As part of its strategy to ship more product into the direct market, Corel Corp. has struck a deal with Dell Computer Corp. to bundle WordPerfect 10 and Quattro Pro 10 into the company’s latest line of low-end PCs.
Ottawa-based Corel already has bundling deals in place with Sony, Compaq and Hewlett-Packard (Post merger, HP is still shipping both Compaq Pressario and HP Pavillion desktop machines).
“”The direct channel for software, as well as hardware, has been growing,”” said Steve Houck, executive vice-president of strategic relations for Corel in Ottawa. “”I think people are getting used to buying things direct from manufacturers — which oftentimes is facilitated online — than they were just two years ago.””
Dell’s SmartStep 150 D line, which started shipping in the U.S. last week, marks a slight change in the Round Rock, Tex.-based company’s strategy. “”It’s kind of a departure from Dell’s traditional business model where a customer can call in and order whatever mix of hardware and software that they want,”” said Lionel Menchaca, public relations manager for Dell client products. “”With the SmartStep line, the whole point is to have a standard offering for customers that are intimidated by technology.””
The Dell-Corel bundling agreement is for these low-end machines only. “”The kind of customers that buy that system are looking to use it for basic office applications. With WordPerfect and Quattro Pro, we thought that would be a good fit for the 150D customer that’s using it for basic business applications,”” said Menchaca.
Dell is testing the waters with Corel product for now and will wait for customer feedback before deciding whether to extend the agreement to other Dell product, he added. Most Dell machines currently ship with Windows XP and Works Suite 2002 with an option to upgrade to other Microsoft products like Office XP.
The Dell deal doesn’t extend to Corel’s planned launch of a WordPerfect upgrade in the first quarter of 2003, but Houck said there may be an opportunity to upsell SmartStep customers through direct mailing campaigns and other marketing promotions. “”Of the OEM bundles that we do, we have a 20 per cent attach rate to upgrades,”” he said.
Bundling deals are probably not a large revenue stream for Corel and won’t do much to chip away at Microsoft’s practically insurmountable lead in the desktop software market, according to IDC Canada Ltd. analyst Warren Shiau, based in Toronto. Houck said that Corel considers its share of the word precessor market to be 12 per cent, but that number could be inflated said Shiau, since the company measures the market based on off-the-shelf retail purchases.
For its part, Corel seems content that it’s holding its own with other word processor manufacturers that own a small share of the market. “”The good thing there is we’ve been able to keep Lotus and (Sun Microsystems) StarOffice at bay from taking the market share that’s available outside of Word,”” said Houck.
“”They’ll never really challenge to be a dominant player. Even the days of Corel thinking that way passed long ago,”” said Shiau. “”They’ll take whatever cash they can get from it and use it to subsidize R&D and other product areas.””
The SmartStep 150D currently retails for US$599. Canadian ship dates and pricing have yet to be determined.