Some will say that when Vector Capital purchased Corel Corporation that they saved the company from a sure death. As they are a private company, few financial details are available. Corel Corporation is still alive and I will make the assumption they somehow turn a profit. Sure, they could be operating at a loss and that makes things even worse. My view is the cuts made to achieve profitability (or less of a loss) have caused harm to the development of products. For products to grow again, a new owner with deeper pockets is needed.

One thing Vector Capital has done is purchase a number of other companies and/or products and merge them into the Corel portfolio. This has led to a stockpile of image editing and video applications that don’t necessarily work well together. But it just may be that stockpile of applications that make Corel Corporation valuable to a buyer. Today I’ll lay out an argument for why buying Corel would be good for Google.

First let’s look at a couple of transactions that have happened recently. Let’s go back to April 2012 when the news came out that Facebook was buying Instagram for (say it like Austin Powers) $1 billion! Some of you may use Instagram and some of you may find it incredibly dumb. No matter what you think about it, Facebook paid a lot of money to acquire the company. Google fired back this week and bought Nik Software. When I first saw the news, I didn’t understand why Google valued a company that made some great Photoshop plug-ins. Then I saw they also made Snapseed which is considered technically superior to Instagram, though not as popular. As Snapseed isn’t currently available on Android, it also gives them a good reason to make it available soon. Financial details of this transaction aren’t available, but it was surely much less than the cost of buying Instagram.

When many of you think of Corel, you think of CorelDRAW. Stop! To understand the company’s value, you need to look at the other products. Yes, I will explain how CorelDRAW is of value to Google.

Look at the two deals above. They are all about bringing some image editing tools to mobile devices and social networks. Corel certainly owns a lot of image editing technology. Let’s start with Corel Painter and the cool effects and brushes it includes. There is also Corel Paint Shop Pro. But wait, there’s a lot more. Don’t forget Corel PHOTO-PAINT, Micrografx Picture Publisher, Ulead PhotoImpact, AfterShot Pro, KPT Plug-ins and probably a few others that I’ve forgotten.

Now put those image editing tools together with what Google got out of the Nik Software purchase and their own tools like Picasa and you have a heck of a lot of technology to drive imaging online, to the Google Plus social network and on mobile devices. Just with what we know about past deals and the image editing tools, do you see that Corel has value to Google?

What else is hot on the Internet and mobile devices? Video! Who owns one of the biggest outlets for online video? That’s right, Google owns YouTube. Corel also loaded up on video tools. First up is VideoStudio Pro and MotionStudio 3D. Just a few months ago, Corel purchased the Pinnacle products from Avid to give them even more video technology. There there are products like WinDVD Pro, DVD MovieFactory Pro and DVD Copy Plus.

Add up all that image editing technology and video technology and the deal makes even more sense for Google. Let’s throw in WinZip here since it doesn’t necessarily fit with either of those categories and certainly brings some value to the deal. Somehow or another, the products in the WordPerfect Suite can certainly bring something to Google Docs.

Now let’s bring CorelDRAW into the conversation. ZDNet wrote an article back in March 2012 suggesting either Adobe or Corel could be buyout targets. They discussed how the interface elements for phones and tablets can be drawn as either bitmap or vector. As screens get higher resolutions, storing multiple sizes of bitmaps can really eat up storage space. The alternative would be to create those elements as vector graphics so they can be scaled to any size possible. What does CorelDRAW do? It creates vector graphics! Just as that can be useful to Apple for iPhones and iPads, it makes just as much sense for Google’s Android devices.

That same article says that an offer of $1 billion for Corel would be a very good purchase price. So if Facebook paid that for only Instagram, don’t you think all of Corel’s technology combined is worth at least the same? I do. Google, what do you say? According to Google Maps (shown at right), it takes less than an hour to drive from the Googleplex (A) in Mountain View to the Vector Capital office (B) in San Francisco. Time for the dealmakers to make the drive. Readers, what do you think of such a deal?

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