WinZip purchased by turnaround specialist
Published: July 17, 2005, 9:00 PM PDT
By Michael Kanellos
Staff Writer, CNET News.com
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Is it possible to make money off a product that millions have downloaded for free? The new owners of WinZip Computing hope so.
WinZip, which specializes in software that compresses large files for storage or mailing, has been bought by turnaround investor Vector Capital.
For years, WinZip's eponymous utility has been one of the most popular shareware programs on the Web. More than 140 million people have downloaded the program, and it's downloaded for free about 500,000 times a week, said Chris Nicholson, a partner at Vector.
Technically, WinZip charges $29 for the program after a 30-day free trial. Unfortunately, the honor system doesn't work as well as it used to. Few customers end up paying for the program.
The company also has never charged for upgrades or new versions, a common practice in the software world. And it has not added extra features for customers that paid the $29 licensing fee.
"There was little emphasis on monetizing what they had," Nicholson said.
Vector will try to change that by reminding users a little more firmly that the software costs money, as well as likely coming out with features that only paying customers can download. Vector also signed a marketing and distribution agreement with Google.
Previous Next But Nicholson added, "We don't want to be heavy-handed about it."
If anything, Vector has shown that software companies that have been around the block can mount a comeback. The group bought Corel, which lost millions trying to latch on to the next big thing, in 2003. Vector took Corel private, streamlined its product lines and even got a new CEO.
"Corel is making money now. It is very, very profitable," he said. Corel, in fact, last year acquired Jasc Software, which makes Paint Shop. Jasc was also owned by Vector.
"We're not looking to have our investment dollars spent on R&D or building a market," Nicholson said. "We are buying companies that have a customer base."
Terms of the deal, which was concluded earlier but is only being revealed now, were not disclosed.