Hewlett-Packard is to pre-install Corel's WordPerfect suite on its consumer PCs, a blow to market leader Microsoft.
Previously Hewlett-Packard provided Microsoft Works, a reduced version of its productivity suite Microsoft Office, to consumers who purchased new computers. But this week the company said that WordPerfect will now be installed on all HP Pavilion desktop PCs sold in North America from September onwards. The pre-installed Corel software is also a slimmed-down version of the company's WordPerfect Office 2002 suite.
The move follows the decision by Dell earlier this month to replace Microsoft Works with Corel's WordPerfect productivity software. WordPerfect 10 and Quattro Pro 10 will be pre-loaded on the Dell Dimension 2300 desktops and on Dell's Inspiron 2600 notebook computer systems starting in September. These systems will be available in North America. WordPerfect 10 and Quattro Pro 10 are also currently available on the SmartStep 200N and 250N notebook computers from Dell.
The news should provide badly needed revenues to Corel. The firm had been suffering from losses, slow growth and a lack of direction. Its shares, which traded at USD30 in December 1999, have been halved since the start of 2002 to USD0.89 on Monday in New York. Corel stock has not traded over USD1 since 17 June and the company has received a de-listing warning from the Nasdaq.
In its second quarter of fiscal 2002, Corel had flat revenues of USD30.8 million and reported a net loss of USD6.3 million, or USD0.07 per share, meeting consensus estimates but twice as high as last year's losses.
Despite its woes, there are two determining factors that have been cited as the primary reasons for the switch from Microsoft products to Corel products. Most importantly, Corel's WordPerfect software is thought to be cheaper than Microsoft's competing Works suite. At a time when both consumers and technology firms are looking to trim costs by any means possible, the lower cost of WordPerfect is an enticing incentive for PC makers.
Additionally, Corel is thought to be benefiting from Microsoft's legal troubles. During the recent anti-trust hearings in Washington, PC makers said that Microsoft had been abusing its monopoly in operating systems and productivity tools, and in particular the way it licensed its products to PC makers.
Subsequently, Microsoft's anti-trust problems have resulted in more open competition for the pre-installed PC software market. In the last financial year Microsoft generated USD9.6 billion of its total USD28 billion of revenues from desktop software. Microsoft currently has more than 90 percent of the office productivity software market.