A provocative headline -- but a great article, with another analyst confirming Lotus's position back on offense...

The key message that I drew from Lotusphere is that Lotus really does seem to be getting some significant traction in the market. There is a mindset among many in the messaging and collaboration industry that Lotus is slowly bleeding customers and will continue to lose market share to its rivals.

However, Lotus' numbers are impressive: the company saw more than 30% growth in the sales of Notes licenses during the fourth quarter of 2006 and sold more than 1 million Sametime seats in just the four-month period since Sametime 7.5 started shipping.

Lotus has cleaned up, tightened and strengthened its messaging story substantially. ...

Our own research shows that Sametime is the dominant choice among organizations that have formalized a standard instant messaging platform. Plus, if mere attendance at an event is any indication, the larger numbers for Lotusphere this year compared to attendance just a few years ago is a positive sign for the company.
Link: Network World/Michael Osterman: Is Lotus slowly bleeding customers? >

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  1. 1  Randy Shimizu  |

    I think 30% growth rate for notes is very impressive. I do think Lotus/IBM is going to have do more. Lotus/IBM needs to do more to reach outside it's existing customer base. The Lotus ads are encouraging, but we need to see much more. Lotus also needs to more to expand it's SMB presence.

    If Lotus wants to beat Microsoft they need to come out with products before they do. Lotus should have come out with their telephony features earlier since they have existed in Notes for years.

  1. 2  Phil West  |

    Where I live there are no I.T. companies that support Notes (despite claiming to be IBM BP's). Those that try to support clients that have Notes do a poor job with staff who have little experience and no training in the product) and they actively try to move clients to another platform.

    I have no idea how this might be achieved but it does seem to me that changing that mind-set is vital.

  1. 3  Randy Shimizu  |

    @2

    This seems odd where do you live...?? But seems like a business opportunity for someone.

  1. 4  Phil West  |

    @3 I live in Guernsey, Channel Islands, UK. There are financial institutions of all kinds here and many of them use notes but they tend to be centrally administered from places like London, Switzerland etc.

    I'm a principle dev and admin and I used to jointly own an IT company here til my partners (All MS people) decided to sell out to a rival. I joined our principal client instead.

    There is money to be made here but there are particular difficulties in the market here that might not be applicable to other areas but that is not the point of the post. I suspect that the issue is more widespread than that.

  1. 5  Bill Buchan http://www.billbuchan.com |

    Phil - get in touch...

    ---* Bill

  1. 6  Richard Moy http://www.dominointerface.com |

    @1

    I agree with you Randy. I believe a key battleground for Lotus is the SMB market and I do not mean IBM's definition. We have been developing Domino products for this SMB market and it is hard to get IBM's attention in this market. This is the same market in which Microsoft start and grew their busines and this is where MS has a stronghold. However, it is a big untap market which requires a different type of marketing and sales strategy than what IBM has been providing.

  1. 7  Richard Moy http://www.dominointerface.com |

    Bill,

    Thanks for the great presentations at Lotusphere.

  1. 8  keith brooks http://www.vanessabrooks.com |

    @2 email me I support Domino everywhere and remotely if that helps.

  1. 9  Randall Shimizu  |

    @6

    IBM seems to make half hearted attempts at the SMB market. IBM needs to have a SMB VP to lead their efforts Without advocate it's very hard to garner corporate support within IBM for SMB. One big problem is that Lotus still needs to work on refining it's message. In many cases the Lotus site will have press releases, but no links to the product info. I do think the Workplace message is being cleaned up.

    One possible solution would be for IBM to purchase Novell and have them market their SMB products.

    It should be noted that the Lotus division was cited as being one of IBM's most profitable divisions in the last quarterly earnings report. A few years back they the SBS Linux suite and they dropped it after a year or so.

    Last year IBM was trying to market WSE as SMB product. IBM recommended that customers have 3 servers I believe. I will be interested to see how much a full implementation of Notes will require. If IBM can carry out it's vision with a reasonable amount of resources then they will be very successful.

    IBM also tried to brand a bunch of products under the Express logo to make them seem like SMB products.

  1. 10  Ed Brill http://www.edbrill.com |

    Randy, IBM has many vice presidents responsible for SMB sales. Software group's most recent VP of SMB software sales just joined Lotus partner Lotus911. But there are people responsible for SMB sales in every geography and region as well as every major division.

    Also the Linux suite marketed by IBM a few years ago only included one Lotus component (Domino) and wasn't part of the Lotus division's product set.

    The Express products remain quite successful, at least in the Notes/Domino world. IBM doesn't break out per-product revenues but I can say that we're pleased with the results in that space. Is there more to do? Sure, always.

  1. 11  Kerr  |

    Ed, having recently look around other product offerings from IBM there is a WebSphere community edition (based on Apache Geronimo) and DB2 Express-C. Both of these are free to deploy and use, though come with differing licence restrictions. I'm sure there must have been a discussion on a Domino Express-C edition, with similar licensing constraints. It would be interesting to hear a breakdown of that discussion. If this has been raked over before I'd still be interested in a pointer to that discussion. Clearly there are many pros and cons and the DB2 market is different to the Domino market, but I'd have thought the arguments would be similar.

    The only mention of this I could find was in a blog post by Philip Storry.

    { Link }

    A very interesting post, but no comments and no mention of it in the post it refers to here. Maybe this is just one of those questions that pop up now and again along with "why don't you open source Notes?", that you just have to bat away. But with a new lease of life and the market waking up to the idea that maybe Notes isn't dead after all, why not make it even easier for those at the bottom to give it a try?

  1. 12  Ed Brill http://www.edbrill.com |

    The question of a free Lotus NOTES client has been discussed on the blogs ad-nauseum (most recently just last week!). But I don't think we've had a public discussion of a free community edition of Domino or something like that. No idea what the organizational support would be for it, and not quite sure what the use cases would be, but not adverse to a discussion.

  1. 13  Beau Schless http://www.rasco.com |

    As an ISV with 3 Notes products I am seeing a real decline in prospects, never mind sales. I am also seeing a fairly strong migration off the Notes platform by some large multi-national customers that if I were IBM I'd be rattlig cages about (interestingly when you talk to IBM no one seems to know who in the company should be working the problem, a problem in itself!) My question is: what is IBM doing to communicate to all these "new" customers that there are turnkey productrs waiting to solve their business problems. That's what we as ISV's need.

  1. 14  Ed Brill http://www.edbrill.com |

    @13 if you are a reader of this blog, I find it tough to believe you don't know who to talk to at IBM (hint: I work with the entire Lotus field organization including competitive SWAT on a worldwide basis). E-mail me anytime about customer situations.

    As for your product and getting the word out, I'd strongly suggest you get it added to the business partner solutions catalog, found at { Link } . I can't find a listing for it there.

  1. 15  Kerr  |

    @Beau, I went and had a look at your site and if what is presented there is what you are trying to sell then I think you going to find it tough.

    When I'm in the market for a solution, the first thing I do is check out the vendor's web site. Yours does not encourage me. Downloading a self extracting winzip (that is not licensed for distribution, BAD) that contains a lotus ScreenCam of a Notes 4.x app is not going to get me on the phone. It wouldn't have got me on the phone 5 years ago.

    Does your site reflect your products? Whether you like it or not, it's your public face and it does reflect your business and currently it's reflecting badly.

    Please take this in the spirit it is meant, constructive criticism. There are many people here who can help you and we all want to see the Notes/Domino market thrive.

  1. 16  Martijn de Jong  |

    At the "Ask the Developers" session during LotuSphere one question was why IBM isn't doing more to get students to know Lotus Software. He hadn't really heard about Lotus Notes before he started working and that is very typical for the world today. Everybody knows Outlook, no one knows Lotus when they're young.

    I would take this even further and start at high schools. In the Netherlands many schools do their own IT and have a hobbyist administering the mail infrastructure for the school. Being hobbyists, they usually go for Exchange as they know Microsoft and they usually don't know Lotus Domino. I think it would be great if IBM would be able to go out to those schools and just give them Lotus Notes/Domino for free and give the IT hobbyist a free course in Administering Domino. It wouldn't really cost IBM that much and it would make a huge difference in market awareness of Lotus Domino!

  1. 17  Nathan T. Freeman http://nathan.lotus911.com |

    @10 - "Software group's most recent VP of SMB software sales just joined Lotus partner Lotus911."

    And when we started the trip to Lotusphere, when I was introduced to him, I said "IBM SMB Software sales, huh? So you've never actually SOLD any products, then?"

    When we all stopped laughing, he pointed out that for IBM, e-Bay is a "small business." Which is certainly true. We business partners think of "small" as less than 50 employees, and "medium" as less than, say, 1000. That disconnect is going to remain as long as there's an audience of BPs who really are targetting a market that IBM practically considers consumer-level. That doesn't seem like the end of the world to me, though. It's really why the entire BP program exists in the first place!

  1. 18  Volker Weber http://vowe.net/about |

    Good point, Nathan. If IBM actually SOLD to the real SMB sector, many BP would die off. However, they should MARKET to it.

  1. 19  Richard Moy http://www.dominointerface.com |

    @18

    That maybe true for many of the BPs. However, IBM should have a group devoted to this area of the SMB market. There are BPs like us who do focus in this area. The marketing approach is a little different and the business development process is harder since Microsoft is always there, but the customer needs are the same as larger organization just at a smaller scale.

  1. 20  Richard Moy http://www.dominointerface.com |

    @12

    Ed, I agree with you on this point. Free is nice but that will not help. Small businesses want solutions not technologies. The small business market remember is dominated by Microsoft and they spend lots of money specifically marketing this group. Small businesses have many directions that they can go to get free solutions, but most of those solutions can only stand by itself. There are now many Web-based solutions out there that small businesses can also use. The advantage that Notes and Domino has is its integration capabilities. However, Notes has some major shortcoming including the UI which Notes 8 has improves on. In this space, UI is just as important as the functionality and capability of the product. You are competing with Microsoft who has very good looking products, they do not work that great but the user does not see that. If any ISV plans to compete in the small business space they better start investing in good UI designs.

  1. 21  Randall Shimizu  |

    @17

    I agree IBM needs to expend more resources understanding and marketing products to the SMB sector. IBM/Lotus needs to develop more products for the SMB market. There also needs to be more integrated products for the SMB market. It's hard to integrate products like WSE. I would like to see more deployments guides and patterns/best practices.

    Much of IBM's SMB attitude is corporate culture related. IBM has been very reluctant to advertise. Back in the OS/2 days IBM announced that they were going to begin a big marketing campaign. At the last minute IBM would pull back. This happened on several occasions when new editions of OS/2 were launched.

  1. 22  Ed Brill http://www.edbrill.com |

    Ok, so as is typical for this kind of post, somehow we've moved away from a few constructive points that supported the original (VERY POSITIVE) article to the usual "Lotus marketing sucks" (ok, this time it's IBM marketing :-) ). Can we either get back on topic or move on? I am getting fatigued of citing all the good things IBM is doing in SMB if it isn't enough.

  1. 23  Nathan T. Freeman http://nathan.lotus911.com |

    Ed, can I offer a (hopefully) fresh perspective on the topic over here? { Link }

    And suggest that anyone in this thread feel free to divert the conversation over there, so Ed can finally bury this horse on his site? (Even Volker is welcome to comment.)

  1. 24  Mike Robinson http://www.invcs.com |

    @13- Prospect decline isn't a function of Lotus as much as it is the Marketing mix (Price, Place, Promotion, Product). Really it sounds so text book and cliche you want to ignore it, but it is really is that.

    @14- That was awfully kind of Ed to even blink twice on that. Good suggestions to gain visibility for your products.

    @22- Ditto. Sometimes it's like the "why the Red Sox" can never win the world series (when they already have...)

  1. 25  Mika Heinonen http://siipi.com/mika |

    I just bought a Domino Utility Express Server for $25.

    Can you get MSSQL, IIS, Exchange Server, BizTalk, etc.. for that price? I doubt so. Still you need them all to have even a slight comparabilty between Domino the the Microsoft Suite.

    Then you need Domino Designer for $780 and Notes Client for $144. I see Domino Designer and Notes Client replacing Visual Studio, which can do only Windows code, while the Domino Designer+Notes Client Combo can produce cross-platform code, which directly fits into Domino (no Microsoft product can do that, obviously).

    I don't even need Visual Studio for programming 3D games, since Blitz3D ($100) and the forthcoming next version of BlitzMax (currently $80) will do the same with much better quality and speed (direct Machine Code compilers at Basic Language style interface), and cross platform compatible.

    The only thing which I am still using Visual Studio Express for, is to compile command line Notes API tools, but it's free, for which I must really praise Microsoft for.

    If you ask me, is Lotus bleeding customers, you should rather ask if Microsoft is. None of my friends has been praising Vista, instead they blame it for beeing slower and requiring a security control, and hardware boost, which rather seems to pacify paranoia and insane politics.

    And about DirectX 10 which is Vista only (lame marketing draw)? I was never a fan of DirectX as OpenGL has performed always better, and is fully cross platform capable.

  1. 26  David Russell  |

    It'll be interesting to see the sales figures this time next year, Notes 8 seems like such an exciting release. For Developers it has the Eclipse stuff to play with (love the Component Designer by the way) - Administrators, the extensive feature list (recall, etc) - and End Users the redesigned user interface. Maybe we'll see even greater sales numbers!

  1. 27  John Head http://www.johndavidhead.com |

    @25 Mika - be careful on going after DirectX 10 ... the games that are DirectX 10 only look freaking amazing ... and most of the DirectX 10 stuff are features that new graphic cards are just adding. So Microsoft decided to not make DX10 backwards compatible to Windows XP is ok with me

  1. 28  Phil West  |

    @12 "...a free community edition of Domino..."

    That could be a good way to encourage its use in new areas. Subversively getting the product "out there".

  1. 29  Edwin http://www.eniac.nl |

    Why not have a 'light weight' Lotus Notes (primary)messaging client for distribution based on the exclipse platform, so also for Linux, and portalbe to mobile devices like google does with their mobile mail client.

    That way students may experience the power of .....

  1. 30  Sean Jennings  |

    re: bleeding customers...

    As we know, many established Notes customers are 'locked-into' Notes in the sense that they have Notes-applications upon which their businesses depend. Migrating mail and calendaring isn't a problem, but replacing a mature and trusted application, possibly developed in-house, can be an expensive and damaging process and with no obvious business benefits to be gained.

    The question is, how many Notes customers have placed a moratorium on developing new in-house Notes applications and placed current Notes apps into maintenance-mode?

    The strategy being that over time their dependence upon custom Notes apps will decrease, so that at some future-point with far fewer applications to port, it will be easier to migrate to another messaging platform.

    Does IBM know how many of its customers are continuing to develop Notes-based applications?

  1. 31  Mika Heinonen http://siipi.com/mika |

    @29) That would be really useful. A Notes Client Express edition. I like the Microsoft Express editions, since they are free, and only have the stuff I need for programming.

    Right now I am starting a new programming project for fishing needs. A tool which needs to be small and easy to install and use, and have the possibility to connect to a Domino server. I'm not sure how the Notes 7.0.2 USB Stick install works, but I doubt I can give that out for free to my customers. So I need to make a little Visual Basic 2005 program, and program somekind of simple database system to it, which then can be replicated with a Domino database over the HTTP protocol. Now, if there was a small Notes Express client, I could just deploy that to my users, and have the database and native Domino connectivity via LotusScript already built-in!

  1. 32  Mika Heinonen http://siipi.com/mika |

    @29) Just wanted to add that basically I could do a Notes Client Express edition myself already, by removing all DLLs and files which are not needed to run a specific Notes Application in KIOSK mode. The only thing needed would a permission from IBM that distributing this minimum client with the specified files would be allowed for free.

  1. 33  Alan Dalziel  |

    I'll get back on topic in a minute Ed, but I thought NotesBuddy gives you Notes access for nada - { Link }

    On topic - I was very pleased to hear the numbers for the tail end of 06, but as a BP I have to join the throng who doesn't understand where IBM gets their SMB sizing from. A small business is, to me, a company that has an IT team of less than 5 people which typically means up to 150 employees or so. Somehow one of my clients that has a half dozen servers, 500 users and has an IT department of 20 or so is considered small. This client runs Notes and Domino and loves it, but they also use Sharepoint and love that. And the question of which side of the fence to fall on to consolidate vendors is hanging in the air. MS want to give them all the licensing they need to move but IBM apparently don't even know they exist. Losing a client like this may not mean much to IBM in terms of revenue dollars now, but it's the long term effect that is more significant. 20 companies of <500 employees moving away from Notes/Domino may have a more significant effect than one 10,000 employee company moving away. The knock on to BPs in local markets makes a big difference to the marketability of products - MS BPs are on every corner but IBM/Lotus BPs are relatively rare. (Sorry - kind of ran off topic again :-)

  1. 34  Randall Shimizu  |

    @33

    I tend to agree having a larger customer base increases the overall market presence. Having more companies use Notes enhances the markets perception. At the same time there is probably a greater likelihood that 20 companies will have a higher growth rate as opposed to a single organization.

    Perhaps a SMB council of Notes users would be of help.

  1. 35  Randall Shimizu  |

    @25

    Well I guess I was mistaken, IBM actually does have a product that is extremely competitive. Sorry Ed. With Notes 8 this will give us a very competitive advantage over Exchange.

  1. 36  emma  |

    I think @16 and @33 both make good points about gaining market share through the "little people".

    The main argument in my very large organisation for moving away from Notes, is that the decision-makers have Outlook on their home computer. In an organisation of this size and culture, the decision-makers are often business managers with little technical understanding. All they see is "does it work the way I'm used to working?" They view change as inherently bad. It slows down their ability to get business done by demanding that they learn a new tool.

    If we had more end-users experiencing Notes through the school system, or through a free basic client, there would be less "I use Outlook at home, so let's just use it at work too" attitude.

    There's no denying that the Lotus product suite is technically better and good value-for-money. The difficulty is getting the message into the minds of decision-makers. I think this could be improved by learning from Apple and Microsoft's success in focusing on "little people".

  1. 37  Charles Robinson http://cubert-codepoet.blogspot.com |

    @25 - How exactly did you do that? A single core CPU is 100 PVU's, and it's $25.75 per PVU. See { Link } and { Link } .

    Also, Domino Utility Server Express doesn't do messaging, so it's not fair to put Exchange into your comparative MS software stack. Finally, Visual Studio can produce cross-platform code, at least for Windows and Linux. I don't have any reason to investigate whether a .Net CLR exists for OS X but if one does, Visual Studio can be used to deploy applications for it, too.

  1. 38  Charles Robinson http://cubert-codepoet.blogspot.com |

    To get back on target, I do think that Lotus has come a long way in clarifying its message. I may not always like what they're saying, but at least it mostly makes sense now.

  1. 39  emma  |

    Gartner Australia agrees that Lotus is back on track with branding.

    { Link }

  1. 40  ירוחם  |