1600 Carling Avenue
Ottawa, Ontario K1Z 8R7
Telephone: (613) 728-8200
Fax: (613) 761-9176
Incorporated: 1985 as Corel Systems Corporation
Sales: $243.05 million (1999)
Stock Exchanges: NASDAQ Toronto
Ticker Symbol: CORL COR
NAIC: 51121 Software Publishers
Since its founding by Dr. Michael Cowpland in 1985, Corel Corporation has built a reputation as an innovator with its leading-edge business and graphics software. The Company's products, used by more than 50 million people worldwide, are recognized for their excellence and value through hundreds of industry awards. Corel is dedicated to delivering advanced technology with compatible and user-friendly products that are competitively priced. Development of its CorelDRAW line of graphics applications and Corel WordPerfect family of business tools is continually evolving to meet the demands of the corporate, retail and academic markets. In recent years, the Company has expanded its graphics expertise into a new line of consumer products designed for the home and small office market.
1985: Dr. Michael Cowpland founds Corel as a systems integration company.
1989: CorelDraw is launched after two years of code development.
1991: CorelSCSI is launched.
1992: CorelDraw 3 debuts, representing the beginning of the modern full-featured graphics suite.
1995: CorelDraw 6 is launched simultaneously with Windows 95, becoming the first major 32-bit application available for the new operating system.
1996: Novell Inc.'s WordPerfect division is acquired.
1999: WordPerfect Office 2000 is released; sales of CorelDraw reach ten million copies.
2000: Corel announces definitive merger agreement with Inprise/Borland Corporation.
Corel Corporation is one of the world's largest developers of business productivity, graphics, and operating systems solutions. Corel's signature product is CorelDRAW, a graphics software package with sales that reached ten million copies in 1999. Aside from its graphics software, the company also develops and markets WordPerfect business productivity software, having purchased the WordPerfect division from Novell Inc. in 1996, as well as Internet applications for home and business customers. Corel markets its products in more than 15 different languages in approximately 70 countries. The company is led by its founder, Dr. Michael C.J. Cowpland, and is seven percent owned by Novell.
Corel is the offspring of Michael Cowpland, a high-energy entrepreneur and Ottawa celebrity who is credited with founding two of Canada's most successful high-technology ventures: Corel and the earlier Mitel. Cowpland was born in Sussex, England, in 1943 and received his bachelor of engineering degree from Imperial College in London. In 1964 he emigrated to Canada. There, he earned a master's degree and finally a Ph.D. at Carleton University while working as a research and development engineer at the respected Bell-Northern Research Ltd.
Cowpland worked at Bell-Northern with Terry Matthews, a friend who also had emigrated from the United Kingdom. In 1973 the pair left Bell to form a new venture dubbed Mitel (an abbreviation for Mike and Terry Electronics). They launched the tiny company with the hope of creating a device that could translate the pulses generated by rotary dial telephones into the tones created by touch-tone phones. Laboring in Cowpland's garage in Ottawa, the pair achieved their goal and went on to build one of Canada's most successful private telecommunications products companies.
Cowpland and Matthews realized stunning success with Mitel during the 1970s and early 1980s, doubling sales of its advanced telephone switching equipment every year for ten straight years. The darlings of the Canadian investment community, Cowpland and Matthews grew rich. In the early 1980s they began to chase new markets by diversifying into various digital technologies, and the pair seemed to have the Midas touch when most of those projects took off.
All seemed to be going well until the mid-1980s. Mitel posted revenues of C $343 million in 1984, in fact, by which time the company was employing more than 5,000 workers in ten plants around the world. It was in 1984, though, that Mitel's diversification effort suddenly began to look like a miscalculation. Significantly, Cowpland and Matthews fell behind schedule on the development of a state-of-the-art phone switch called the SX-2000. When computer giant IBM tired of the delay and shopped elsewhere for the technology, Mitel was faced with plant overcapacity, cost overruns, and a C $50 million research-and-development tab. Mitel began losing money, and Cowpland and Matthews were compelled to sell the enterprise to British Telecom. Still, both founders walked away with millions in cash.
Undeterred, Cowpland viewed the sale of Mitel as an opportunity to pursue the development of technology that was of greater interest to him at the time and to escape a job that had become an administrative burden. In 1985 he dumped C$7 million of his own money into a new venture, which he named Corel. His initial goal was to develop a better laser printer that could be used with personal computers. He found that it was too difficult to compete in that market with low-cost Asian manufacturers, however, and quickly shifted his strategy. Corel soon became a value-added reseller of computers, selling complete systems geared for desktop publishing tasks.
Cowpland scrambled during his first few years to find a role for Corel in the marketplace. He eventually added optical disk-drives to his desktop publishing system lineup and then started marketing local area networks. Considering the hefty start-up investment, sales grew tepidly&mdashø about C$6.6 million during 1988--and for a few years, Cowpland seemed the consummate fallen star. 'The first couple of years were the most challenging as we were trying to find the right niche, but I think that is typical of any new company,' Cowpland recalled in the June 1992 Profit. 'It's almost impossible to come up with the ideal concept right out of the starting gate,' he added.
Corel's Graphic Software Debuts in 1989
While he pushed his value-added hardware, Cowpland labored behind the scenes on what became a pet project: the creation of software that offered better design and layout capabilities than were offered by leading applications of the time. To that end, he hired a crack software development team that he allowed to work relatively autonomously. Before the end of the decade, the team had developed a graphic arts software package that would become the standard for the PC-based desktop publishing industry. In 1989 Corel unveiled its cutting-edge CorelDRAW software program. CorelDRAW, significantly, was the first graphics application to incorporate into one package all of the major graphics functions: illustration, charting, editing, painting, and presentation.
CorelDRAW was an instant success, which was surprising given the fact that Corel had never mass-marketed anything, much less a software application. Cowpland's savvy marketing strategy, however, eventually earned him almost as much respect in the software community as did CorelDRAW. Cowpland plowed millions of dollars into an aggressive sales campaign. Specifically, he bucked the industry norm by marketing CorelDRAW heavily in Europe and Japan. Most software companies at the time started out focusing almost solely on English-speaking consumers. Furthermore, as CorelDRAW became more popular, Cowpland refused to adhere to the convention of selling different versions of the program one after the other. Instead, Corel developed and simultaneously sold multiple versions of CorelDRAW, each of which was tailored for a select market niche.
Corel's rapid-fire product development and marketing effort quickly boosted its bottom line. Indeed, sales (roughly 80 percent of which were attributable to CorelDRAW) rose to C$36 million in 1990 and then to C$52 million in 1991, while net income increased to a solid C$7 million. Going into 1992, Corel was employing about 250 workers and had shipped nearly 300,000 of its CorelDRAW packages to more than 40 countries. CorelDRAW was becoming increasingly popular with such customer groups as children, artists, architects, and business owners, among others. In short, CorelDRAW allowed users to create anything from T-shirt designs to corporate logos and technical drawings. Using a computerized pencil, or drawing from 12,000 programmed images, users could create an endless array of color illustrations, designs, and drawings.
As Mitel had, Corel reflected the insatiable drive of its founder. Cowpland had established his name in the Canadian business scene with Mitel, but his remarkable success with Corel revived his fame in his home town, where he 'replaced Pierre Trudeau as Ottawa's most-watched celebrity,' according to Canadian Business Magazine. In Ottawa, Cowpland was known as much for his persona as his business success. He raced around the city in flashy sports cars and generally made no apologies for his wealth. He and his wife built a massive new home that included a ten-car underground garage and two squash courts and was designed to mimic the look of Corel's gold-colored headquarters.
Cowpland's no-holds-barred, unemotional business style was mirrored more clearly on the tennis court, where he was known as an aggressive contender driven to win at any cost. Evidencing that drive was Cowpland's relationship with longtime tennis partner Ed Hladkowicz, the tennis pro at a club that Cowpland bought during his Mitel days. Cowpland hired Hladkowicz to work for Corel, and Hladkowicz became a manager in the company's systems division. Meanwhile, the two friends continued what became a 20-year run of regular tennis matches. Then, one day in 1992, Cowpland coldly and abruptly eliminated the systems division and sent Hladkowicz packing. A week later he phoned the stunned Hladkowicz to arrange a time to play tennis (the two eventually did resume their association).
Although Cowpland was criticized for his callous treatment of employees, few could dispute the success of his philosophy in the business arena. Cowpland prided himself on making quick decisions and moving briskly to capitalize on new opportunities. During the early 1990s Corel introduced a string of CorelDRAW programs geared for entry-level users, intermediates, and advanced buyers. Those introductions helped Corel to capture a hefty 55 percent share of the global market for drawing and illustration software products. The resulting revenues rose to C$90 million in 1992, C$140 million in 1993, and then to C$226 million in 1994, while net income increased to nearly C$45 million.
Corel's success in 1993 and 1994 blasted critics, who claimed that Cowpland's downfall was imminent. Based on what they believed was a saturated market as well as Cowpland's history at Mitel, a number of investors began shortselling (betting against) Corel stock in 1992 in anticipation of an earnings slide. Instead, the company's earnings climbed rapidly in the wake of new product introductions and an improved balance sheet. Impressively, Cowpland had managed to grow Corel without taking on any debt. By 1994, in fact, Corel had virtually no long term debt. Furthermore, Cowpland still owned an equity stake in the company of about 20 percent by 1995, giving him an estimated net worth of $200 million.
By 1994, though, it could be argued that Corel was relying too heavily on a single product line geared for a market niche that was becoming saturated. So, after shipping nearly one million CorelDRAW programs in 15 different languages, Cowpland began looking for a new avenue to growth. In 1994 the company launched an ambitious initiative to branch into four new markets: consumer CD-ROMs, office suites (or 'bundles' of productivity software), video-conferencing, and computer-aided design (CAD). Production of CD-ROM games and educational products was a top priority--Corel planned to launch 30 titles in 1995 and an additional 50 each following year. Corel planned to tap its established network of distributors in 60 countries to vie with venerable Microsoft in the $1 billion CD-ROM consumer market.
Creating its CD-ROM products in cooperation with Artech Digital Entertainments, Inc., Corel launched several CD-ROM products in 1995, including an electronic coloring book called 'Blue Tortoise,' a Marilyn Monroe photo compilation, a movie database, and collections of card and board games. At the same time, it continued to enhance its CorelDRAW line and to chase the other market categories it had targeted in 1994. For example, it announced plans to begin shipping a CAD software application called CorelCAD, which was designed to help homebuilders and people doing home renovations. Cowpland expected that effort to generate sales of $50 million annually by 1998. Likewise, Corel introduced a video-conferencing system early in 1996 called CorelVideo that was designed to operate efficiently on local area network systems.
Acquisition of WordPerfect in 1996
Critics wondered why Cowpland would take on so much risk by simultaneously jumping into industries in which he had little or no prior experience. Their concern was no doubt heightened early in 1996, when Corel stunned the software community by agreeing to purchase Novell Inc.'s vaunted WordPerfect division in a transaction valued at $124 million. WordPerfect word processing software was a leader in the massive word processing market. The deal also included Quattro Pro, a leading spreadsheet software, and the PerfectOffice application suite of productivity software. The surprising purchase was expected to more than triple Corel's annual revenue base.
The WordPerfect purchase vaulted Corel from a major niche player to a software industry contender in a business dominated by operating system powerhouse Microsoft: 'Corel Feels Bold with WordPerfect Deal; CEO Has Glass House, But He Throws the First Stone at Microsoft,' read the headline in the February 11, 1996 Wall Street Journal. By purchasing WordPerfect, Cowpland threw down the proverbial gauntlet, positioning his company to go toe-to-toe with Bill Gates's behemoth Microsoft. The acquisition marked the beginning of a new era for Corel. From 1996 onward, Cowpland's success with Corel would be measured by his ability to beat Bill Gates at his own game.
In the wake of the signal WordPerfect acquisition, Corel braced itself for the intense media scrutiny fueled by Cowpland's bid to break Microsoft's hegemony. The company continued its practice of relaunching CorelDRAW approximately every 13 months, recording consistent market success with its tried and true graphics product. In 1999, when CorelDRAW 9 was released, sales of Corel's mainstay product line reached ten million copies, a milestone achieved during the tenth anniversary of the product's release that testified to the one enduring strength supporting Corel. The company's success in posing as a legitimate threat to Microsoft's formidable position in business productivity software, however, was considerably less certain.
Corel's Java-compatible version of WordPerfect was tailored for compatibility with a variety of platforms, including Windows 95 and 98, Windows NT, Windows 3.1x, Macintosh, Unix, and Linux. In 1998 the company released WordPerfect Suite 8 with Dragon NaturallySpeaking, giving users speech-enabled word processing. A year later, Corel released WordPerfect Office 2000, but neither version catapulted the company to the rarefied heights for which it clamored. Corel lost $30 million in 1998 on $246 million in revenues and posted a $16 million profit on declining revenues of $243 million in 1999. To be fair, the company was pursuing an ambitious goal, one that could not be realistically achieved by the decade's end.
The true measure of Cowpland's success remained to be determined in the inaugural decade of the 21st century. Corel made a positive start to its determinative decade by completing an important merger. In February 2000, the company announced that it had signed a definitive merger agreement with Inprise/Borland Corporation, a transaction valued at $2.44 billion. The union of Inprise/Borland, a leading provider of Internet access infrastructure and application development tools and services, and Corel represented a pivotal step toward reaching Cowpland's goal. In a February 7, 2000 Corel press release, Cowpland stressed the importance of the merger's effect on Corel's advances with the Linux operating system, which was capable of running on a wide range of hardware. 'With Inprise/Borland's leadership in the software development community and Corel's Linux desktop operating system and productivity applications,' Cowpland said, 'we have an extraordinary opportunity to reach all facets of the exploding Linux market.'
Upon completion of the merger, Inprise/Borland was to be organized as a wholly owned subsidiary of Corel. Based on 1999 figures, the two companies would generate over $400 million in revenues. Although the company's graphics and business productivity software was developed for a variety of platforms, much of its future success--particularly its success in wresting market share from Microsoft--hinged on the popularity of the Linux operating system. Toward this end, Cowpland's hopes were buoyed by the announcement that the Linux operating environment was expected to grow at a compound annual rate of more than 25 percent through 2003, according to International Data Corporation, an industry research organization. Whether or not such growth could inject Corel with muscle it needed to combat Microsoft remained to be determined in the years ahead.
Principal Subsidiaries: Corel Corporate Limited (Ireland); Corel, Inc.; Corel International Corporation (Barbados).
Principal Competitors: Microsoft Corporation; Adobe Systems Incorporated; Quark, Inc.
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Source: International Directory of Company Histories, Vol. 33. St. James Press, 2000.