Cowpland's Corel is number two, but tries harder

By Richard Morochove

First published July 31, 1997

For most CEOs, battling Microsoft in office suite software would be challenge enough. But feisty Michael Cowpland, CEO and founder of Ottawa's Corel Corp., now wants to challenge the software giant's support of the Net PC.

Cowpland has high hopes for Corel's Network Computer. He handed me an NC prototype, which looks smaller than you'd expect.

"This gives you full functionality on a little computer," said Cowpland. "You don't have to give up any of the features people have got used to in the Win95 environment."

Cowpland's aiming for the high-end of the NC market, with a fairly powerful device. The NC will be based on either a StrongARM 230 MHz. or Pentium 200 MHz. processor and come with 32 megabytes of RAM and a 300 megabyte hard drive for caching data. Retail price should be in the $700 to $950 range, however he believes half the machines will be rented to users.

He's talking with potential bulk buyers such as Northern Telecom and America Online. He says AOL may offer NCs on a subscription basis to new members who don't have a PC.

There will be at least two versions of Corel's NC, a small desktop device and a somewhat larger portable unit, with volume shipments beginning in October. Corel dropped plans for a handheld PDA, due primarily to the success of 3Com's Pilot, which now dominates that market.

Corel acquired a source code licence to Netscape's Navigator web browser and is re-writing it in Pure Java for the device. Corel will provide 80 per cent of the software in the NC, including the operating system and Office for Java, Enterprise version.

Cowpland believes the NC will become a commodity item with low profit margins for the hardware, since any processor that runs a Java virtual machine can be substituted. The key to its usability is the software inside. So he views the NC as a copy-proof container for his software that will skim off some of Intel's quasi-monopoly profits for Corel.

Cowpland describes Microsoft's competing Net PC running Windows as "Complexity on top of complexity, supposedly making it simpler. We don't believe it. Basically, you want to go with the most elegant, new, modern approach, which is Java."

Cowpland dismisses Microsoft's support of Java. "They're trying to preserve their monopoly. Their worst nightmare is Java basically, so why would they want to endorse it?

"They've had to grudgingly accept it by having JVM [Java Virtual Machine] in their browser, because otherwise they'd lose their battle to Netscape. It must have really burned them to buy a licence from Sun!"

Cowpland believes Microsoft is trying to split the Java market by blending in ActiveX controls, which now work only in Windows. Java creator Sun Microsystems reacted to this threat by establishing a 100 per cent Pure Java accreditation.

"ActiveX gives you complete control of the operating system and therefore is basically insecure. People can erase your hard drive," Cowpland said. "Whereas Java works in a box which is very secure."

I believe Cowpland never met a software company he didn't like. He buys companies the way some boys collect baseball cards. He estimates that of some 500 acquisitions, 480 have turned out well for Corel. He seems particularly fond of once-proud software brands in decline, which he can snap up at a bargain.

Cowpland plays his acquisitions like chips in a poker game. The more you bet, the more chances you have to win.

"We pretty well bet correctly on most of the horses," said Cowpland. "We bet on CD-ROMs, admittedly a bit early. Similarly, we bet on Windows, with Corel Draw 3 being the first star Windows product. Our Win95 product was the first one, aside from Microsoft's. We didn't bet on OS/2 and other people did. I think we're very happy with betting on Java very early and betting on NCs early, too."

When you buy so many companies, some are bound to slip through the cracks. When I reminded him of a former leader in word processing software now in Corel's stable, he was momentarily taken aback.

"We ... aaah ... yes, we did buy WordStar! That's correct," exclaimed Cowpland. "That one turned out to be superfluous, because we bought WordPerfect, which is the Crown Jewels."

Some bargains are not what they seem. Corel recently wrote off the remaining portion of the WordPerfect acquisition cost, more than $100 million U.S. However, Cowpland still considers it a success, because he can now sell upgrades to 26 million WordPerfect purchasers worldwide.

Even though Corel's 1,500 employees face 22,000 staffers at giant Microsoft, Cowpland believes Corel can survive by being quick-footed and delivering updated versions faster than Microsoft.

"It's such a big market," said Cowpland. "Even if there's a dominant player, they'll never get 100 per cent of the market. Look at Pepsi vs. Coke, McDonald's vs. Burger King, there's always a good number two. We think we're a good number two in the Windows space." CW