"Changing the way America buys software"

Softkey was originally a Canadian software company called Softkey International Inc. Softkey made its money by acquiring back rev (old, no longer supported) versions of commercial software (such as Corel Draw) and distribution rights to titles from small "garage" development shops without access to sales channels. Softkey repackaged these programs as cheaply as possible, and sold them cheaply, relying on volume and the probability that people wouldn't bother to try and return a $9.99 piece of shovelware.

They were innovative in a twisted way, introducing jewel case packaging of software for those "impulse" buying racks by the cash register, for example. (The laughably named "Platinum" line.) They also controlled the Canadian tax software market, buying up all of the major Canadian tax software companies: Informatrix, taxPREP and CanTax.

Though purportedly Canadian, Softkey kept nominal corporate office in Bermuda, which gave significant tax protection. The yearly winter junkets of senior Softkey executives to Bermuda for "planning" was an open joke in the Softkey companies, as coming back from these retreats were seldom plans, but always tans.

In 1994, a new SoftKey organization was formed by a three-way merger of SoftKey Software, Spinnaker Software, and WordStar International. Synergy was to be achieved from the diverse product line and broad distribution channels. Michael Perik, CEO of SoftKey Software, and his partner, company president Kevin O'Leary headed the new company. O'Leary once famously remarked that creating new software titles was no different from blending new flavors of cat food. (Thanks, boss.)

The company achieved minor notoriety for publishing a CD version of the Sports Illustrated swimsuit calendar, a truly bletcherous bit of software than nonetheless sold well, for some mysterious reason.

Softkey continued to acquire other companies, and in 1995 absorbed educational software company "The Learning Company" (NYSE: TLC) and later Broderbund Software Inc., with whom they'd fought a pitched battle over TLC, and MECC (Minnesota Educational Computing Corp.). Softkey then took on the Learning Company name, and ceased to exist under the Softkey name.

This isn't the end of the Softkey story, however. In 1998, after a restructuring and a round of layoffs, The Learning Company announced a merger agreement with Mattel, Inc. (NYSE: MAT), worth about 3.6 billion $US. The wealth of the deal astonished employees of the former Softkey, and rumours abounded that Perik and O'Leary had somehow cooked the books. Soon after the deal closed, Perik and O'Leary sold most of their Mattel stock (for $5.9 million each!) and took a powder¹. They each also received $5.2 million in severance pay, outraging many former Softkey employees who had previously been turned out on the streets with next to nothing.

Mattel was unprepared for the high rate of returns on Learning Company products from distributors and also had to take a 50 million $US write-off of bad debt. Mattel's CEO resigned in disgrace after a further 206 million $US in losses in 1999. Mattel eventually put TLC up for sale in April 2000. Gores Technology Group (GTG) bought the earthly remains in October 2000. They can still be found online at http://www.learningco.com/, doing fine with some of the original TLC titles like Reader Rabbit.

The above is mostly from memory, with numbers gleaned from several web sources. I worked for them for a time, in the early 90s, due to an accident of corporate acquisition. And yes, there's some bitterness remaining, so when I found the open link, I had to vent.

1. See http://www.cs.brown.edu/courses/cs092/2000/mattel.html

From the back of the box for KEY ClipMASTER 1.80S:


With SoftKey you get all the latest features, frequent upgrades and superb technical support. Comparable products cost much more. How do we do it? Simple. It's the SoftKey way of doing business - many different products, large production runs, efficient packaging, low overheads. The savings are enormous. And we pass them on to you. SoftKey brings you into the new age of software publishing - cutting prices, not quality or features. SoftKey's shares trade on NASDAQ, symbol SKEYF.

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