Lotus tackles its identity crisis

The IBM-ization of Lotus Development Corp. has put Lotus at a crossroads.
Written by Rob O'Regan, Contributor

The IBM-ization of Lotus Development Corp. has put Lotus at a crossroads. The path it pursues will have a major impact on how IT deploys Lotus products.

Lotus and IBM officials put an impressively positive spin on their relationship for attendees at the Lotusphere conference here last week. But in reality, the two groups must still resolve many issues regarding product direction, development and marketing.

On one hand, Lotus and IBM recognize the need for more synergy among their development, sales and marketing teams. On the other hand, they remain steadfast in their pledge to retain the Lotus identity.

That contradiction could hamper IBM's attempts to coalesce its e-business software strategy around its WebSphere application server family and Lotus' collaborative services, which encompass Domino, the forthcoming Raven knowledge management suite (see related story, below) and distance learning applications.

A muddled marketing message also isn't likely to jump-start sales of R5, the latest releases of Notes and Domino that shipped last February. While Lotus executives touted record unit growth for Notes and Domino in 1999, outgoing CEO Jeff Papows acknowledged that only 20 percent to 25 percent of Lotus customers have migrated to the R5 release, largely because of Y2K remediation.

To boost sales, most observers agree that Lotus, of Cambridge, Mass., needs more help from IBM's marketing and service organizations to move from a product focus to a solutions-oriented approach. The presence of longtime IBM executive Al Zollar, who will replace Papows on Feb. 1, could speed that transition.

"Lotus is good at talking about solutions at a very high level, but they're not good at getting market share," said David Shimberg, chief marketing officer at IT Factory, a Lotus business partner in Cambridge. "We still respect the Notes developers, but it's the right time [for more integration with IBM]. We couldn't have waited much longer."

While recognizing the synergies between IBM, of Armonk, N.Y., and Lotus, officials maintain the need for Lotus to continue with dedicated sales and marketing organizations.

"Lotus will continue to manage its own destiny in areas of sales, marketing and development," said John M. Thompson, group executive in charge of IBM's Software Group. "When you start to homogenize, you lose focus."

From a development standpoint, Lotus and IBM are making some progress in synchronizing their efforts. Last week, the companies announced plans to integrate WebSphere and Domino with a common set of foundation services. Toward the second half of the year, both products will adopt common directory support, security, development constructs and transactional capabilities.

Other joint development efforts are less defined. Lotus last week introduced two Notes clients, iNotes and Mobile Notes, as part of a strategy to provide Domino access to non-Notes PC clients, handheld computers and wireless phones. But officials had trouble explaining how Lotus' work matches up to the work from IBM's own Pervasive Computing Group.

As Lotus focuses on application services, it's moving away from its battle with Microsoft Corp. for the desktop. The new iNotes client, due to ship in the first half of the year, enables users to access Dom ino services from Microsoft Outlook or any browser.

One thing executives won't waver from is the need to preserve the Lotus brand. "The brand is very strong and vital to the future success of Lotus and the IBM software portfolio," Thompson said. "We're not about to undo any of that successful formula." c

Lotus by the numbers

8.5 millionNew Notes/Domino users in Q4 1999
56 millionTotal Notes/Domino users at end of 1999
20-25%Percentage of Notes/Domino customers upgrading to R5 in 1999
28 millionSmartSuite installed base
6-7 millionRemaining cc:Mail users
3+ million Remaining cc:Mail users committed to upgrade to Notes

Source: Lotus

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