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Novell Should Learn from Microsoft's Assault on WordPerfect

Look at history, know your fierce rival

Remember what Microsoft did to Corel? Novell is repeating the same old mistakes by chewing that same old bait again. Accidentally enough, Novell is also leading itself into a journey of deliberate incompatibilities, technical sabotage, and other dirty tactics. Remember that Corel bought WordPerfect from Novell and years after its deal with Microsoft Corel even gave the nod to OOXML. This endorsement proved handy to Microsoft's argument, where the Grand Cause is lock-in and monoculture. Corel lives on, however, and it even claims that Microsoft's pattern of copying rival products is flattery to WordPerfect, whose features were copied once again.

As many as 8 of the top 10 benefits of Microsoft Office 2007 provide capabilities that have already been addressed by Corel WordPerfect Office X3. Some "new" features of Microsoft Office 2007 have even been part of Corel WordPerfect Office for close to a decade!


It is interesting to find that even today's reporters have memory of what Microsoft did to Novell back in WordPerfect days. From last week's news:

Even though Thompson was a veteran of the tech world, he thought he could beat the odds. In fact, just a cursory look at the history of tech deals shows that transformative acquisitions can be disastrous. For example, there was Novell's acquisition of WordPerfect in the early 1990s. Within 18 months, Novell lost about $1.2 billion on the transaction because of the onslaught of Microsoft.


But what exactly happened there? Let's find out what Microsoft did to WordPerfect, shall we? Here are the "switcher tactics" exhibits [PDF] (thanks to 'Doug Mentohl' for the text).

From: Robbie Bach To: Hank Vigil; Jeff Raikes; Pete Higgins Co: Mark Nickerson; Michael Herert Subject: RE: Word market share Date: Thursday, June 09, 1994 6:40 PM

PeteH and HankV are out. Here's a summary of our plans to make Word win and an overview of the Office plans - pardon the format but i tried to cut this down to the main points. MikeHeb: feel free to add to the Word stuff where I missed some things - you might forward some of the docs on TimeSavings as well.

1) We are pursuing a strategy to keep WordPerfect on the defensive. In effect, this means acting like we are still the "trailer" and explicitly calling them out with aggressive switcher tactics. The $99 upgrade promo effort is the first wave of this with the second wave this summer and fall focusing on the "TimeSavings" research we have done. This is quantitative research showing that Word makes you more productive, helps you complete your work faster than WP, is preferred by WP users, etc. It includes:

* National ads (WSJ, USAToday and PC press ads pushing TimeSavings and our switcher message

* $99 upgrade promo thru August with endcaps, local ads, etc. in June and July.

* Distribution of Time Savers "proof kit" with video that shows the research and how people saved time.

* Major focus at the upcoming set of tradeshows including signage, literature, etc,

* Press release on the research and follow up press work to drive the points home.

2) As we have discussed in the past, we will push hard in Smorgs to try and capture WP DOS users and new computer users. The general Smorg efforts for the Office apps (including DwayneW's work) includes things like raising awareness thru our Biz press advertising, targeted user stories in Smorg pubs, generating trial thru relationships with Smorg/Trade associations and Smorg service companies (like kinko's), and Smorg tradeshow/seminar work (often done by the field). In addition, Word will focus on the legal market with ads, pr, OEM "legal PC" bundles, legal tradeshows, etc.

3) In many ways, the best way to get Word over 60% is to win with Office. If you look at the budget, we are actually forecasting Word standalone share to drop 1%. We will get the 4% point increase in Word total share (up from 51% to 55%) from the continued success of Office and the shift in the market toward office suites. Even if we only get the 78% share number for Office, this helps Word relative to WP and hits them where they are at their biggest disadvantage. If we do better than 78%, we can close the gap on 60%. Our plans for Office are summarized below.

4) In the second half of the year Word 95 (or whatever we call it) starts to become a factor. We will have PR and "advanced leak" work for this product which should ultimately help us win relative to WP. Note that they have lots of work to do to get WP and their office suite ready for Chicago and we hope to beat them to the punch. We don't have the specifics of this worked out but "levereging the Chicago launch" is clearly part of the strategy to beat WP.

5) Steve has made the point recently that one factor in getting over 60% is to knock one of the competitors out of the category...which means Ami Pro. I actually think this is a false aspiration. I don't believe that AmiPro is really a factor in the standalone business and for all intents and purposes is not a player there. But we will not get them out of the category because they generate sales thru SmartSuite. This means we need to continue winning with Office (#3 above) end fight for share from WP (#1,2 above).

My final point on this is one that you, PeteH, and HankV know only too welll. There are not alot of silver bullets lying around in terms of taking share from WP. We are going to win this war with some creative ideas (like TimeSavings!, some trench fighting (like the block and tackle Smorg stuff), great products, and with Office. Its frustrating to me that this doesn't sound more "revolutionary" (something we will keep trying to achieve) but to some degree its the nature of our mission.

In terms of keeping Office above 80%, the real issue is that Lotus is making an explicit effort to move 123 buyers all the way up to SmartSuite - much more so than in the past. Since many of these users are effectively "captive Lotus" accounts, they can drive up their run rate of SmertSuite even if the user is only =nterested in 123. In addition, they will have a new version which will be a much more competitive (but still trailing) product. Here are some things we can do to prevent this from happening:

1) Win with XL: The best way to keep their SmartSuite share down is to beat 123. Our activites on this area will mirror those for Word. We will start an XL $99 promo similar to the Word one as of July 1. We will also conduct TimeSavings research to see if we can achieve the same results as Word. Excel will push the accounting vertical market in the same way that Word will push legal. Excel 95 will obviously be key going forward.

2) Disrupt the SmartSuite launch: This is a fairly tactical effort to maintain our own momentum thru their launch. This includes heavy PR messaging during the summer with several press tours, weekly editor buddy calls, press releases on Office and XL momentum, switcher message at tradeshows, etc. We'll also push Access in this messaging pretty heavily since lots of the new stuff in SmarSuite is in Approach.

3) Increase awareness: both Office and SmartSuite have very low top of mind awareness. They will spend heavily to increase this and have already closed the gap -- we are at 8% with Fringe IEUs, they are at 6%. We will focus our business press ads almost exclusively on Office (a few promotion based ads for Word/XL) to continue building our own awareness.

4) Win in the Channel: Today, Lotus probably does a better job in the channel getting merchandising space, keeping awareness high, etc. We are making progress here and want to keep that up. This inclucles increasing distribution for the Office upgrade SKUs (especially OfficePro), running a major value-add fall promotion (buy Office get other bits free), improving our POP materials and frequency of usage, etc.

5) Sell Office as s solutions platform: This is arguably the area where we have under-achieved so far. We have a clear product advantage with VBA (they will not have OLE 2 or LotusScript until 1995) and customers love the Office solutions platform message when they hear it. We have not done a good job yet of synching up our message with DDT and NT/NTAS/SQL/EMSIetc. and are working with RichT/CameronM/JohnNi's group on that right now. Target is to have a unified message and approach to this to roll-out at the NSM/ESM. This will also help us fight Notes -- where Lotus really does a good job selling the solution even if the tools, implementation, etc. are not greet.

I know I've left lots of Office tactics out of this summary, but this will give you a good sense for where we are focusing. I've attached the Desktop apps marketing plan overview (easiest to print this in PPT outline view) and some timelines which take a crack at this from a different angle. Note that we are working on cletailed drill down plans in all areas and should have that finished in the next two weeks.

File Attachment: FY95SUMM.PPT File Attachment: TIMELIN.XLS

Thanks

Robbie

From: Jeff Raikes TO: Hank Vigil; Pate Higgins Cc: Mark Nickerson; Robbie Bach Subject: Word market share Date: Thursday, June O9, 1994 9:59AM

I believe SteveB will make a big deal about us not being at > 60% market share in Word processing. I am not arguing the numbers in the forecast. But I must have a good story about what we think we can do to get above 80%. Can you help? I haven't seen anything but analysis on standalone share; ie. no real plans tO do something about the problem, do you think that is the key to greater than 60% share? or do you

have a different strategy?

Help please. Dry run on presentation is tomorrow afternoon.

Separate question:

What do we do to keep Office above 80% share? Your numbers show it dropping to 78%, and Lotus gaining to 21%.

Thx.


The 'smoking gun' is here [PDF], among other places.

I have decided that we should not publish these extensions .. We can't compete with Lotus and Wordperfect/Novell without this ..


There are various other exhibits which teach us what really happened there. To use the words of Doug, who has read many of these exhibits patiently (not exact quote), "as a unique insight into the corporate mind at Redmond, these emails are priceless. Assuming they are a statistical sample, then they spend about 1% of the time in writing code, 30% in finding bugs in other people's code (and not telling them) and the rest in sabotaging their competitors/partners business. What's the Smorg stuff referring to? Why did WP have lots of work to get ready for Chicago?"

The original post was sent by Robbie Bach, who has recently made some headline due to alleged fraud. Robbie Bach engaged in insider trading and he essentially stole $6 million right out of shareholders' pockets. He was never punished. Here are some articles about this:



To quote a report on the first article that broke this news:

MarketWatch.com reports that Robbie Bach, president of Microsoft's Entertainment and Devices division, sold $6.2 million of Microsoft stock just prior to announcing that Microsoft was going to have to extend XBox 360 warranties to three years because of extensive failures. The filings note that this was not part of any scheduled diversification or selling program; this was a conscious, unscheduled sale by the guy in charge of releasing news that could affect the value of Microsoft stock.

[...]

Insider trading is a very serious violation of the law; just ask Martha Stewart, who served five months in prison for avoiding losses of $43,000 through trades that just had suspicious timing (no insider trading was actually proven). This is $6.3 million that went straight into Robbie Bach's pocket.


Consider this proof that a certain company is virtually above the law.

The next post on this topic will explore further the relationship between Microsoft, Corel, and Novell. There is a lot to be learned from history and these court exhibits were not available for public viewing, until recently.

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