtual machine) separates the development environment from the operating system. Corel Office for Java runs in this thin-client environment just as any Web page will run on your current-generation PC.

Eleanor Turton-Hill