Corel announced on Tuesday that PC Chips, a large Taiwanese maker of PC motherboards, would bundle the Canadian software vendor?s Wordperfect Suite 8 with up to 18 million motherboards this year.
David Wong, PC Chips? vice chairman, claimed the company shipped 15 million PC motherboards last year and intends to ship 18 million in 1999. Under the terms of its one year agreement with Corel, each of these motherboards will come with a CD Rom including Wordperfect Suite 8.
Although financial terms were not revealed, Corel admitted that the deal would not contribute greatly to earnings, but instead it hopes to jumpstart sales of its upcoming Wordperfect Office 2000 by seeding the market with its predecessor.
In a similar move earlier this month, Corel said it would grant ?amnesty? to users of illegal copies of Wordperfect, enabling them to legally buy WordPerfect Office 2000 at the upgrade price of $29 rather than the full license price.
PC Chips, for its part, hopes the deal will enable it to provide PC makers with a more complete product rather than just a motherboard. The company is also moving into the fast growing "white box" market for PCs that can be branded by distributors or dealers. By the fourth quarter of this year, Wong said, PC Chips would sell a "white box" PC for just $99.
But this unusual arrangement could dramatically boost Corel?s installed base. While the firm claims that its Wordperfect Suite is currently being used by 35 million people worldwide, the new arrangement could increase this by as much as 50 per cent.
David Cowpland, Corel?s president and chief executive, said that 12 per cent of the user base purchased an upgrade last year, but if 12 per cent of the new 18 million users upgrade to Wordperfect Office 2000, this would present a significant boost to earnings.
And such a boost would be a welcome one for the struggling company. Corel?s two main products, Wordperfect Suite 8 and Corel Draw 8, are both at the end of their product lifecycle, which caused a shortfall in revenues in the firm?s last quarter when it reported a net loss of $14.6 million.
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