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Applications: The struggle continues

Lotus and Corel fight to stay relevant against Microsoft in the application suites market. One vendor won't.

What's a company to do when it's unable to break the hammerlock its main rival has on the marketplace? If you are Novell (NOVL), you simply give up.

That's literally how the year began when Novell decided to get out of the desktop productivity business by virtually dumping WordPerfect to Corel (COSFF). For the curious, Novell sold the suite for $11 million in cash and 10 million shares of Corel stock. It originally paid over $1 billion for WordPerfect the company, whose core business was word processing.

"1996 was characterized by WordPerfect returning from edge of extinction," said Eric Brown, senior analyst at Forrester Research. "Corel was able to solidify niche markets and make inroads into the general market by marketing the hell out of the box."

Besides lowering the price of its suite to $99, Corel also tried some unusual per-server pricing strategies to pry corporations away from Microsoft Office. Neither made much of a dent in its competitors' market share.

The other remaining, er, contender in the suite race is Lotus Development and its SmartSuite, which is also limping along. Since IBM (IBM) acquired the company, the focus has largely been on the Notes franchise. In an interesting marketing twist, Lotus is taking out full-page advertisements that go after Corel instead of the market leader, Microsoft (MSFT). Lotus's pitch: Trade in your WordPerfect suite for a free copy of SmartSuite. Go figure.

However, both Corel and Lotus will continue to nip at Office's heels as they prep new version of their suites, both due in early 1997. Next year should go a long way in determining the viability of network-centric computing as all three companies move to break their suites down into componentized elements, which are easier for users to download and for developers to create custom applications in a network-centric world.

Corel is working on a pure Java version of its WordPerfect Professional suite, a move that when first announced was greeted with skepticism but could eventually end up with a lot of imitators. Lotus is about to ship SmartSuite 97, a more traditional suite with a hint of component technology. It will follow that with a Java suite of its own, retooling its Lotus Notes Components to run in any Java-enabled browser.

Microsoft may say nice things about Java in public, but its own component strategy revolves around its own technology. To make its Office 97 suite easier to run from a server, Microsoft has built common components such as help wizards, toolbars, and graphics tools for the different applications to share. Office 97 also supports Java applets as long as they're wrapped in ActiveX. But a pure-Java Microsoft Office anytime soon? Stay tuned for that one.

Meanwhile, even as the three suite vendors gear up for 1997 upgrades, market researcher Dataquest released a study in September that expressed concern over the health of the application suite market.

The market, dominated by Microsoft, grew by 24 percent from the second quarter of 1995 but has experienced a slowdown from the first quarter of 1996, the study said. "This market is still astonishingly healthy and profitable, but these early warning signs warrant careful attention," said Dan Lavin, Dataquest senior industry analyst.

Predictions for 1997
"I think Microsoft deserves some praise for getting HTML and GIF converters out the door. Corel gets praise for trying to convert a significant portion of their suite to Java--it could be a watershed move."
--Ross Rubin, group director at Jupiter Communications

"SmartSuite and WordPerfect will continue to find it difficult to compete against Microsoft Office in the near-term. But the next real turn of the wheel will come when some measurable installed base of Java-driven or similar network computers permeates the installed corporate base. Lotus and Corel have been putting resources into Internet computing and will be well positioned, not in the 1997 time frame, but in the next generation."
--Eric Brown, senior analyst at Forrester Research

"I think Corel's Office for Java is an intriguing proposition. I like their jump-ahead-of-the-curve attitude."
--Karen Moser, senior analyst at the Aberdeen Group

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