Will Lightning Strike Google and Microsoft?

The new software, which goes into beta today, takes a hybrid approach to the desktop and the Web. Where Google Apps is a strictly online affair and Microsoft Office is bound to the desktop, Lightning offers some capabilities on the desktop and others on the Web.

The approach's importance cannot be understated. Corel faces the same kind of problems as Microsoft with respect to the burgeoning Web platform—only its risk is greater, because Corel doesn't have the deep product portfolio of Microsoft or the benefit of two desktop monopolies.

Corel also takes great risk, by offering a free product that—if it satisfies enough users—could backfire and actually hurt WordPerfect sales. Corel's challenge is giving away enough, without taking too much utility away from its paid, flagship WordPerfect Office product. Corel will mitigate some of the risk and fine-tune feature balance during the initial beta period, which is expected to last about three months.

Lightning differentiates from purely desktop or Web-based products in four basic ways:

• The software's core, individual user functions take place on the desktop while interaction—document and information sharing and collaboration—takes place online. Information can be stored locally and online.
• Lightning cross-integrates with the larger WordPerfect suite, which also downloads as a trial that can be converted to full product anytime. Corel has built in an upsell mechanism for its core product, rather than shifting informational relevance to the Web.
• Third parties will be able to brand a white-label version of the software; Corel expects the approach to appeal to some OEMs and, perhaps even more, to ISPs and portals.
• Corel plans to offer a rental model for WordPerfect Office, which brings to the desktop a successful Web 2.0 tactic—the subscription. End users can purchase product use for X period of time. For someone that finds Lightning satisfies everyday needs, the full WordPerfect software would be available for nominal cost for other times.

From an end-user perspective, Lightning strikes three verbs: consume, create and collaborate. Corel attempts to keep most of the value in areas that don't cannibalize WordPerfect Office, or extends beyond it. The core functionality is viewing, manipulating or sharing Word, WordPerfect or PDF documents.

"Most of what people do is consume existing content," said Richard Carriere, general manager of Office Productivity at Corel.

Hybrid Approach
The Web platform is shifting informational relevance from the desktop to the Web, similar to the shift from mainframes to PCs more than two decades ago. Shifting relevance puts the traditional desktop software model at risk. Google is at the bleeding edge of shifting relevance, with search, contextual advertising and even Web-based productivity applications.

Microsoft is at the trailing edge and, in some respects, falling behind. The company has yet to offer a credible desktop software response to the Web platform, although chief software architect Ray Ozzie could do so today. Corel is showing the way for Microsoft, should anyone there be paying attention.

David Young, Joyent CEO, said that "Corel is trying to build an ecosystem that rides on the desktop and the Web. It's a hybrid approach."

Joyent, Corel's major online partner, provides Lightning's Web capabilities, which include online collaboration (for two people; more users cost more), shared e-mail, calendaring and contacts and online storage (200MB). Content is synchronized between the desktop client and online service.

Trojan Horse
Lightning really is a Trojan horse for upselling to WordPerfect Office. Corel limited major functionality to content consumption, offering little for creation—and there is no real utility for spreadsheets or presentations; end users would want the productivity suite for these functions.

Lightning offers many hooks to WordPerfect, for which many end users would already have on the PC. While Lightning is a tidy 20MB download, Corel encourages end users to also take the whole 240MB WordPerfect suite, which downloads quietly in the background. The productivity suite would be available for a 30-day trial, which Corel plans to extend for some customers.

In OEM distribution, PCs shipping with Lightning would also have the WordPerfect Office trial, convertible to the paid version. With download or OEM preinstall, WordPerfect Office would be on the computer, a silent Trojan, waiting to be tried by the end users. The trial would begin at first use, not at download.

Carriere made clear that upselling to WordPerfect Office would be the major "revenue model" for Lightning. Microsoft's Office trial conversions have proved to be exceptionally successful, according to NPD. Even a fraction of Microsoft's success could greatly bolster WordPerfect Office, even if Corel isn't in a position to snatch much share from entrenched Microsoft Office.

Young conceded this point. "There's no question that Microsoft owns the office productivity space," he said.

But Lightning and the trial could win over small businesses and consumers that have never used either company's productivity suite, the same long tail of users Google seeks out with Apps Premier.

The other sales-Trojan and upsell opportunity: Joyent services. Lightning users get access to robust collaboration tools for free. But two users may be insufficient. Joyent offers other services, including Web hosting, which could interest Lightning users.

"Small businesses are going to be attracted to this," said Young, referring to Lightning and additional Joyent paid services.

Rent Me
Corel also expects to generate from Lightning rentals of WordPerfect Office.

Carriere explained, "People can unlock the software for a certain period of time."

For how long and for how much are matters Corel hasn't fully worked out. The company doesn't expect to offer the rental option until around the time of Lightning's formal release—or later, depending on beta response.

Rentals would be a major differentiator from Microsoft Office. Microsoft has experimented with Office rentals but never made a full commitment to the option. Corel's success would hinge on conversion—how many Lightning users would show interest in using WordPerfect Office. If the conversion strategy stumbles, rentals could diminish as a realistic offer.