Even in an industry well known for its innovators and eccentrics, Corel Corp president and chief executive Michael Cowpland has a reputation for being a maverick. With a broad portfolio of software products, ranging from the Draw graphic design program to the WordPerfect office suite, Dr Cowpland has set Corel apart as the scrappy rival to Microsoft Corp, the computer industry’s 800-pound gorilla.
‘How much do I worry about Microsoft’s market share?’ he asks. ‘It’s something I watch. The good news is that we can compete, and compete very well even though it has three times the market. We could not grow market share against the Microsoft juggernaut for a really long time. But we have started to grow WordPerfect, which is a big deal in the Microsoft environment.’
An expatriate Briton who went to Canada in 1964 to pursue graduate and postgraduate studies in engineering, Cowpland based his company in Ottawa, far from the hot spots of the US-dominated software industry. But in so doing, he helped turn the Canadian capital into a high-tech center in its own right. In many ways, Cowpland is a computer industry outsider who has made his presence felt in Silicon Valley largely by the force of his own will, but that suits him just fine.
‘We’re proud of the fact that we’re Canadian,’ he says. ‘You can go anywhere and see our products. It’s a source of pride to us that we’re the best in the world and we’re doing it right here in Ottawa.’
Cowpland has built Corel with a sense of pride that some critics say borders on arrogance. And more than once in the company’s 14-year history he has come under fire for being reckless with his shareholders’ money.
Bundle of joy
Corel began life as a desktop publishing systems integrator, bundling hardware and applications – ironically, WordPerfect and Ventura Publisher were among the first – with homegrown graphics utilities. Before too long, though, Cowpland realized where the real money was, and Corel soon abandoned the safe systems integration business in favor of developing its software business.
‘We found that the utilities we were providing were in huge demand by people who didn’t want to buy whole systems,’ he explains. ‘We found the profitability in that area was enormous and we began to focus on that.’
With clip-art libraries, fonts and the award-winning Draw design program, Corel soon acquired the lead in the burgeoning PC graphics software market. It was a position Cowpland was willing to leverage throughout the late 1980s and 1990s. Corel’s aggressive acquisition strategy saw the company grow from a vendor focused primarily on graphics software to a diversified industry leader.
However, that strategy came with costs that often made investors nervous. In 1996, when word leaked out that Cowpland had set his sights on WordPerfect Corp, the Utah-based software company then owned by Novell, market analysts sounded alarm bells and investors started to sell. Once the deal was complete, Corel’s stock price plummeted even further in the face of layoffs and some truly alarming losses.
The following year, Cowpland tied his company’s fortunes to Sun Microsystems’ Java programming language. ‘Java is being referred to as the fourth wave of computing,’ he announced at the time. ‘I expect the WordPerfect suite to be the only suite able to run on every computer.’
Despite its advance press, Corel’s Java project soon spiraled down the drain. Today, Cowpland says the mistake was expecting Sun to be open with its technology. The project was ‘based on a product controlled by another company and it was held back,’ he says. ‘Sun was well behind on its promises. Java just isn’t there on the desktop. It’s too slow.’
In the media, Corel appeared to be a lame duck; and shareholders and the press have blasted Cowpland himself. But he seems to take this neither personally or too seriously. ‘You don’t expect good press when you go into a transition,’ he says. ‘It’s always a painful process, and when things aren’t doing too well, we do hear about it from our shareholders.’
Indeed, in September Corel settled a class-action lawsuit launched by shareholders after Cowpland and other executives sold some stock before releasing a quarterly report which detailed a rather large loss in 1997. Corel listed on the Toronto Stock Exchange (TSE) in 1989 with an offering on Nasdaq following in 1992. From a high of about $18 in mid-1995, the stock dropped steadily to around $6 from the date of the WordPerfect acquisition in early 1996. That changed with the announcement of better than expected results for the quarter ending August 31 1999, sending the stock soaring 23 percent in heavy trading.
‘You really have got to be philosophical about the stock market in this industry. High technology is always volatile, but, at the same time, real growth requires some steady long-term investment in research and in people,’ Cowpland pondered prior to those results. ‘Where we are going and the strength of our technology isn’t necessarily reflected by the stock market.’
On the rebound
His tune may have since changed. With its newly articulated aggressive strategy, and great third quarter results, the company is on the rebound. More importantly, Corel is being touted as a software giant killer.
‘The secret to success is to have a good strategy and to communicate clearly,’ Cowpland now pronounces. ‘We provide as much information and communication as we possibly can about what we’re doing and where we’re going. But you can’t always be effective – the market has a mind of its own.’
Cowpland’s most recent strategic advance is into the world of Linux, an operating system alternative to Microsoft Windows that has been gaining a good deal of support in computer and IT circles. Unlike Microsoft Windows, the Linux operating software is ‘open-source’ software. That means that its basic components and architecture are free for anyone to use or supplement.
‘It was a surprise to us three years ago when we first got into it that you could get this quality without paying any fee,’ Cowpland says. ‘That was particularly surprising compared to Java, which was supposed to be open but was controlled by Sun. When we found that Linux was so good and available, it was refreshing.’
Cowpland has recently begun to focus all of Corel’s resources toward Linux and has already released a version of WordPerfect for Linux, with its award-winning office suite and Corel’s very own version – or ‘distribution’ – of the operating system due to follow very soon.
Business as usual
Cowpland is re-inventing Corel yet again, though he insists that it’s all just business as usual. ‘It’s not really that big a change,’ he says. ‘When we develop a Draw or a WordPerfect, what we’re building is the top level of the operating system, the application layer and GUI [graphical user interface]. With Linux the kernel [core code of the operating system] is already there. So we’re not starting from scratch by any means. The thing we’re doing is what we’re experts at – the GUI, the fonts and the applications.’
The goal, according to Cowpland, is for Corel to leverage its Windows applications and its existing user base in a hot new market. A study released by market researchers International Data Corp found that 13.5 percent of businesses surveyed now use Linux, compared to none two years ago. That growth is expected to continue, and Cowpland wants to be along for the ride.
‘The fact that we understand Windows makes us very strong in Linux,’ he says. ‘None of the other distribution vendors understand the need for transfer from the Windows world. We’ve positioned ourselves as the bridge between Windows and Linux.’
But that also positions Corel and Cowpland as the leaders of a crusade against what many computer users see as Microsoft’s evil empire. It’s a perception that Cowpland will only grudgingly accept. ‘We don’t want that negative energy, so it is more a question of what we can do with Linux better than what we can do with Windows,’ he considers. ‘But it isn’t productive to us to be anti-Windows when we have 50 mn Windows users.’
Cowpland argues that it is certainly productive, however, to provide a viable alternative to the world’s biggest software company, and so he is pursuing what he says is the market strategy that got Corel started in the first place.
‘We think that we have a huge edge,’ he comments. ‘We can bring all of our Windows users to Linux in one fell swoop. And we are now making great profits. Anything that we do in Linux is gravy on top of a profitable company.’
