HP signs up Corel WordPerfect for Pavilion PCs

FRAMINGHAM (08/27/2002) - The overall sales war with Microsoft Corp. Office was lost long ago, but the skirmishes continue for Corel Corp. as it steps up the fight to find new marketplaces for its own WordPerfect office software products.

In a deal announced this week, Corel said it will provide its WordPerfect 10 word processing software and Quattro Pro 10 spreadsheet program to Hewlett-Packard Co. for inclusion on all new HP Pavilion desktop computers sold in North America, starting next month. No such details have emerged for Australian consumers. Also featured as part of the WordPerfect Productivity Pack is a customized task manager to help users complete projects.

The deal follows a similar pact made with Dell Computer Corp. through which Corel will provide the productivity pack for selected models of Dell Dimension and Inspiron computers.

Steve Houck, executive vice president of strategic relations for Corel, said that under the deals with HP and Dell, the Microsoft Works software that has been offered on the machines in the past will be replaced, expanding Corel's toehold in the profitable office productivity software arena.

When asked why Corel took so long to sign up with HP and Dell, Houck said, "It's not that we haven't been trying." The company has had bundling deals with computer makers in the past but hasn't been able to maintain them due to pricing wars.

And while Corel is way behind the dominant Microsoft Office suite in terms of sales and revenue, it sees these opportunities as a way to begin building relationships with original equipment manufacturers to gain market share for Corel products, Houck said.

He estimated that some 3 million HP Pavilion machines and about 1 million Dell machines will ship in the next year with WordPerfect software, based on numbers from IDC.

"The onus is on Corel" to make sure that users of the software are satisfied with the products and find it easily compatible with Microsoft Office file formats, Houck said.

Users will be offered inexpensive upgrade paths to get the full WordPerfect 10 office suite, which features presentation and database applications and more. HP users will be able to upgrade for a special $99 price.

Of the expected 4 million machines that will ship with the WordPerfect products, Houck said he hopes to see 12% take the upgrade option.

Analysts said the deals are good for Corel but won't make much of a dent in the office suite wars.

"What can be a good business for Corel ... doesn't necessarily change the enterprise dynamics," said Jonathan Eunice, an analyst at Illuminata Inc. in Nashua, N.H. "They figure they lost the big war years ago, so now what can they do with this asset?"

For manufacturers like HP and Dell, the deal probably means lower costs and elevated profits, even if by small measures, he said. "Down at that level of platform, price is all," Eunice said. "Any $5 or $12 that you can switch out of anything is usually [good]."

David Smith, an analyst at Gartner Inc. in Stamford, Conn., said that similar bundling deals made in the past haven't really meant much in terms of future increased market share.

What is different today, he said, is that Microsoft's recent and well-publicized licensing and pricing changes have angered many users, giving them the incentive to look elsewhere when they can.

Corel's $99 upgrade may be something that at least some users will consider, he said.

"It's a strategy," Smith said. "It makes sense to seed the market with some low-cost or free software and then get them to upgrade. It's not something that's going to revolutionize the world or keep Microsoft up at night, but they could make some money."

Tom Anderson, worldwide marketing manager for HP's home products division, said his company went with Corel to give HP buyers software that will meet their needs and provide value.

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