Competition, heart of the market
Corel is a Canadian company that produces software for the publishing
industry. Some of its products, such as CorelDraw and Ventura (a product
it bought rather than invented), are among the best in the world. They
do the job well (even if they are hard to learn and increasingly loaded
with unusable features).
But Corel has a problem. A few years ago it decided that it could only
compete in the global market for personal computer software by expanding
its range — compete means to survive in the face of the Microsoft Corporation.
Corel chose to buy another software product, WordPerfect. WordPerfect
in its day was the leading word processing software, with well over 50%
of the world market. It wasn't the first market leader — that honour belonged
to WordStar — but it set the standard for global desktop domination in
the early 1990s.
Like WordStar, WordPerfect required users to learn long lists of arcane
key sequences to do things like moving text around. In general once a user
learned that skill they were wedded to the software (why learn multiple
sets of arcane key sequences).
That was fine, until Microsoft decided to introduce its Windows operating
system. This was a shameless copy of the Apple Mac environment, but when
Apple took Microsoft to court they lost — because it turned out that the
Apple Mac environment was a shameless copy of something invented by workers
at Xerox.
With Windows came a flashy new version of the Microsoft Word program,
where a mouse made short shrift of all the arcane key sequences. WordPerfect
was dead in the water, even if it took a while for the market leader to
realise this. By the time Corel came to buy WordPerfect, the price had
dropped to a few hundred million dollars.
Today, the entire Corel company is worth just a few hundred million
dollars. The company is in trouble. Its founder quit as chief executive.
Another loss for diversity in the world software market was on the cards.
Suddenly, Corel shares are up again, rising 70% in one day last week.
The reason? Microsoft has just purchased a 24.6% stake in the company.
In the past couple of years Microsoft has also purchased a significant
stake in its rival, Apple. The reason is not hard to find. If Apple fails,
killing its Mac operating system, Microsoft would find itself with almost
all of the personal computer operating system market. Similarly, if Corel
goes to the wall, taking WordPerfect with it, then Microsoft Word would
have almost 100% of the word processing software market.
Such market dominance is not allowed under US anti-trust legislation.
If WordPerfect and Mac disappeared, it would make Microsoft's claim that
it does not use its market domination to destroy all opposition in its
path (which of course it does) harder to sustain.
Despite the explosion of inventions and investments in information technology,
Microsoft has proven itself able to entirely monopolise any area of technology
within a decade of its development. Such is the real tendency of the market.
BY GREG HARRIS
