Few companies in the IT industry have changed their spots moreo Microsoft. Although strong on technology, Lotus will have a struggle against the giant's marketing muscle. comprehensively than Lotus. When IBM amazed Wall Street by paying $3.5 billion for the company in 1995, Lotus was king of a rather quirky heap it had largely invented - the groupware market. It was also keeping up the appearance of being a serious challenger to Microsoft in core office applications.
A year later, despite slashing its prices, Notes was under fire for being too expensive, too proprietary and too cumbersome, compared with the cheap and cheerful intranet technologies that were becoming increasingly popular.
Microsoft was making a superficially convincing case for Exchange as a competitor to Notes, and SmartSuite was losing the battle with Office.
The industry was beginning to wonder whether Wall Street had been right, and whether IBM had bought itself more of a lame duck than a high flier.
But when version 5 of Notes ships later this year (see boxes), Lotus will have completed a process of change that began in 1996.
It will not only have reinforced its dominant position in the PC messaging market, but also silenced most of its critics by fully embracing open technologies and creating a series of bases from which it could, if fate is kind, dominate both the intranet and traditional groupware markets - or unite them under a single banner.
Few will blame it if it abandons the uphill struggle with Microsoft Office and quietly leaves SmartSuite to its fate. But sales of Notes remain strong.
'Overall last year we had our best ever year in Lotus terms,' says Steve Caunce, software marketing manager at Computacenter. 'Revenue grew by about 40 per cent, mostly in Notes and Domino.'
The reason, Caunce believes, is that Lotus has realised it is better off sticking to its knitting: 'Lotus is really a groupware and messaging company, and it has done a good job at going back to what it's best at. We no longer do any marketing around SmartSuite. As integration with IBM increases, I see Notes and Domino going from strength to strength.'
Although it is three years since the marriage with IBM, the couple have only really begun to live together in the past few months, when the licensing and partner marketing teams of the two companies finally merged. Resellers saw this as a positive move and in March, the first major fruits of the union were delivered in the form of a native version of Domino for the AS/400.
'The AS/400 is the best performing platform we've ever put Domino on,' says Jim Moffat, Lotus product marketing manager for Notes/Domino. 'The benchmarks suggest it will support 10,000 users. We expect the AS/400 to be a significant market, because it's being sold as an application server, which makes it a good fit for Domino.'
Trevor Ward, Lotus UK partner sales manager, agrees: 'It will enable resellers to be operating system agnostics. They can walk into any customer and say: "we can run on your platform".'
Tony Westray, marketing director of Lotus Notes specialist Total Computer Systems, believes the reliability and reputation of the AS/400 and S/390 - an S/390 version of Domino was shipped at the end of last year - will give Domino a big boost as a corporate intranet server.
'There's a very big installed base of AS/400s,' Westray says. 'A lot of those still haven't deployed Notes to the extent Lotus expected. We could increase our turnover by 25 per cent, just thanks to the AS/400.'
Robin Saunders, managing director of Notes systems house Nexus, says: 'I think it will be a major incentive for IBM to convert its OfficeVision users, and it will encourage users to take on Notes Mail instead of Office Mail because of reduced overheads from having everything under one roof.'
Even Notes resellers with no AS/400 experience expect to take it in their stride. And more than 30 AS/400 business partners with no Notes experience have also signed up to sell Domino. Strangely though, no one is expecting the market to become overcrowded.
Indeed, the Notes channel appears amicable. 'It's remarkably co-operative.
People will talk openly about customers without fear of them being poached,' says Ian White, a senior consultant at Notes consultancy Lloyd McKenzie.
'That's largely because the market is expanding faster than the number of business partners.'
It is also thanks to Lotus itself, which actively encourages collaboration between its partners, who often specialise in single areas such as application development or consultancy.
Resellers say Lotus is supportive in its attitude to its business partners.
The software developer is trying to encourage them to specialise in markets where it has identified good prospects, including banking, manufacturing, retail, distribution and government.
Lotus has about 700 partners in the UK, 'but there's still enough market out there for more partners,' according to Ward. His aim is to add Web developers and ISPs to the Lotus channel; about 25 of each were recruited last year, and the company hopes to add more this year.
Lotus says it worked hard at selling licences last year, setting itself tough targets across Europe and meeting them. 'The work Lotus did in 1997 has made a real difference to the market for the solutions we sell,' says Westray. 'A lot of the calls we receive now are from existing Notes users looking for key solutions on top of the messaging they've already got.'
Lotus claims to have more messaging clients - including Notes Desktop, Notes Mail and cc:mail - than its next three competitors put together.
This already makes it a 'safe bet' with customers, and mail in particular will be a big marketing focus for the company in the coming year.
Resellers welcome the mail changes in Notes 5, which will simplify the product by rolling the old Mail client and the cc:mail interface into the main client. Westray hopes the latter will encourage users of older versions of cc:mail to upgrade to Notes, increasing the market for value-added sales.
The Notes 5 client, with its use of Push technology and integration of personal productivity applications, could be incredibly important, says Saunders. 'Notes 5 is going to upset the Windows paradigm in many regards,' he says.
'There won't be much point going outside Notes for most of what you do.
This is critical to support the way the majority of desk-bound staff work.
The days of Microsoft Office and SmartSuite are numbered.'
Maybe this will hold the key to making Notes deliver on its decade-old promise to change the way people work, which to date has eluded it.
'The trouble with groupware is that it requires people to think differently, which is a problem in a lot of big organisations,' says Mark Robertson, managing director of Blue Curve, a firm that develops Notes systems for the financial sector. 'People can't imagine what they can do with it, so they never find the killer application.'
Notes/Domino 5 will also mark the completion of Lotus' journey from the darkness of proprietary technology to the light of open standards, particularly intranet standards and Java.
The intranet thrust of Domino inevitably attracts much attention, but resellers with long experience of Notes warn that Lotus must not lose sight of its traditional groupware market, especially as many existing and potential customers have not yet got very far with their intranet plans.
And since there are very few development environments that embrace both the legacy and Web arenas, if Lotus plays both hands to its advantage, it may find itself in a very strong position. 'Domino is now part of people's server strategy, whether they use it for their server or for messaging - that's a great advantage to us,' says Westray.
Inevitably, there will be caveats. Skills are in very short supply, and developing Notes systems remains complicated. 'Notes is still quite difficult to work with as an intra-net development platform,' says Robertson. 'Although the scripting languages are quite straightforward, knowing how to put it all together is a bit of a black art, and there aren't many companies that can do it.'
Lotus will have to sort out its pricing - not altered since the price of Notes was halved twice in 1995. Smaller businesses find the product expensive, compared with shareware or giveaway alternatives, until they are convinced of the extra benefits. And server pricing is too lenient, according to some resellers. Most revenue currently comes from the client side, but this will have to change as servers become fatter and clients thinner.
And despite Lotus' efforts in marketing Notes, especially in collaboration with IBM, resellers still complain it is too quiet when it comes to marketing products. 'Microsoft is a massive marketing machine,' says Saunders. 'Lotus is a massive technology machine. A lot of its technology is better than Microsoft's.'
Notes' competitors have the upper hand in some areas. Netscape is more scalable than Domino 4.6, Groupwise is better at wide-area directory maintenance, and some of Lotus' tools are not as strong as Microsoft's.
It's an uphill struggle, but Notes is on the attack, with more to come in version 5. 'If all you want is a messaging system, it's difficult to differentiate,' says Caunce. 'But because of the development capabilities built into Notes, it offers greater functionality than groupware or Exchange.'
NOTES ON NOTES
According to Lotus, Notes has three main functions:
Communication, via mail or the internet.
Collaboration, which includes information-sharing, discussion and decision-making.
Co-ordination, the most complex function, which involves action on a document or project by several different people, supported by technologies like workflow.
Lotus deliberately renamed the server side of Notes, Domino, to emphasise the fact that the two products could be sold independently.
Even before the IBM takeover, Lotus had decided to turn Domino into a combined Web and Notes server, and the 'Will the intranet kill off groupware?' debate which raged in 1996 has virtually ceased.
Co-existence is a watchword for Lotus this year, and Domino, which has now embraced most of the main internet standards, has made a name for itself as a general-purpose intranet and messaging server, without having to run Notes on top.
Functionally, most Notes systems sold are still in traditional areas, such as workflow, document management and salesforce automation. It is increasingly being used for intranet functions such as document publishing, or for combining intranet and groupware functions. Inter-company Notes systems, along the lines of an extranet, but with richer groupware functionality, are also being set up.
Core transaction processing is still outside the scope of Notes, but it is becoming common to link Notes systems directly into core Oracle or DB2 databases, using products like Casahl's Replic-Action or IBM's MQ.
Although established and robust enough to have become a corporate architecture in its own right, Notes/Domino is not just aimed at corporates. Businesses as small as two people have implemented it, and sales to SMEs are growing.
It is even possible to rent Notes applications on the Web for a few pounds a month, from companies like Interliant with its Instant Teamroom product.
Version 5 of Notes/Domino was previewed at Lotusphere in February, and is due to be released during the second half of 1998. Lotus hopes the beta will be available in Q2.
The latest version aims to make the product more open, and also consolidate and improve access to some of the features that are already in version 4.6, but are easily overlooked.
HIGHLIGHTS OF NOTES 5
The main interface will be even more browser-like, with full browser functions such as table rendering, which the 4.6 Notes browser does not do. Alternatively, users will be able to use Microsoft or Netscape browsers.
To ease the problem of information overload, it uses PointCast's push technology and is based on 'headlines' pre-set by the user - the major events of the day, key words, key ideas, and so on, which automatically pull out the relevant information. This is intended to act as a front end to the user's personal applications.
To aid this, the current cc:mail, Lotus Mail, Organizer and Replicator applications are combined into the Notes 5 client.
Searching is improved and more internet-like. Intranet and Notes information can be formatted and displayed identically.
More internet protocols are included, such as IMAP 4.
The existing three clients are reduced to two, by amalgamating the Notes Mail client into the main Desktop, which will be known simply as Notes 5. The Designer client will continue, as Domino Designer.
There are improved knowledge management tools, including academic-style distance learning tools.
Minor enhancements include adding a print preview mode and reducing the hard disk requirement by about 5Mb per client.
The enhancements in the Domino 5 server will mostly be under the bonnet, since most of the Web features are already present in version 4. But Lotus claims that scalability and reliability will be improved (for example, supporting up to a million entries per address book) and that the server software will be almost an order of magnitude faster than version 4.
CEO Graeme Watt admits the trading climate is becoming a little more uncertain as he and CFO Graham Charlton reflect on the reseller's £1bn year
Security vendor appoints Infinigate as part of strategy to grow channel business
As the trade war between the US and China ramps up, Marian McHugh investigates what impact this will have on UK prices and how partners are adapting to higher costs
CRN quizzes Avaya CEO Jim Chirico on the firm's progress after exiting Chapter 11 earlier this year, and listing on the stock exchange