Corel Perfects Turnaround

It has been 10 years since the then WordPerfect Corp. made the fateful decision not to have a version of its flagship word-processing package ready when Microsoft unveiled Windows 95. The good folks in Orem, Utah, resigned themselves to the idea that they could not have a graphically updated version ready in time, so they focused their energies on perfecting a version for DOS instead. Big mistake.

As everyone knows, Microsoft won the office-suite productivity war, and WordPerfect, which was later bought by Corel, has never fully recovered.

That's until lately. Under Corel, WordPerfect initially floundered. But in the past few years and under the guidance of Corel CEO Amish Mehta, WordPerfect has rebounded surprisingly well. Corel has strung together five consecutive quarters of profitability and begun growing revenue again. Mehta took over the company after it was acquired by San Francisco-based Vector Capital Group in August 2003. He chalks up his success to good management, a sound product plan and a heavy reliance on the channel. He also has a strategy that is unique in several ways and may just yet prove that there is life after the world's most successful software company pounds you into submission.

As it celebrates its 20th anniversary, the Ottawa, Canada-based company, best known for the CorelDraw Graphics Suite, the WordPerfect Office Suite and the Corel Painter Natural-Media package, believes its future will be secure if it focuses on the small-to-midsize business market and users, positions itself as the smart alternative, doubles down on bets in digital-photography software and continues to make inroads into the VAR channel.

The SMB market is a no-brainer for Corel, whose products boast many of the same features as products from Microsoft or Adobe, but cost anywhere between 30 percent to 60 percent less. Stepping up as the alternative to Microsoft and Adobe is also a shrewd move for the company. Mehta believes VARs and customers alike have grown weary of Microsoft's security problems, licensing issues and lack of openness. As for digital photography, the market opportunity is virtually unlimited as businesses and customers alike embrace digital cameras.

Regarding the channel, Mehta says his growth rates in the VAR channel are upward of 20 percent in the past year. He has authorized his lieutenants to double the amount of people they hire to help partners and commit more money to supporting and rewarding VAR allies.

Now, Mehta believes the turnaround is complete and that Corel is poised to be a robust growth company once more. In fact, he notes, Corel could double or triple the amount of business it does in Office productivity software and not make a dent in Microsoft's market share.

With all the company has going for it, it's somewhat ironic that Mehta attributes his recent success to what he's not doing as much as to what he is doing. For example, when he took over, Corel was trying to operate in as many as 13 different market segments with various products. Way too many, he concluded. He focused the company on core assets and winnowed his key product lines to three.

But one key task remains to be explored: a new CEO. A financier at heart, Mehta is moving on soon. The move has been well-planned and well-known for some time. But it does raise some uncertainty about the company.

After all that it has been through, Corel still has work to do.