The Battle For Corporate Mindshare

We are talking about Microsoft and Lotus, an IBM subsidiary. When IBM acquired Lotus in 1996, Fortune predicted that this was Big Blues way of getting back at Microsoft. It was right. But Lotuss attack was concentrated on the groupware market, and its flagship product was Lotus Notes. The name is now almost synonymous with Lotus Notes, so much so that Microsoft refuses to refer to their competing product, Microsoft Exchange, as groupware. The company prefers to call it `messaging server. The battle has intensified with the introduction of Outlook 98, the client software for the latest version of Microsoft Exchange. In India, Notes captured the market before Exchange, but Microsoft is targetting new users in India with aggression.

 

Groupware is not your ordinary desktop software it is a powerful, enterprise-class system that provides an infrastructure for users in a corporate network to share information. The emphasis by the protagonists, of course, is on their respective strengths. Lotus proclaims Notes/Domino as the complete corporation application development environment, as also the strongest in e-mail and messaging. It also has a feature called replication which replicates the same document across different users and offers easy synchronisation which Microsoft still lacks.

Despite its huge popularity., some call groupware nothing more than glorified e-mail flying around the corporate office, with files attached to them. But from mere e-mail, groupware has grown to include scheduling, calendering, white-boarding and Lotuss own replication into a mammoth structure. Whatever you call it collaborative computing, messaging or groupware the battle is fought for the same corporate mindshare. And for a change, this is one battle that the Redmond-based company is finding tough to win.

In 1996, when Microsoft moved into the groupware market with Exchange Server in 1996, many believed Lotus was about to go down under. They were wrong. While exact figures are unavailable, it is estimated that Notes/Domino still commands the market, with 20 million users to Exchanges 13 million.

The International Data Corporation (IDC) report on e-mail and groupware markets at the end of 1996 makes the picture clearer. The research organisation ranks Lotus Development at the top in both fields.

Internet e-mail software exploded onto the corporate messaging scene in 1996, with new users growing at a rate of 727 per cent, compared to 46 per cent for the overall market, says the paper. It also goes on to say that the arrival and espousal of open (internet based) e-mail standards as one of the reasons. Traditional e-mail products used in groupware using proprietary standards pale in comparison to the ease of use and ubiquity and almost universal compatibility of open internet standards.

E-email, in the corporate context, is intricately tied to the collaborative environment used. In such a scenario, IDC states that the top e-mail software vendors in 1996, based on new users world-wide, were IBM/Lotus with 8.4 million new users (26 per cent), Netscape with 5.5 million (17 per cent), Microsoft with 4.4 million (11 per cent), QUALCOMM with 2.9 million (9 per cent), Novell with 2.2 million (7 per cent), Software.com with 4 per cent and Hewlett-Packard with 1.1 million (3 per cent).

The situation was different in 1996, with the Lotus and Novell at the top. In its Preliminary Look at the 1996 Groupware Market, IDC evaluates worldwide commercial groupware software used for business purposes and states that the number of new users grew at a rate of 42.5 per cent in 1996, to 12 million. Of this growth, Lotus Notes users increased by 4.33 million, or 36 per cent of the total. The nearest competitor, Novell Groupwise, increased by 18 per cent of the total number of new groupware users and Microsoft Exchange users grew by 17 per cent. The study showed IBM/Lotus with more than 15 million total combined groupware users that year.

In 1997, the situation changed, with Microsoft emphasising not just Exchange server but a whole host of its backoffice software which includes NT, Exchange, Internet Information server and Outlook Client while Lotus introduced the Domino/Notes combo to take on an intranet avatar. It paid rich dividends for both. Exchange quickly eclipsed Novells GroupWise and was ready to take on the leader in 1997.

The new Exchange packaging, revolving around the free introduction of its new Outlook client for exchange, has already proven popular. A recent IDC study that surveyed more than 1,000 people employed at small, medium and large organisations found that Exchange Server is the number-one collaboration environment to which companies are moving. Already, more than 10 million seats of Exchange have been sold, 2.8 million in the fourth quarter of last year.

Over 7.2 million unit sales have recently been reported in the mail census newsletter Electronic Mail & Messaging Systems.. EMMS says that Microsoft Exchange numbers are growing at an incredible rate - almost tenfold in the past year. Recent sales increases suggest that the customers who spent 1996 evaluating and testing the product are now making affirmative purchase decisions.

Another recent IDC study that polled over 500 business users at small, medium and large organisations, said that Microsoft Exchange was the leading selection in the new server market and the primary product companies to which companies were switching.

In fact, with more than 7.2 million seats sold in the products first 18 months, Exchange was clearly rapidly becoming one of Microsofts top-selling products of all time. But it was the hype surrounding the introduction on intranets (call them internal internets) that spurred the growth. Notes was supposed to be the first victim of cheap, open standards-based collaboration.

But instead of falling by the wayside, Lotus reacted by co-opting the intranet mantra. Lotus Notes thus became Notes/ Domino, with Domino taking care of the web-publishing part. Domino converts Notes documents on the fly into internet-standard HTML so any world wide web browser such as Netscapes Navigator or Microsofts Internet Explorer can view Notes documents in their browsers.

The growing popularity of browsers could have thus meant a break to the glorious Lotus trail, and pure internet standards-based groupware could have won the day. Coupled with the maturity of Notes as a platform and the relative immaturity of newcomers, pure internet-standards-based groupware such as Netscapes Suitespot never became a major threat to Lotus. The invasion of Internet culture into corporations has brought with it real-time collaboration tools such as chat and electronic whiteboarding functions not associated with traditional groupware. Thus, to different degrees, every groupware offering today is a blend of proprietary functions and Internet standards.

Exchange too was quick to adopt to Internet standards. Microsofts Outlook 98 offers almost all internet protocols, but is still available only on the companys server operating system, Windows NT. That could be Microsofts Achilles heel. Lotus Domino/ Notes is currently available on all major operating system platforms, and applications developed for Notes run on all those platforms.

However, Microsofts strategy of building a vertical IT architecture with NT at the base and Exchange and Outlook 98 on top while attractive for corporates who have already standardised on Windows, does not look palatable for companies running several operating systems. So this is one battle Microsoft is not going to win easily and markets like India will see much of the fire and fury.