Corel

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 CJ. Cowpland, and is seven percent owned by Novell.

Origins

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 diskdrives to his desktop publishing system lineup and then started marketing local area networks. Considering the hefty start-up investment, sales grew tepidly—to 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).