Tales In Tech History: Lotus Software

The 1990s

But Lotus carried out developing (and buying) new packages, and even invested in firms such as Sybase (database) and Rational Systems (programming software).

But it was the arrival of Lotus Notes (from Iris Associates) in December 1989 that had the greatest impact on Lotus fortunes.

Lotus Notes was a new category of software called “groupware,” and was designed to exploit the growing client-server operating structure, as it allowed several users to collaborate on documents and other projects from distant locations across a network.

It was a big success, but Lotus was not out of the woods yet.

For years Lotus had refused to develop products for Microsoft Windows GUI, until early 1990, when it finally relented and announced Windows versions of its offerings.

Another problem was that Lotus was more committed to IBM’s OS/2, developed by IBM and Microsoft (until Redmond backed out).

Lotus invested heavily in developing a version of 1-2-3 for OS/2, which did not sell well. Matters were even worse when Borland offered a version of its Quattro Pro spreadsheet for OS/2, meaning that Lotus was facing competition on two fronts (on the PC and Mac from Excel, and on OS/2 from Borland).

In 1990 Lotus came close to merging with Novell, as it wished to gain access to its networking expertise. Remember, Novell’s Netware ran 65 percent of PC networks worldwide at that time, but at the last minute the deal fell through.

But Lotus was helped in its fight against Microsoft when it gained a word processor thanks to acquisition of Samna Corp in late 1990 for $65m. That transaction resulted in Lotus Ami Pro, which was widely praised but was still ranked a distant third in the word processing leaderboard, trailing behind Microsoft and WordPerfect Corp.

Continued delays to upgrades for its core products on both Mac and Windows seriously dented Lotus’s market share in its key markets. In March 1991 Lotus bought cc:Mail Inc. for $32m. Again, this resulted in the cc:Mail application, used to send and receive electronic messages and it sold reasonably well.

Lotus was also one of the firms (Borland, Novell, and Apple) to develop electronic message standards to let different electronic mail systems talk to each other.

In 1992 Lotus bought the Organizer software, a time and contact manager, from Threadz, which became became Lotus Organizer (an electronic filofax).

And in April that year, Lotus introduced SmartSuite for Windows, a software package that integrated several separate Lotus applications, making it easy for a user to move between Ami Pro (word processing), Lotus 1-2-3 (spread sheet), and Freelance Graphics.

But it was the groupware product, Lotus Notes, that kept the home fires burning at Lotus Towers, thanks to annual maintenance contracts that brought in a steady revenue stream. This was even more so in 1994, when sales of Lotus office suite and spreadsheet packages dropped sharply, due to a combination of its late entry into the Windows sector, and fierce competition from Microsoft.

Lotus then brought Iris Associates, whose technology had resulted in Lotus Notes, and made a number of other acquisitions as well.

The End

But the success of Lotus Notes had attracted predators. In 1995 Lotus was achieving revenues of $1.15 billion and had thousands of employees. In June 1995 IBM launched a hostile takeover bid for Lotus for $3.5bn in cash. In the end, IBM succeeded and snapped up the software firm.

Then in October 1995 Manzi announced his resignation from the Lotus Development division of IBM, and he walked away with stock worth $78m.

The acquisition of Lotus by IBM had raised eyebrows in certain circles, as Lotus was actually a relaxed and socially advanced company for its time, compared to the rigid corporate nature of IBM.

For example, Lotus was the first company to support an AIDS walk (in 1986) and to grant benefits for same-sex partners (1992). It even had a daycare centre and family-friendly policies.

But in the end IBM handled the acquisition relatively well and integrated Lotus within its corporate structure.

Some Lotus products are still available today such as Lotus Domino and Lotus Notes, but others such as Lotus 1-2-3, Lotus Organiser are in maintenance mode. Lotus Jazz, cc:Mail etc have been discontinued.

Quiz: What do you know about IBM?