April 9, 1999 12:40 PM PDT

Can Lotus kill its one-product image?

With a major release of its Notes/Domino messaging software now finished, Lotus Development is tackling another, more difficult challenge: Erasing its long-standing image as a company driven by a single product.

Lotus executives say they are determined to shake the one-trick pony perception by later this year touting a group of products that fall under its knowledge management strategy and are not dependent on Notes/Domino.

It's an effort Lotus has been fighting for years. Almost since its founding in 1981, the Cambridge, Massachusetts-based company has ate and slept one key product. In the early 1980s through the early 1990s, that product was Lotus 1-2-3, which helped spawn the PC industry.

In more recent times, Notes, the first groupware product on the market, has attracted both customers and the attention of IBM, which purchased Lotus for $3.5 billion in 1995, principally to get its hands on the Notes franchise.

One overriding issue has haunted Lotus through those two very different eras: how to develop a decent second fiddle product to augment the company's cash cow.

"They are considered the Notes company," said Rob Enderle, senior analyst with Giga Information Group. "Notes is an IBM product. It fits well with its overall strategy."

And therein lies the problem. While Notes/Domino is considered strategic by IBM, Lotus's other major product line, its SmartSuite desktop application suite, well regarded for its technical merits, hasn't benefited from IBM's marketing largesse.

"[SmartSuite] doesn't get anywhere near enough marketing dollars to make a difference," against market leader Microsoft Office, said Enderle.

Also, a plan to launch a set of Java-based office productivity applets appears to have fallen by the wayside. At one time, several hundred developers were assigned to the project, sources said. Now, the company plans to break off the SmartSuite component SmartCenter, a desktop tool that accesses contact information and gathers news from the Internet, into a separate product. No timeframe has been disclosed.

Lotus is also considering porting SmartSuite to Linux, said Lynne Capozzi, vice president of Internet applications. But again, no timeframe has been disclosed.

Most likely, Office's hammerlock on the market will preclude any additional marketing splurges on SmartSuite. The command Microsoft Office has over the desktop market is nearly universal, Ted Schandler, an analyst at Forrester Research, said. "It's as close to 100 percent as you would want to get."

Now that Notes/Domino R5, considered the most important launch of Lotus's groupware product since release 1.0, has shipped, the IBM subsidiary is ready to try again to establish a strong second-string product line. This time, the strategy will focus on a set of knowledge management applications that are not dependent on Notes/Domino.

"If you watched carefully at Lotusphere 99 and even late last year, Lotus is trying to divorce themselves from the one-product mold," said Tom Austin, an analyst with the Gartner Group. "They have products like SameTime and other knowledge management applications that are being sold as stand-alone products and as integrated components of Notes and Domino. These are good products," he said.

Knowledge management software is used to provide a system for companies to transform information from various sources--the Web, back-office applications, databases--into client applications for making business decisions.

Lotus points to a group of knowledge management software packages that it will sell as separate products and will aim at customers that may not use Notes or Domino.

One of those products is SameTime 1.0, a software tool for instant communication via the Web. Launched in January, SameTime is actually the combination of two different technologies obtained by Lotus when it purchased real-time software vendors Lexington, Kentucky-based DataBeam and Israeli-based Ubique.

Another new product is LearningSpace, a distance learning software package. Due to launch by the end of May, LearningSpace 3.0 will include LearningSpace Forum, an asynchronous version of the product; LearningSpace Live, a synchronous version; and LearningSpace Anytime, which is a combination of both the asynchronous and synchronous versions. The product includes a "live" virtual classroom environment, making it easier for instructors to deliver remote presentations, share applications, and tour Web sites with participating students.

LearningSpace "is of strategic importance and great value to Lotus," said Brian Bell, vice president of Lotus's new knowledge management division.

Lotus points to its successes in the hosted application market as yet another example of its ability to develop products that are not dependent on its vast Notes/Domino customer base.

Based on the earlier success of its Instant TeamRoom offering, which allows distributed users to work together over the Internet, Lotus QuickPlace rolled out in February.

QuickPlace allows workgroups within and between companies to use their Internet browser to set up a customized workplace to centrally communicate, share, and organize information, documents, and schedules relating to a particular project.

"The fact of the matter is we had the first knowledge management product," said Bell. "That product is Notes and Domino. We're leveraging this important product on a higher level of collaboration. Knowledge management is a huge business in its own right."

Bell estimates the knowledge management market in North America is worth $50 billion.

According to a recent report by the Gartner Group, one-third of Fortune 1000 companies are including knowledge management initiatives in their 1999 plans.

But just because Lotus is selling products in the knowledge management market doesn't mean it can completely shed its Notes/Domino skin, Gartner's Austin said.

"Will they achieve the same sales as Domino? Not on your life. But it is still worth the effort."

 

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