December 7 2004
Today is really the day -- 20 years ago,
Ray Ozzie, Tim Halvorsen, and Len Kawell founded Iris Associates. Five
years later, on December 7, 1989, Lotus Notes 1.0 shipped, and the software
world hasn't been the same since.
If it had not been for IBM, I highly doubt that Notes would still be on the radar today. When IBM acquired Lotus in 1995, the company was struggling following two missteps -- the well-known effort to build 1-2-3 for OS/2 before Windows, and the less-well-known huge bet on AT&T Network Notes, just as the worldwide web and commercial internet were mainstreaming. Someone was going to buy Lotus, and it was Lou Gerstner's genius that he did so in an opportunistic, yet sensible way. Lotus was left to "run as a subsidiary", but let's be real about history here -- without Uncle Lou's wallet, things would have been very different.
Selling Notes in the early days was not easy. My colleagues and I used to joke that "nobody woke up in the morning saying, 'today I'd like to buy some groupware'." Lotus on its own had sold about two million seats of Notes, first for the bundle price of US$62,500 (100 users and a server), then for a per-user (or server) price of US$495. Notes was primarily a departmental solution in those days -- few companies could afford, or understand, an enterprise-wide deployment. Almost always, the sale was solution-led. Ozzie recounts the "Nifty Fifty" templates in last week's Network World interview; he also mentions the success of the Lotus partner program in developing an ISV market for Notes. I also remember that Notes 3.2 (or 3..3?) shipped with a fully-functioning version of Lotus's own internal customer support system (CSERV); I wonder if anyone actually deployed it?
There were two watershed moments where Notes's success was ensured. The first was when Lotus realized that the market for e-mail was shifting from mainframe and/or file-sharing architectures to client/server. In 1993, at the cc:Mail Interchange conference, Lotus announced the Lotus Communications Server, being built as part of Notes 4.0. I was in the audience as a customer, intrigued by this new announcement but unsure what it really meant for my cc:Mail environment. I was quoted in PCWeek (on page one, no less) as saying, "It sounds interesting, but there's basically no product here". And it took time for that product to ship, the MTAs to mature, the market to be ready. The shift from a departmental 75-users-on-OS/2-over-NETBIOS solution to an enterprise mail server came just at the right time. Combine that with the second watershed, when Mike Zisman made the gutsy move to drop the price of Notes to US$70 a user, and the messaging wars were upon us.
The interesting challenge at the time was that Lotus had two e-mail products on the books, neither one quite the right product for the market. I often wonder how different things would have been if a) the first "Lotus Notes Express" had been called "cc:Mail client/server edition", and b) it had been licensed to cc:Mail users at no charge (or as part of maintenance). A lot of customers and prospects at the time wanted the features and capabilities of the client/server system -- great offline support, better security, better managability -- with the usability and ease of deployment of the file-sharing architecture. My colleagues and I spent two+ years in one pitched battle for an enterprise messaging decision, where we were told that Notes had the features that mattered, and when 4.0 showed up with an improved user experience, they'd be quite happy with it -- only to lose to Exchange (4.0!) because of organizational politics.
Given that challenge, dropping the price and going for market share was exactly the right move. Of course, just as that effort ramped up, the Internet was mainstream, and destined to kill Notes. Ozzie and company didn't take this threat lightly, and built an ambitious product plan for Notes R5. It was exciting enough for me to want to be part of it, and I picked up and moved into product management. I moved to Boston just as Lotus acquired Ubique and Databeam, and went to beta with R5. Clearly, R5 became a seminal release -- not just in terms of the technological leap forward, but also because it came at the height of the software market's dot-cominance, and had a huge marketing budget for launch. Those were heady days, memories of Denis Leary ads and "I AM" signs and kodo drummers and all that crazy stuff. But it wasn't just a launch -- it was the work that cemented Notes's position as the leader in corporate e-mail and collaboration.
The last few years have seen the maturing of that market, though impressively, there are still thousands of companies installing their first Domino servers this year. Ray and the other Iris founders have moved on to other inventions and innovations. Still, despite what seems like almost annual pronouncements of its death, Notes not only lives on -- but with the seventh version now in beta, and concrete evolution plans for the future, it seems certain that Notes will remain a key part of the corporate software landscape -- perhaps for the next 15 or 20 years.