Conference 7.286::digital

  Maybe OS/2 ain't dead yet?

                                   Atlant

    Maybe IBM needs to keep the Lotus Suite (only one that runs on OS/2)
    alive.  If Lotus gives up on OS/2, then what is the message to the
    marketplace.  Keeping OS/2 alive is becoming a very expensive problem
    for IBM.
    
    Guess we shouldn't expect to see Lotus Notes ported to Digital UNIX in
    the near future .... ;^)

>    Guess we shouldn't expect to see Lotus Notes ported to Digital UNIX in
>    the near future .... ;^)
    
    Why we have CICS on Digital UNIX.
    

    Mr. Manzi has been so busy keeping his eyes on one Mr. G he forgot all
    about the other Mr. G....
    
|   Our goal is to accelerate the creation of a truly open, scalable
|   collaborative computing environment so people can work and
|   communicate across enterprises and across corporate and national
|   borders.
    
    Paying over THREE BILLION DOLLARS in cash for Notes/WARP?  (That's
    got to be the most expensive "port" in the history of computing.)
    
    								-mr. bill

    Damn, I thought Lotus' 3+ gain on (30 to 33) Friday in an otherwise
    dull market looked fishy.

RE: .2 (About Lotus Notes being ported to Alpha)

That's exactly what I said, after the word damn. 

Things are going to HEAT UP even more between IBM and Microsoft. 

	C'Ya,
	Wayne

	This move makes the job of FCC very easy! They don't have to worry
	about microsoft's monopoly any more. Looks like IBM did not have much
	choice either. If Lotus were to drop their support to OS/2 (which
	they very well could have thought of doing looking at the poor
	showing of OS/2 and less $$ available for Lotus to invest in) IBM
	had to do so serious thinking in terms of what to do with OS/2.


	Looks like they have made a decision to keep it! Are IBM stocks 
	up or down? I expect them to go down!

	Anil
	

IBM was down 2 as of 2:49.

    I doubt if this has much to do with OS/2, and everything to do with
    account control.  IBM sees Lotus Notes as a key to re-establishing
    centralized control over IS. Doesn't "Groupware" sound a lot like
    "departmental computing"?  If IBM can control the Groupware, which is
    akin to a distributed operationg system, they can regain some control
    in their account base.
    
    FWIW
    
    gc  

    
    Here, here, Mr. Crosby.
    
    IBM has never forgotten Watson Sr.'s lifelong focus on account control.
    
    If this actually takes place, the whole industry is going to go thru
    consolidations and "synergistic combinations" that would make the
    railroads of the 1890s look like schoolyard exercises.
    
    You can't have lots of O/Ss, so we are headed for three - the
    DataCenter, the Distributed Server, and the Desktop.
    
    This is going to make the "clone wars" just a warm-up. I'm in shock...
    
    
    		the Greyhawk

>    In the very near future, a company's market value is going to equal just
>    the sum of the market values of each employee working for them.

That's a reductionist view of the world.  Many, many systems tend to be
more than the sum of their pieces.  (Splitting a group of 20 into two
groups of 10 in different ways, for example, can have radically different
end results.)  There are also groupings that are net negatives, which
will tend to disintegrate from either internal or external forces.
Also, things aren't static, but dynamic (one can argue that Digital
had a net negative added value while it was losing money, for example.)

    OK Greyhawk,
    
    At least there's one other marketing mind in here.
    
    If my (our) theory is correct about account control, and IBM will offer
    $60/share,
    
    Then why is Lotus trading above $60.00 today?
    
    Does "White Knight" come to mind?
    
    I suggest that there is only one other computer company with the same
    strategic interest as IBM.........digital?
    
    Digital just announced the first killer app for 64bits...the commercial
    large address space Oracle database....Notes is a commercial server
    product.  Match the highest performing database with the best group
    work management system in the business and you get an interesting
    combination.
    
    I wonder if Bob Palmer and Jim Manzi are having lunch today?
                                

    There might be a white knight but think West Coast not east. 

    re .16
    
    Good point.  Sun has themselves boxed into the low priced commodity box
    game.  They're organized to take on a software unit.  They're very
    strong commercially.  I wonder how much cash they have on hand?
    
    I can't see it being HP's style for some reason.
    
    gc

As luck would have it, I was working at lotus in Cambridge this morning...

I was asked what I thought about the big news and replied "what big news?"...

From what I heard both IBM and ATT had been trying to reach agreements with 
Lotus and IBM decided to take it to the shareholders.

The jokes were all of the "I don't own a suit" and "I guess I'll ask for ties
on fathers day" type since Lotus is VERY informal (I was told NOT to wear a 
suit there).

Dan Buckley, Digital Consulting

    
    	Quite frankly, it is my humble opinion that IBM senior management
    is sharing Mr. Newton's medicine bottle ( insert major smiley here ).
    
    Lotus selling over $60 is a Wall Street over-reaction for which they
    are justifiably famous. I can't see anyone paying $3Billion for Notes,
    and what is left of their original product's installed base. Kind of
    like paying a HUGE premium for our ULTRIX-only CPUs.
    
    IBM is the only natural player. SUN cannot afford the bidding, H-P
    could care less, Digital has LinkWorks (which BTW is better!!!),
    and everybody else is in the Client business, not the Servers.
    
    This will make for a very interesting summer...
    
    
    		the Greyhawk

    SUN or HP? 
    
    I think not. If 'twere true, this would be good news for all the other
    computer firms, especially Digital. When it comes to an acquisition of
    this nature, such a move by either of those players would cause them to
    defocus. A substantial amount of energy and resources would be lost to
    understanding and integrating the technology. I predict that neither of
    those companies could handle the task and maintain their current
    position. Plus I really doubt either one of them could afford the debt
    that such a transaction would bring to the balance sheet.
    
    No, I would have to say that I doubt there is a single white knght from the
    hardware industry. Someone wondered if Bob Palmer and Jim Manzi were
    doing lunch today. An interesting thought, but Bob has enough alligators
    to wrestle right now. 
    
    I DO wonder what has been going through Bill Gates' mind today though.
    $3B is not chicken feed, but if Bill can spend that building a house,
    I'm sure he would not have much trouble coughing up that kind of money
    to acquire a company if he could get something out of it. 
    
    What could he get out of it? Hmmm mmmmm mm..
    
    	1)  A way to expand to the "workgroup" plateau
    	2)  A way to be a further pain in the butt to Lou Gerstner ... 
    	     ooooh!! MAJOR pain could be inflicted.
    	3)  A way to remove those pesky Lotus apps from the horizon
    	    (very carefully of course so as to not wake the government)
    	4)  A way to be a further pain in the butt to Larry  Ellison
    	
    Microsoft DOES know how to market software. Inclusion of Microsoft
    applications would be a neat fit and a logical extension.
    
    If Bill isn't thinking seriously about this, I think he should. Then
    the people at Lotus wouldn't have to worry about the 'suit' thing
    either.
    
    Idle speculation is such fun.
    
    /se
    
    
    
    

RE: .26

If anti-trust looked at MS+Intuit hard, imagine how they'd look at the two
largest makers of "suites" being under one roof...  Even just taking notes
and spinning off the rest...

    RE: .28
    
    If anti-trust looked at MS+Intuit hard, imagine how they'd look at the
    two
    largest makers of "suites" being under one roof...  Even just taking
    notes
    and spinning off the rest...
    
    	I would have thought that the anti-trust act would not be brought
    into place here due to Microsoft still have the monopoly on the desktop
    market. I don't know how long that would be when the monopoly will be
    broken, but I hope it will be soon
    

re:    <<< Note 3918.25 by BOUVS::OAKEY "I'll take Clueless for $500, Alex" >>>

>>I just checked a Lotus Development Corp. quote from the 'web' and they're 
>>trading at 31 and change (don't know where the 60 came from).  Up 2 for 
>>sure but 60 seems excessively high.

	$60 a share is what IBM is offering....this is a hostile takeover,
	very out of character for IBM....personally I think the move
	lies somewhere between genius and desperation....

	_kelley

re: .25

According to the article on the front page of the Dallas Morning News this
morning, Lotus closed at $61.4375, up $28.9375.

Bob

    I guess that could end the 85% discount for digital employees
    on SmartSuite.  :-)
    
    ed

>	$60 a share is what IBM is offering....this is a hostile takeover,
>	very out of character for IBM....personally I think the move
>	lies somewhere between genius and desperation....

    Right now, I'm putting my chips on IBM being a couple of points 
    closer to genius than desperation.

    I heard this morning on the drive in that there was several
    large purchases last Friday of Lotus stock before IBM made
    the announcement.  Buy in the 30's and lo' and behold it
    jumps to the 60's.  Jail time!!

    
    RE: 3918.34  I'd have to agree.  How many billions of $$$ did IBM make
    last quarter?  Let's wuit fooling ourselves with regards to IBM.
    
    
    Mike  

    Boy, my wife (who was the Notes project leader once upon a time before
    being laidoff by Digital), got angry as hell when heard about the
    IBM deal for Lotus.  She still gets angry at any Lotus Notes
    commericial and hits the "MUTING" button on the remote control...
    
    She isn't mad at Lotus or IBM, but at Digital.  Digital had the
    technology to take VAX Notes and turn it into a multiplatform groupware
    solution. There was even a project to rewrite it into C (at least the
    UI client side) so it could run on additional platforms.  Digital
    killed it and wouldn't even fund a single marketting person to figure
    out that you could make money with a product like Notes (granted that
    Lotus Notes can do more than VAX/DEC Notes, but they've actually been
    investing in their software over the years, unlike Digital with
    Notes...)  So we she hears how much money Lotus is making with Notes
    and that IBM now wants to buy Lotus just for Notes, stay out of her
    way...
    
    				-John

    re: .37
    
    I also react when I recall the time several years ago when cc:Mail was
    knocking on our doors wanting to enter into a business relationship/
    partnership, and we (EIS) couldn't get anyone up the ladder to respond.
    
    So eventually they gave up; then Lotus bought them, and now IBM will
    own what is considered to be one of the premeier PC LAN mail systems.
    
    Dave

    
     re -.1
    
    IBM has not bought anything yet.
    
    IBM has a love hate relationship with many consumers and customers.
    
    IBM has just as much trouble articulating software direction as anyone
    else.
    
    IBM has just about as much trouble with the computer industry as anyone
    else.
    
    Lotus has a huge problem migrating its cc:Mail systems to next
    generation technology.
    
    Lotus Notes while the key buzz word for GroupWare is not next
    generation technology (i.e. object enabled).
    
    Lotus E-Mail backbone is still restructing its past aquisitions.
    
    There are numerous cultural/physical/relational differences between
    the companies. A merger could work, it might work, it might fail
    miserably.
    
    Don't cry over the past. There is a window of oppertunity here for
    *many* to exploit.
    
    -Mike Z.

    .37
    
    Obviously, long term strategic planning. If *we* had done notes
    properly, IBM would want to buy us. So, a good job that we screwed up
    there. Phew.
    
    [Rumor alert....]

    SJ Mercury News had a columnist musing 'from the mind of Bill Gates' as
    he contemplates this deal.  It was well done, sorry I can't enter it,
    look for it (today's paper.)
    
    DougO

>    We are blessing [...] Motorola

hmm, I'm not exactly blessing the Motorola system that I'm running
in RHC, but I won't enter my choice comments in here.  :)

re. we all stand to benefit; well, mentioning no names, there's some
company directors out there that I wouldn't exactly trust my life
with, so I think caution is a byword.

Chris$cynic.

    re .a few back [Sorry, Thomas got in the way]
    
    cc:Mail is a dog. Compare it with TeamLinks and our REAL X.400/X.500
    backbone - we didn't seriously consider cc:Mail, did we ? I think that
    IBM will have a real problem with that.
    
    Lotis Notes is well respected but has a small(ish) precense in the
    marketplace. A few companies have it in a BIG way. Not sure how
    Linkworks compares in market share but it seems to get better reviews.
    
    SmartSuite is (IMO) up with the best of them - apparently the new 32
    bit version is brill. I reckon that IBM are on to a winner with that -
    they have nothing to compare with it in house and they get an immediate
    15% market share which, with their sales force, they can easily grow.
    
    Is it all worth $3B ? Probably not - but IBM can afford it - can others
    such as Oracle ?
    
    Alan

    re -1
    	I don't know if it is a dog or not, I can tell you that just about
    every customer I visit is using CCMail, they must have done something 
    right...

    
>    SmartSuite is (IMO) up with the best of them - apparently the new 32
>    bit version is brill. I reckon that IBM are on to a winner with that -

A little off the subject, but is there a WNT version that is Alpha native?

Al

PC & Consumer Software  
                                                                 IDC FAX Flash

IBM Launches Hostile Takeover of Lotus

Analysts: Mary Conti-Loffredo, Linda Myers-Tierney, Michael Sullivan-Trainer, 
Darby Johnson, Rick Villars, David Card,Scott C. McCready, Cindy Santisario

IDC Opinion

If it acquires Lotus, IBM could potentially alter the competitive landscape of 
the software industry. IDC believes that IBM wants Lotus in order to control 
Notes -- but not to restrict Lotus products to OS/2. We suspect Lotus will 
eventually be acquired by someone, even if not IBM, and that Lotus may try to 
shop itself to AT&T or Oracle, at the very least to get the price up. IBM is 
showing its seriousness about the deal with a high valuation and by taking 
steps to ensure Lotus abandons its poison pill efforts.

Announcement Highlights

?   IBM announced its intention to acquire Lotus Development Corporation in an 
unsolicited bid of $60 per common share.
    
?   IBM has initiated legal action to compel Lotus' Board of Directors to 
redeem the poison pill and to eliminate the applicability to the tender offer 
of certain of Lotus' anti-takeover provisions. As part of its acquisition 
announcement, IBM released their communiqu? to Jim Manzi from Louis Gerstner, 
Jr. which clearly spells out IBM commitment to completing this transaction.
    
?   Lotus has responded to IBM's overtures by hiring Lazard Freres and Wachtell 
and Lipton to study the legal and financial alternatives it now must confront. 

?   In a teleconference with analysts, IBM strongly indicated it would keep 
Lotus' product line "platform-independent;" that this was not an effort to 
acquire software for OS/2 or other IBM-specific systems.

What is IBM buying?

First and foremost, IBM is buying Lotus' desktop experience in products, 
channels, and end user marketing.  This element is an essential asset in the 
computer industry because mind share with users is a key influencer in 
significant IS purchase decisions.  At the same time, acquiring Lotus might 
allow IBM to challenge Microsoft, particularly in corporate networking and 
middleware. The jewel of the deal is Notes.

Workgroup/CommunicationsSoftware

Obviously, Lotus Notes is the product that can really send IBM on an entirely 
new growth curve for its software revenues. With large volume Notes sales, IBM 
will be in the enviable position of providing a much-needed distributed 
computing and working environment for the Fortune 500.  

Lotus Notes continues to be the defining product in the workgroup arena.   Its 
1994 revenues of $212 million represent approximately 27% of the total market; 
from 1993 to 1994 Notes revenues grew a whopping 101% .  With Notes v 4.0 on 
the brink of release, this momentum is likely to continue. Imagine the muscle 
that the IBM distribution network could add to this scenario!

In addition, this potential acquisition also raises questions about Lotus' and 
AT&T's Network Notes venture. Given AT&T's relationship to Lotus, it is not too 
soon to rule out the possibility of  its launching a competitive bid to protect 
their investment in Lotus Notes. However, the security provided by IBM's 
possible ownership of Notes might be enough to keep AT&T out of the bidding 
ring. Furthermore, IDC believes IBM would be foolish to jeopardize the Network 
Notes project due to the enormous revenue stream it would generate. 

What about cc:Mail?  Historically neck and neck with Microsoft Mail, it 
generated close to $100 million in 1994, and continues to own a commanding 
share of  the  installed base of LAN e-mail users.  However, the potential 
acquisition by IBM would cause a conflict between cc:Mail and IBM's Ultimail, 
which is part of its workgroup strategy announced in November, 1994. (see IBM 
Comes Out swinging with New Workgroup Strategy, November 1994, IDC #9477). 
Although  IBM has said that its products complement Lotus', the company must 
resolve which e-mail package to promote and develop first and also address 
integration with its OfficeVision environment.

Personal Productivity Applications

From a purely product perspective, IBM gets an excellent set of personal 
productivity applications which in their new release are state of the art.  
Sneak previews of 32 bit versions suggest that Lotus is entering a whole new 
set of product life cycles.  

Despite the quality of these products, marketing against Microsoft remains a 
struggle for Lotus.  It is currently having difficulty maintaining a second 
place position in the Windows desktop applications market and a third place 
position in the Windows word processing market.   Lotus' 1-2-3 for Windows 
currently holds a 23% revenue market share against Microsoft Excel's 74.6%.  On 
the word processing side, Lotus' AmiPro lags significantly behind with a paltry 
7% market share.  Things are not much better with their database product, 
either.  In this market, Lotus' Approach owns a10.1% market share. And despite 
the market opportunity for desktop suites, Lotus has had to struggle to 
maintain its second place showing of  15.5%.  

Conclusion: Synergy or Conflict ?

Acquisitions in the computer industry have a habit of turning out to be 
expensive and not necessarily good for the customer or the shareholder.  In 
this case IBM is getting something that it would not have been able to create 
on its own so there is tremendous value.  Will IBM allow this value to grow and 
learn from the process?  Ultimately, that is the question.  If consumers and 
IBM shareholders alike are going to get value from this purchase, then much of 
Lotus' product and management independence must remain intact.  If not, Notes, 
valued at $2.22 billion alone, is going to look very expensive. 

Despite IBM's statements about the potential synergies between the  two 
companies, the acquisition is not all a bed of roses. Cultural and product 
conflicts will make immediate success difficult. In the meantime, other vendors 
have an opportunity to take advantage of the expected confusion in Lotus and 
IBM product strategies.

IDC believes that IBM is really purchasing Lotus in order to add Notes and 
cc:Mail to its product stable. On the personal applications front, the 
acquisition is a mixed bag.  While owning OS/2 applications is attractive, IDC 
questions the longevity of these applications given current market dynamics.  
 On the Windows applications front, the Lotus applications have struggled 
against Microsoft's and have met with increased pressure from Novell's 
PerfectOffice offering.  This environment will only become more heated with the 
upcoming migration to Windows 95 and its associated applications.

It is likely that IBM's move on Lotus will put it and other software companies 
in play. Should the deal go through, AT&T might feel the need to consolidate 
its partnership with Novell, for instance. We also expect that Microsoft will 
be watching this potential alliance very closely. Once again, AT&T looms as a 
player.

As a final point, why exactly is Lotus so strenuously resisting the takeover?  
It is no secret that Lotus had been streamlining operations.  In the last 
several months, the vendor has reevaluated jobs and its corporate structure and 
reorganized itself into four separate P&L's.  IDC believes these maneuverings 
have prepared Lotus for partial sales of its applications or businesses and 
served to depress the stock price in the last several months.  Is Lotus 
protesting the acquisition or the suitor? 

I see noone has pointed out in this conference that

	IBM Lotus

has an anagram

	Botulism

/john

    Why buy Lotus??
    
    What have they ever produced??
    
    1-2-3 - but that was 15 years ago.
    
    cc:Mail - Lotus bought that in.
    SmartSuite and Ami Pro - Lotus bought that in.
    Organiser - Lotus bought that in.
    Notes - Lotus bought that in.
    
    I would have thought it cheaper to buy the buyer in Lotus, rather than
    buying the whole company!!!
    
    Cheers, Chris

    >Why buy Lotus??
    
    Marketshare and mindshare.
    
    >What have they ever produced??
    
    Groupware that people buy.
    
    					andrew

    RE : -1
    
    < brought that in
    < brought that in
    etc.
    
    Ummmm .... so if you don't physically engineer something yourself and
    bring it to market you are somehow inferior?  Are you saying a company
    needs to build it themselves to be a 'real success'?
    
    What Lotus has done is take technology in and MARKET IT! Where they got
    it from is not relevant. How they package it, price it, distribute it,
    promote it, and modify it to meet market demands is the issue. This is
    why somebody wants to buy them. They know how to package/price/
    distribute/market to a particular set of customers. That's worth
    something.
    
    Building (or acquiring) the best technology or the best product is a
    meaningless quest. Many inferior products survive and flourish because
    they are packaged properly for the right market segmentation.
    
    
    JAFO
    
    /se

    
    <<< Groupware that people buy.
    
    Hah, *only* because they spent close to 200 million (+) U.S. dollars
    since it's introduction to M.A.R.K.E.T. it.
    
    You give someone that much money for something and you'll get market
    share too.
    
    -Mike Z.

    >> You give someone that much money for something and you'll get market
       share too.
    
    You might if you understand market segmentation very well and do
    sufficient research to understand who to reach, how to reach them and
    what to say about the product or service you have. 
    
    I dare say I could EASILY blow $200 million in marketing dollars and
    get very little or no appreciable increase in share. It has been done
    before. (Not by me, of course :^) It isn't as simple as throwing
    marketing money at the problem. A certain amount of marketing know-how
    is a definite prerequisite. 
    
    /se
    
    

Chris:

  Your theory would invalidate Microsoft as well.  Gates didn't
  write "QDOS" ("Quick and Dirty Operating System"), he bought it
  for $50K when IBM was shopping around, after they were rebuffed
  by Digital Research (and their "CP/M" product).

  And Microsoft didn't write "Excel", "PowerPoint", "Fox Base" or
  "Fox Pro" either! (I don't know where "Word" and "Access" come from.)

                                   Atlant

    RE Lotus "buying in" Notes ... keep in mind that Lotus bankrolled
    Iris and the development of Notes from its inception (one of the
    founders of Iris was a designer of Lotus Symphony; most of the
    others came from DEC), so it's not like they picked an existing
    application that was already out there (unless you count K-Notes)
    and just slapped the Lotus logo on it.
    
    And, since I understand that Lotus bought out Iris earlier this year
    (in anticipation of present events, perhaps??), they own it outright
    now.

> one of the founders of Iris was a designer of Lotus Symphony;
> most of the others came from DEC), so it's not like they picked
> an existing application that was already out there (unless you
> count K-Notes) and just slapped the Lotus logo on it.
    
  According to Chris's theory, maybe IBM should buy *US*! :->

                                   Atlant

>  According to Chris's theory, maybe IBM should buy *US*! :->

	Nope, doesn't work, because the product in question (K-notes)
	wasn't a DEC product.

	However, I'd like to take this point to mention that, if
	anyone wants to buy expertise in propping up obsolete
	mail protocols, $5 million gets you everything I know.

re Lotus Organiser,

I think I still have a pre-Lotus version of this lying around somewhere;
one of its more novel features is that it crashes Windows when you exit!

Chris.

    I heard tell that a popular motto at Microsoft is, "It ain't done till
    Lotus don't run."  Takes on a whole new meaning now.

I don't agree with comment on that Lotus won the market share and mindset
with money only! In fact Lotus was the one who built the idea what 
groupware should be, they didn't invent the idea, they just built the
connection between the idea and customer's real life business!

This is why we have lost quite a few LARGE customers to Lotus instead of
getting them to be locked into Digital solutions. Microsoft clearly 
sees group ware markets as huge potential right now, and this Lotus 
hassle will improve MS's situation.

It's clear that Lotus has failed to deliver what they promised, and it's clear
that many customers have been dissapointed in what they did get from Lotus,
but that's a different story. Nobody can deny that Lotus has been leader
in groupware by setting the expectation level of customers and showing
customers that Lotus understands their business needs. Please, don't start
the discussion if Lotus Notes/cc:Mail/Mumble/FooBar is a good product 
(technically) or not.

I'd guess that these changes will give MS a window of opportunity to be 
the next groupwqare leader, but Lotus Notes has still momentum behind it,
as thousands of software houses are still developing and supporting 
Lotus Notes based applications.

We should try to learn instead of blaming Lotus or IBM, and we should finally
set our own software strategy instead of building more chaos...

		-jari

    <<< this opens opportunities to many players
    
    We have the products now. Industry analysts rave about them. The same
    analysts also recommend a wait and see attitude. They question
    commitment, funding, marketing, the desire to stick your nose in the
    game. Problem is we have been burned in the past, wrong game. We have
    limited funds, got to choose the game. Weak market perception, the
    industry changes every minute.
    
    So just how do you get a product into the market then? A difficult
    expensive, tea leaves shot in the dark. Why has Lotus been successfull
    at Notes? Who really knows. It was many factors. The first one that I
    think of is that they went after the desktop market. A huge market
    where even 5% of penetration can equal billions in return.
    
    I say the oppertunity is wide open for Digital to be successfull. We
    need some marketing of our own products. Our product set and
    partnerships look better and better with this deal.
    
    -Mike Z.

> Problem is we have been burned in the past, wrong game.

  Problem is, we have *BURNED* in the past. People bought into
  our software products and expected continuing development.
  Instead, we often decided we weren't interested anymore.

  This makes it a lot harder for any reasonable person to
  choose a Digital software product now.

                                   Atlant

    One aspect on which I haven't heard much speculation involves how
    many Lotus employees (if any) would simply refuse to work under
    IBM ownership, and would perhaps quit and start their own company?
    Are there many talented, product-critical people there that would
    simply take their ball (i.e., skills and experience ) and go home?
    Or, perhaps just as bad, stay but not be as effective as they once
    were...
    
    A company is more than the attractive products that appear on their
    current price list.  If the people are uncomfortable with the idea
    of working under an IBM yoke, this might not be such a bargain after
    all.
    
    Chris

I've seen lots of speculation on this in the newspapers.  According to an
article in today's Boston Globe, the Lotus employees interviewed seem to think
that they'd be better off under IBM than facing the uncertainty and downsizing
which has been occurring lately.  Given what we've been through at Digital,
I sympathize.

					Steve

There are some quotes from him in today's Wall Street Journal (and tomorrow's
VNS).

						Trace

      ...but a report I saw said that if IBM acquires LOTUS that it
    would almost certainly have to cut the LOTUS workforce by 30%.
    
    
                                        Rich

>      ...but a report I saw said that if IBM acquires LOTUS that it
>    would almost certainly have to cut the LOTUS workforce by 30%.
    
   If this is the same report I saw...

   I understood it to be a LOTUS Rep stating that, whether or not IBM
   acquires LOTUS, LOTUS needs to cut its workforce by 30% based upon
   current industry practices given its revenue stream.

	Andy

   The problem is LOTUS' revenue stream, not their number of people.
   They need to increase their income from Notes and office apps by
   selling more of them.  That can be done by dropping Notes down to
   commodity pricing levels, and advertising the hell out of Lotus
   Smartsuite.  In each case the marketing is easy now that the hard
   work of developing the product set has been done.

    re:.71
    
    Please provide a concise, accurate "commodity pricing level" for Lotus
    Notes, that can be defended to the shareholders (whomever they may be),
    customers and prospects.  Give us a number.  Then provide a per unit
    cost structure for development, maintenance, marketing/promotion and
    distribution.  This should allow you to create a margin analysis.  Then
    evaluate the margin and see if its marginal profit contribution will
    satisfy the stakeholders in the company.
    
    A brick is a brick is a brick is a commodity.
    
    Notes ain't.  
    
    fwiw
    garyc
    

>    Please provide a concise, accurate "commodity pricing level" for Lotus
>    Notes, that can be defended to the shareholders (whomever they may be),
>    customers and prospects.  Give us a number.  Then provide a per unit
>    cost structure for development, maintenance, marketing/promotion and
>    distribution.  This should allow you to create a margin analysis.  Then
>    evaluate the margin and see if its marginal profit contribution will
>    satisfy the stakeholders in the company.

Why should I do that?  That is the function of a Communist dictator in an old
Soviet-style command economy.  The U.S. has a much more efficient, if also more
distributed and complex, mechanism called the free market.


>    A brick is a brick is a brick is a commodity.
>    Notes ain't.  

Everything in a free market economy is a commodity, including Notes.  It could
well be an overpriced commodity, in which case Adam Smith's rules of supply and
demand predict low sales and suboptimal profits.

    The request was to provide a number...a commodity pricing level for
    Notes.  Ignore my request for a margin analysis.  
    
    Why should you do this?
    
    Two reasons.
    
    First.  In your Open Letter to Everyone About Profitable Strategic
    Market Shifts (by the way you have two chapters six) you begin to
    introduce the concept of commodities on page five, and you have
    continued that thread throughout the document and for days on end.
    Since you appear to understand this concept better than I, I am asking
    you to define a price.  In the Communist system, the state sets the
    price.  In a free market, the price is established through the
    mechanisms of supply and demand. Supply and demand starts with an offer
    to sell, or an offer to buy, and negotiation takes care of the rest.
    
    Obviously you believe that Lotus has established an arbitrarily high
    price point.  I infer then, that you have another price point in mind. 
    Kindly share it with the rest of us and end the mystery.
    
    Secondly, I and many others in here are pulling for you.  I think that
    maybe it would be helpful to you to think this problem through down to
    the tactical and operational levels.  
    
    Don't call me a pop psychologist, just someone who sees some
    interesting ideas and metaphors that are being ignored or wasted due to
    your inability to articulate them in greater detail.
    
    As my buddy Ross said:  The devil's in the details.
    
    garyc                                                               

    Here's a guess: $100 or so a seat.  Why do I say $100?  Because it is
    the price of those ubitiquous Works packages that are sprouting up all
    over the computer marketplace like weeds.

    Simple market test: Put Notes on sale for an introductory time period
    of several months for $100/seat, like Microsoft Access or Microsoft
    Foxpro (two similarly-complex, valuable products).  See how customers
    react and judge pricing strategies from there.  Worst-case: some limited
    short-term revenue drop.  Best-case: establish Notes as strategic, highly-
    profitable category-killer product like MS-Office or MS-DOS/Windows.

    Moderator,
    
    I'm going to try to move this back to IBM/Lotus.  If unsuccesful,
    please move it somewhere where market strategy and tactics should be
    explored.
    
    Question:	How much does it cost to buy MS Windows?
    Answer:	$0.00 if I buy a PC. Cheap if I buy a copy at CompUSA.
    
    Question:	How much does it cost to buy OS/2?
    Answer:	$0.00 if I buy an IBM PC. About double (I'm not sure here)
    		the price of windows at CompUSA.
    
    IBM recently began shipping OS/2 with its systems at no extra charge. 
    Microsoft has been shipping Windows with everyone's PCs forever at no
    charge to the customer (nothing is free, but you know what I mean).
    
    Question: 	Who has the desktop OS market share?
    
    Question:	Whose application products run just a wee bit better on MS
    		Windows?
    
    About six months ago, Bill Gates, in an interview with CEO magazine
    was asked: At what point will software prices level off?  His answer
    was "I don't think software will ever be free, but..."  The rest is
    irrelevant.
    
    Now lets move to Gerstners press cnference earlier this week. The last
    question inquired as to whether IBM might consider bundling Notes with
    its PC's.  With a Cheshire cat grin he replied: "We might".
    
    The commodity price for Notes is $0.00, or the cost to load it on to a
    hard disk.  The revenue stream comes from back end service and support,
    either via 900 numbers or professional servic organizations such as
    Sapient, Digital Consulting, Anderson Consulting, etc. As Gillette
    learned years ago, give away the razor and then nail 'em on the blades. 
    If IBM is smart, they'll give away Notes, and ding everyone for
    $50-$100 bucks a whack for add-ons and a million dollars a pop for big
    integration projects.
    
    fwiw
    
    gc

    I agree.  IBM has taken a page from Microsoft's playbook, and is going
    to pay Microsoft back, using Lotus to provide the ready-made products.
    The Wall Street analysts have probably undervalued this deal. In light
    of the strategic implications for IBM, $60/share is chickenfeed.

  Today's paper and America Online's news report that IBM and Lotus are about
  to complete a friendly deal for more than $60/share, and that Lotus software
  employees are very relaxed about the merger.

  Looks like a win-win deal for everyone involved, including us as those cheap
  copies of Notes help move more Digital-brand PCs.

  Think they are a model for cooperation in the rest of the computer industry?

	BBC World Service reported this morning that the
	deal is agreed by the Lotus Board of Directors at
	slightly improved $64 per share.  This now makes
	it a "friendly" takeover.

/Chris.