Sony to bundle StarOffice with select PCs in Europe

Sun Microsystems Inc. Wednesday announced a deal with a division of Sony Corp. to pre-install its StarOffice 6.0 productivity software on some Sony PCs sold in Europe, as it looks to eke out business in a market dominated by Microsoft Corp.’s Office software.

The deal will put StarOffice 6.0 on select Sony Vaio desktops sold in Europe by the end of the year. It will be available in English, French, German and Italian, said Nancy Lee, group product marketing manager with Sun’s StarOffice division.

“We expect that our relationship with Sony is going to expand to other countries and markets,” Lee said.

Sun’s announcement is the latest in a string of deals that computer OEMs (original equipment manufacturers) have made with software vendors to install products other than Microsoft’s ubiquitous Office productivity suite on consumer PCs. In North America, Sony already has a deal with Corel Corp. to ship the WordPerfect productivity suite on some Vaio desktop and notebook PCs.

Sun and Corel share a tiny slice of the desktop software pie not controlled by the Redmond, Washington, software maker. They say lower prices and increased compatibility with Office are making their products attractive alternatives as they look to steal business from Microsoft. The Office suite, and a stripped-down version of that software called Microsoft Works, is installed on an estimated 95 percent of PCs sold around the world, Corel and Sun said, citing market research.

While the two companies are united in their competition against Microsoft, they concede that they are forced to share only a small chunk of the consumer market, and even less of the corporate market. “We’re not going to have major market share competition with Microsoft,” said Steve Houck, executive vice-president of strategic relations at Corel.

However, a weakening PC market is allowing Sun and Corel to appeal to hardware makers where it counts — the price tag. “What we’re hearing from a lot of these OEMs is that they’re being able to provide more value with their desktop machines,” said Sun’s Lee.

Illuminata Inc., a research company in Nashua, New Hampshire, made note of the OEM trend in August when Corel won two deals to ship its software with PCs from Hewlett-Packard Co. and Dell Computer Corp. In a research note, Illuminata predicted that the new options would be appealing because they give computer makers room to cut costs.

“At a time when margins for computer systems are tight enough to strangle most vendors, they can’t afford to give an extra penny away to Microsoft,” wrote Illuminata analysts Kevin Fogarty and James Governor.

A retail version of StarOffice 6.0 is priced at US$75.95. Corel sells versions of WordPerfect for between $50 and $250. Meanwhile, Microsoft sells the standard edition of Office XP for $479, and its lower-cost Works package for about $99. All of the products are sold to OEMs at a discount.

Microsoft acknowledged that OEMs are basing their decisions on “economics in the industry.” Most Office alternatives are installed on low-end, entry-level machines “where consumers are more sensitive to price than performance,” a Microsoft spokeswoman said in an e-mail.

Corel, in Ottawa, Canada, has signed deals with four OEMs to ship WordPerfect in consumer PCs. In addition to its deal with Sony in March, Gateway Inc. agreed in October to pre-install WordPerfect 10 and Corel’s spreadsheet application, Quattro Pro 10, on Gateway 300 S series desktops sold in North America. HP has put the same products on its Pavilion home PCs, and Dell installed it on select Dimension 2300 desktops and on the Inspiron 2600 notebook.

Sun is also expanding its partnerships. Hyundai MultiCAV Europe Ltd., a division of the South Korean conglomerate Hyundai Group, sells consumer PCs running StarOffice in New Zealand and Australia, according to Lee. Various software makers also ship StarOffice with their products, including software packages from Linux vendors Ximian Inc., Inc. and MandrakeSoft SA.

“A couple of small deals in the desktop productivity markets won’t push Microsoft over the edge,” Illuminata analysts wrote in August, “but this was supposed to be a war Microsoft had already won.”