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6/30/2005
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Corel Chairman Plans To Get Acquisitive

Corel Chairman Amish Mehta says in an interview that the company aims to expand its base of customers and partners via acquisition.

Corel Chairman Amish Mehta took the Ottawa-based software vendor private two years ago as part of a bid to save the company from extinction. Today, Corel says it's about to complete its seventh consecutive profitable quarter, thanks to its total focus on the solution provider and retail channels. Mehta recently relinquished the CEO role, naming former IBM executive David Dobson as chief executive.

In an interview with CRN Editor In Chief Michael Vizard, Mehta attributes Corel's growth to a singular focus on the small-business market. He also promises that the company will be more aggressive about expanding its current base of customers and partners through acquisition.

CRN: What do you see as the factors driving Corel's apparent turnaround?

MEHTA: About two years ago, Corel was a public company, and it was focused on over a dozen different lines of business. We decided to take the company private and refocus the company entirely around WordPerfect, Draw and our other channel-centric products. We got out of the business of being anything that was not channel-centric. And over the course of the last two years, we spent all our energy revitalizing Corel as a brand that represents the most credible alternative to Microsoft and Adobe.

CRN: How do you differentiate Corel from them?

MEHTA: We target value-conscious consumers and businesses at the $50 to a $300 price point. We're going after a very different segment of the market. WordPerfect obviously on one hand can compete with Microsoft Office, but you're not going to find too many new enterprise users using WordPerfect. Maybe a better way to think about it is we're going after the market that is buying the sub-$500 PCs.

VARs are very attracted to bundling our products on a $500 PC. If they give you a PC with Microsoft products on it, the PC may cost me $500 but with all the software, the price point is going to push $1,000. But to go with WordPerfect and Corel, you can sell that PC for $600 or $700, and make significantly greater margins. VARs are selling our products because we are much more generous in terms of the percentage spread that we share with them.

CRN: What kind of margins are we talking about?

MEHTA: Based on the volume, it could approach 50 percent.

CRN: Given Microsoft's dominance of the Office space, how well does your software work with Microsoft file formats?

MEHTA: With WordPerfect 12, people have the option to operate in what we call in Microsoft mode. When you click on 'Operate in Microsoft mode,' it looks and feels like Microsoft. Most users in the world are not going to notice the difference, whether they are using WordPerfect 12 in office mode or Microsoft mode vs. using Microsoft itself. That innovation, which we introduced last year, has been wildly successful. We've shipped millions of copies of this product through the combination of our channel partners and OEM partners.

CRN: Has Microsoft's licensing policies created any interest in Corel beyond the small-business market?

MEHTA: I would tell you that a number of Fortune 1000 companies, for the first time ever, have come back and said 'we heard great things about Word Perfect 12, can we learn more?' I don't know if they are going to switch. But I can tell you that they're frustrated. In general, what you're seeing there is category by category, people are looking at and getting more and more comfortable with Microsoft alternatives. Frankly, that is happening at a much faster pace internationally than it's happening in North America.

CRN: How viable is Corel today as a private company?

MEHTA: Corel, this quarter, will complete its seventh quarter of strong profitability. We are a very healthy, vibrant company. Over the course of the last two years we've invested more dollars in our core products. We have probably doubled the size of our channel sales organization and increased the marketing dollars that we are spending on developing that channel. From a head count perspective, Corel at its low was about 425 people. Now we are up above 550 people today.

CRN: How many partners do you have today?

MEHTA: We have only approximately 3,000 partners in North America today. My goal isn't to get 6,000 more partners. It is more to get 3,000 very high-quality partners. I'd rather have 3,000 partners that are very focused and dedicated to our products than have 30,000 partners who couldn't care less about us.

CRN: Is Corel thinking about making any acquisitions?

MEHTA: Unquestionably, we are going to continue to look at acquisition opportunities such as we made with Jasc. What is so [unusual] about Corel is we have a global brand. We sell across 75 countries. We have over 20 million customers and users of our products. And we have a distribution channel that is capable of supporting significant and different products.

So many other companies in different parts of the software chain could benefit heavily from partnering with Corel or being acquired by Corel. We are very actively looking at these kinds of opportunities. Corel has gone over the last two years from being a company that was hanging on in a competitive software industry to one that is wildly successful as a private company, and is now looking to take the leadership position and acquire others.

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