Yahoo now mirrors Lotus then

History never repeats itself exactly, but rereading Kevin Johnson's memo updating the troops on Microsoft's bid to buy Yahoo, I was struck by the contrast with another software mega-merger saga that dominated headlines 13 years earlier.

As we reported on Friday, Johnson, who heads up Microsoft's Platforms & Services division, detailed how a combination with Yahoo would have a tonic impact: Online advertising customers would gain a viable alternative to Google, while Microsoft would carve out a bigger piece of a nearly $80 billion market.

Money was no object for Lou Gerstner.

(Credit: IBM)

In June 1995, IBM stunned Lotus with a unsolicited $3 billion buyout bid. At the time, Lotus was in a world of hurt. Sales of the company's franchise product--its office applications suite--were slumping thanks to stepped-up competition from Microsoft. CEO Jim Manzi knew that the company's future depended on Lotus Notes, the hot groupware product spearheaded by the company's star developer, Ray Ozzie.

Unfortunately for Lotus, sales of Notes weren't climbing fast enough to compensate for the accelerating sales slump elsewhere at Lotus. So when IBM launched its unsolicited tender officer, Lou Gerstner expected a welcoming response.

Manzi instead gave Big Lou the middle finger.

And so what followed was a week full of back-and-forth statements and head feints as the real negotiations played out in the back rooms. At one point, Gerstner got on his plane to pay a special call on Ozzie, whose team of developers worked outside the corporate headquarters in the Boston suburb of Beverly. (The biggest historical irony in all this is that Ozzie is now the go-to technology luminary at Microsoft.)

Whatever charm Gerstner used to convince Ozzie to stick around, it worked--that and a corporate decision by IBM to up its offer by a half billion dollars. Suddenly, Manzi was all smiles for the cameras, touting the combination with Big Blue as a big win for customers, shareholders, and employees. (Amazing how the same script winds up getting used time and again.)

I've often since wondered how Lotus might have fared if it remained an independent company. Would Notes really prove to be Lotus' savior? Impossible to say, but my back-of-the-envelope recollection is that Microsoft was marshaling its muscle behind its own groupware product. Bill Gates wasn't strong enough to shove around Gerstner, but he had already shown himself capable of outmaneuvering Manzi's Lotus. My guess is that Lotus would have wound up no differently than WordPerfect, a one-time software powerhouse also brought low by Microsoft.

Jerry Yang knows the history of the software business. In the absence of a white knight emerging, he doesn't have a lot of good cards. So for the time being, playing hard to get may the best way to coax a higher bid out of an unwanted suitor. After all, it worked for Manzi.

[minonda]

The world would have been better off if Gerstner hadn't been successul, and Notes had just died. Those of us who have to use this clumsy dinosaur dream wistfully of being able to be using Outlook again. Say what you will about Microsoft and Gates, Outlook is light years ahead of Notes in terms of usefulness and efficiency.

[charlie cooper]

interesting comment. you know...i was always of two minds about notes. in the mid-1990s i was a user. but my complaint was that it was overload. when we finally made the move to outlook, it was night & day. outlook has its issues but it "felt" more utilitarian. i didn't need to consult a glossary or put in a call to the help desk. i basically figured it out w/o a lot of trouble. as a user, that's what i want

[minonda]

Exactly. Lotus Notes is not intuitive or user-friendly. That's one of its major flaws. It also lacks an efficent way to summarize the information it contains, compared to Outlook.

[pilaa]

I have worked with Lotus Notes and Domino since version 4.6 and its fairly obivious to me you never used Lotus Notes or Domino enough to fully understand its full capabilities as a group collaboration tool.

Lotus Notes/Domino server was always (and still is) light years ahead of Microsoft Exchange and Outlook Express/Outlook in terms of security, reliability and feature set. Lotus Domino replication is the killer app that makes Lotus Notes the better group collaboration platform, not to mention its was built with industry standard HTML, Java, and other open standards and technologies and supports multiple (Operating System) platforms. Does Microsoft Exchange run on Sun Solaris, Linux, AIX??? I think not!

Sounds to me like you don't know much about the backend applications that make the client apps work...

So go and bash something you know a little something about...

[`WarpKat]

I don't know. One of the things that bothers me here is that, regardless of the anti-trust war being waged against Microsoft, the Redmond behemoth still finds ways to stick its nose in the air in a show of non-obvious defiance.

When Microsoft does in fact buy out Yahoo (it's no longer a question of 'if'), despite the public front being put on by Kevin Johnson that everything will be ok, you can pretty much see the Yahoo brand go the way of the Do-Do. That goes without saying any project Yahoo had been working on out in the open - we can all say good-bye to, as well.

[charlie cooper]

I'm not so sure. Would Microsoft really dump Yahoo mail, for instance? or Flickr? etc. iI obviously think this deal is fraught with trouble but if MS goes ahead and pays $45 billion, I'm going to give them the benefit of the doubt - at this point - that the suits will be ultra careful not to destroy the franchise.

[dfarber]

I don't think Jerry know the history of software....and he is not in much of a negotiating position to get more money out of MS....but he can try...

[jumpjetta]

@charlie cooper... Microsoft may keep around the *name* of these products, but their insinuation of MS "technologies" and other services into the existing products... requiring us to use a Passport to log in to flickr, for instance, or grafting on "features" that require the use of Explorer... will erode the usefulness of the services for those of us that don't swallow the MS pill completely. In other words, if you don't use Vista + Explorer, forget those products working for you completely in the future.

[ceebee23]

as Jumpjetta says, my biggest worry is that Yahoo /Flickr will gradually become less and less cross platform and play less well with no Microsoft products.

Yahoo support for MacOSX and Linux will fall by the wayside and be used to push Silverlight , DX10 and other MS technologies to lock in users to Microsoft's whole eco-system!!

[sleezyb]

Actually if you paid attention to any recent microsoft developments, you'd know that they are pretty dedicated to cross-browser support. Both their web libraries and upcoming Silverlight (sorta like Flash) work on Macs, Firefox, etc. I dont think it is because someone at MS has some big heart, though.

They have to compete, dummies...

[bbkonga]

HARD TO TAKE YOU seriously when you have your FACTS wrong. Notes was not developed in Beverly, that's where Ozzie started Groove associates AFTER he left IBM and Lotus. Notes was developed by Iris Associates when that was a sub of Lotus and that was in WESTFORD ma, where there are still dev offices in the same campus. Oh yeah, how did big Lou woo Ozzie? Gee , try guessing. I big bag of cash in the form of a golden parachute for staying x amount of time. SOP in all cases and "mergers" like this.

Go get your GED and then try writing again,