WordPerfect Corporation

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WordPerfect Corporation

1555 N. Technology Way
Orem, Utah 84057-2399
U.S.A.
(801) 225-5000
Fax: (801) 222-5077

Public Company
Incorporated: 1979 as Satellite Software International
Employees: 4,500
Sales: $705 million
SICs: 7372 Prepackaged Software

WordPerfect Corporation is the manufacturer of the world’s all-time best selling, prepackaged word processing software. Along with its flagship WordPerfect word processing program, the company develops and markets software for a variety of computer operating systems. Its products serve three principal markets: business, work group, and consumer applications. The company is additionally recognized as the software industry leader in providing customer support for its products, which are offered in 28 languages and marketed throughout the world by more than 55 international affiliates serving nearly 120 countries.

WordPerfect traces its roots to a partnership which began in 1976 between Bruce Bastian, a Brigham Young University (BYU) graduate student and director of BYU’s marching band, and BYU computer science professor Alan Ashton. The two collaborated in devising a software program which would display band formations in three-dimensional graphics. After Bastian received his master’s degree in computer science the pair again joined forces to design a word processing system for the city of Orem’s Data General Corp. minicomputer system in 1979. Bastian and Ashton kept the rights to the WordPerfect software they designed for Orem, deciding to market it through their own company.

With only one customer reference and a meager expense budget, Ashton and Bastian started Satellite Software International (SSI) in 1980. Relying largely on word-of-mouth advertising, SSI began to sell WordPerfect 1.0, which represented a significant departure from the Wang standard for word processing. The WordPerfect program was based on the idea that distracting computer functions should be kept off of the computer screen and that users should be able to simply start typing on a blank screen.

Bastian was responsible for overseeing program improvements while Ashton taught at BYU in the mornings and worked on program development and recruiting the best students from his classes during the afternoons. Bastian and Ashton hired W. E. “Pete” Peterson to serve as an office manager and organize the fledgling company’s books. Peterson was given a tie-breaking 0.2 percent stake in SSI, while Bastian and Ashton each kept a 49.9 percent interest in the company. SSI’s initial growth allowed the company to purchase its own development computer (it had been sharing time on the city’s of Orem’s machines) and conduct business on a broader scale. By the end of 1980, SSI had 16 employees. The following year, the company began international marketing of its word processing software.

The creation of the personal computer market, with the release of the IBM PC, set in motion the development of a number of competing word processing systems. In November 1982, SSI joined the competition with its first version of WordPerfect for an IBM-compatible MS-DOS system, which was released to a user base of about 600. The company’s program featured a 30,000-word dictionary, newspaper-style columns, and proportional spacing, as well as automatic footnotes, a four-function math package, and a built-in print spooler. SSI’s 1982 sales were a modest $1 million.

By 1983, MicroPro International’s WordStar was the leading word processing system. To better compete, SSI enhanced its offerings. It released WordPerfect 3.0, which featured one and two keystroke commands, a keyboard overlay, an automatic insert mode, and the ability to have documents printed as they appeared on-screen. That same month the company also released Personal WordPerfect, designed for non-business use. At a cost of $195 (compared to $495 for the more comprehensive WordPerfect versions), the Personal WordPerfect package allowed for user-defined margins, page lengths, and spacing.

WordPerfect began gaining ground on WordStar during the mid 1980s after MicroPro introduced a version of its word processing program that significantly differed from its earlier WordStar program. SSI’s updated WordPerfect versions only added to the features offered in previous programs, making it easy for users to adjust to the newer products. By the end of 1984, WordPerfect was the number three word-processing software, trailing only MultiMate, a Wang look-alike program, and the declining WordStar. That same year SSI began to introduce non-word-processing software and released its first major spreadsheet program, Math Plan 1.0.

In addition to new offerings, SSI took steps to broaden the market for WordPerfect. With its 4.1 version, released in 1985, SSI made WordPerfect available for IBM as well as Apriocot, DEC Rainbow, Tandy 2000, TI professional, Victor 9000, and Zenith Z-100 computers. Later versions were modified for Apple computers. Industry journals gave positive reviews to the WordPerfect 4.0 and 4.1 versions, helping to propel SSI’s status.

While SSI was introducing word processing programs for the burgeoning PC industry, the WordPerfect customer support network—established early on in SSI’s operations—grew into the industry’s best user support system and became a major selling point for WordPerfect software. WordPerfect’s toll-free hotline not only served as a major drawing card for customers, but was also used by the company to gather new ideas for program features and detect bugs in software.

By 1986, WordPerfect was the nation’s best selling word processing software. The program was used by more than 300 major corporations and captured nearly a third of the market for IBM-compatible word processing software. Company surveys at that time revealed that 60 percent of WordPerfect sales stemmed from word-of-mouth referrals rather than advertising. The success of WordPerfect propelled SSI into the position of the fifth largest independent personal computer software company. To take advantage of the name-recognition of its flagship software and clarify any misconceptions consumers might have about the company’s product line, SSI changed its name to WordPerfect Corporation in April 1986. With WordPerfect’s product line enjoying increasing popularity, the company’s 1986 annual revenues mushroomed to $52 million.

In May 1987, the company released its WordPerfect Executive program. Designed primarily for laptop computers, the software included word processing, spreadsheet, calendar, and information management capabilities. While most leading software companies at the time designed programs only for IBM or Apple Macintosh machines unless commissioned by computer manufacturers, WordPerfect broke with tradition and became the first major word-processor serving Amiga and Atari and in the process quickly gained a monopoly for those machines and recouped its developmental investment.

WordPerfect also introduced several non-word processing programs in 1987, including Repeat Performance, designed to increase the speed of programs and cursor movement, and Plan-Perfect, an advanced and faster version of Math Plan. The company also released the updated WordPerfect Library 1.1, designed to work with other manufacturer’s software by adding cut and paste options to other software programs and allowing users to append data to WordPerfect Library’s clipboard, then access that data from other programs on a computer’s menu.

In 1987, with WordPerfect’s work force having grown to 350, including 100 technicians in customer support, Ashton left BYU to serve full-time as WordPerfect president. He soon began directing WordPerfect’s international division, which was translating the company’s software and manuals into 12 languages. WordPerfect closed its 1987 books with more than $100 million in sales.

To support growth into the 1990s, the company expanded its offerings, introducing DataPerfect, a relational database software program, DrawPerfect, its first presentation graphics package, and products compatible for Macintosh computers. As the company’s products gained popularity, the company enjoyed rapid growth both domestically and internationally. WordPerfect’s annual sales rose from $196 to more than $500 million between 1988 and 1990. At the same time, the number of WordPerfect’s worldwide users rose from two to seven million and the company’s work force expanded nearly fourfold from 1,110 to 4,000. By 1990, the company had grown into one of the world’s largest PC software companies.

During the late 1980s, an initial shake out in the software word processing industry left WordPerfect with Microsoft Corp.’s “Microsoft Word” as its principal competitor, beginning an era of competitive jousting between the companies which featured price wars and a race to match and then better features of updated program versions. In early 1988, both companies released updated word processors.

With Microsoft’s 1990 introduction of a program called Windows, millions of DOS-oriented PC owners began updating their computers with Windows, which provided a means of controlling word processing programs through the use of a mouse device pointed at visual prompts on a display screen, rather than through the use of memorized key commands. Sixteen months after Microsoft’s Word for Windows was introduced and began making significant gains in the word processing market, WordPerfect began shipping its first version of WordPerfect for Windows. WordPerfect for Windows received less-than-enthusiastic reviews but nonetheless launched what would become an intense battle for leadership in the rapidly growing Windows segment of the word processing market. While WordPerfect entered 1992 claiming an 85 percent share of the MS-DOS market for word processing software, the company’s delay in developing a product that would run on Microsoft’s Windows cost it ground in that growing segment, where Microsoft controlled more than half the market and WordPerfect only a third.

With competition with Microsoft intensifying and WordPerfect’s market dominance threatened, the company began a major transformation, signalled in March 1992 by the departure of Peterson, who had been actively managing WordPerfect as executive vice-president. Peterson sold his stake in WordPerfect back to Bastian and Ashton, and was replaced by a seven-member executive committee, including Bastian, Ashton, newly appointed Daniel W. Campbell, the company’s first financial officer, and Adrian Rietveld, a co-founder of DELTA ware (a WordPerfect 1987 acquisition) who became vice-president of sales and marketing.

In addition to the management shakeup, changes were evident on other fronts as the company began speeding up programming developments and spending increased sums on advertising, including the company’s first national television ads. In addition, WordPerfect, largely an insular company built on a collegiate atmosphere of Mormon values, began forming partnerships with other firms and making acquisitions in order to expand its business beyond word processing, which accounted for 80 percent of its sales at the time.

In 1992, WordPerfect launched its WordPerfect Information Systems Environment (WISE) marketing strategy designed to promote multi-platform, multi-language, and multi-location software communication products. After teaming up with MagicSoft Inc., a software maker specializing in telecommunications programs designed for e-mail (electronic mail) and fax communications, the company released WordPerfect Works, an integrated software package which included word-processing, spreadsheet, communications, database, and graphics editor programs. The company also upgraded its DrawPerfect package and changed that program’s name to WordPerfect Presentations, which offered paint tools and autotracing abilities as well as charting and text handling features. In December 1992, the company released an updated version of WordPerfect for Windows and early the following year was boasting that its Windows program had captured 51 percent of the Windows word-processing market in North America.

Despite the flurry of moves to make the company more aggressive, in 1992 annual revenues dipped from $622 to $579 million, with an increasing amount of sales coming from international markets. Figures from Dataquest Inc., a major independent software research firm, showed Microsoft’s Word as the number one selling word-processor in 1992, with WordPerfect’s share of the word-processing market having fallen from more than 70 percent in the late 1980s to 36 percent. WordPerfect disputed Dataquest’s 1992 figures.

WordPerfect entered 1993 continuing to focus on product-expansion and competition with Microsoft, and early in the year released an updated version of WordPerfect for Windows, which was received with improved reviews and allowed WordPerfect to recoup some of the Windows market share. In 1993, in order to broaden its product base and enhance its cross-platform reputation, WordPerfect acquired Reference Software International, a developer of electronic reference works and software writing tools such as Grammatik, and SoftSolutions Technology Corporation, a prominent manufacturer of cross-platform and multi-lingual software.

After teaming up with Borland International Inc., a Californiabased software developer, in 1993 WordPerfect released its first “suite” or package of Windows programs which included WordPerfect’s word-processor and Borland’s spreadsheet. The suite was designed to compete with those being offered by Microsoft, which replied to the WordPerfect introduction in May 1993 with its newest suite, including a database program.

WordPerfect formed a consumer products division in 1993 to target the growing market for small business, educational, and entertainment software products brought on by the increased presence of computers in homes, small offices, and schools. Targeting the groupware market, in June 1993 the company released WordPerfect Office 4.0., an integrated software package which allowed PC users to share files, e-mail, work schedules, and databases, and carried the ability to work with DOS and Windows and integrate different operating systems into one network, a feature lacking in Microsoft’s Windows for Workgroups products at the time.

WordPerfect released its WordPerfect 6.0 for DOS at about the same time Microsoft was releasing its updated word processor in 1993. Two months after WordPerfect delivered its upgrade, which was in the developmental stages for three years, the company released an extensive interim version of its namesake, WordPerfect 6.0a, which added numerous functions— including extensive editing capabilities, mouse support, and new tutorials—and addressed what was viewed by consumers as a host of shortcomings in the original upgrade.

At a time when both WordPerfect and Microsoft were in the midst of releasing versions of their flagship writing programs for Windows, WordPerfect filed a lawsuit seeking to stop Microsoft from advertising that it had “the most popular word processor in the world.” WordPerfect argued that it deserved that title, based on the total number of WordPerfect programs sold. Microsoft, which had been claiming since June 1993 to have the “most popular” word-processor, responded to the suit by citing Dataquest Inc. figures which showed that Microsoft Word outsold WordPerfect in 1992; WordPerfect cited contradictory data showing it had a sales edge in both 1992 and the first quarter of 1993. Four days after the suit was filed the two software companies agreed in an out-of-court settlement that WordPerfect could use the terms “most popular” and “all-time best selling” while Microsoft would be allowed to call its Word program “best selling.”

In January 1994, Ashton stepped down as president and chief executive of WordPerfect in a management restructuring program designed to pump young blood into the Utah firm which had grown into the world’s fourth largest software firm and boasted more than 15 million users. Ashton joined Bastian as co-chairman while 39-year-old Rietveld was promoted from sales and marketing to succeed Ashton. Additionally, an office of the president, consisting of Rietveld, John C. Lewis, senior vice-president, and R. Duff Thompson, general counsel, was established.

In early 1994, WordPerfect launched its Main Street line of consumer products, including updates of Grammatik and a new Random House Webster’s School and Office Dictionary. The company also announced the debut of a personal information manager software, WordPerfect InfoCentral 1.0, and plans to introduce home education products and entertainment products, including child-targeted software which featured sing-along and interactive cartoon programs.

WordPerfect moved into the mid 1990s facing heightening internal pressures to go public or merge with a publicly traded company so that the founders’ families could realize some of the wealth created by the company and WordPerfect would be more attractive to new employees. In March 1994, WordPerfect signed a merger agreement with Novell, Inc., another Utah-based software firm specializing in computer networking. Under the terms of the agreement, which awaited regulatory approval before the end of 1994, WordPerfect would become a wholly owned subsidiary of Novell with WordPerfect’s stock exchanged for 59 million shares of Novell common stock and options in a deal valued at $1.4 billion. Coinciding with the Novell-WordPerfect pact, Novell agreed to acquire Borland’s spreadsheet business for approximately $145 million.

The merger, according to the Wall Street Journal, signalled the end of a time when small software companies could be viable competitors for the rich software business. For WordPerfect, the transaction was expected to help thrust the company’s image out of the personal computing era and into a contemporary software arena increasingly focused on networking and connectivity. The deal was also expected to improve the financial position of both WordPerfect and Borland, which had been downsizing their work forces in recent years as a result of price wars with Microsoft. Additionally, the stock transfer was expected to place Bastian and Ashton among the wealthiest people in the United States, with each to net nearly $700 million in Novell shares.

Raymond Noorda, Novell’s chief executive and chairman, remained chairman of what was to be an much-expanded Novell, while a new chief executive was expected to be announced in mid 1994. Rietveld was named to head up the WordPerfect business unit and also join the Novell office of the president. In a WordPerfect press release issued at the time of the agreement, Rietveld said that “customers will look back on the mid 1990s as marking a renaissance in the information systems industry. We are helping Novell create a software powerhouse to deliver stand-alone, software suites, groupware, and network applications that define new capabilities for information systems.”