Saturday, February 13, 2010

Whoa there! Say that again please...

The Registar's review of Lotussphere had an interesting quote from an un-named IBM spokesperson.
In another of IBM's Lotusphere announcements, the company claimed: "From 3Q 2008 to 3Q 2009, IBM's social collaboration software install base grew by 34 per cent."

But by simply checking back to it's third-quarter earnings report, the company said that tevenues from Lotus software - "which allows collaborating and messaging by clients in real-time communications and knowledge management" - dropped 9 per cent over that same period.

Has IBM been giving the software away for free? When asked to explain how Lotus revenue shrunk while its user base grew by double-digits, IBM said the 34 per cent growth number was actually only counting Lotus Connections and Quickr software - which accounts for less than 20 per cent of the overall breadth of the Lotus portfolio.

"It's about the total size of the pie," the same IBM spokesman claimed. "The IBM collaboration segment overall is either holding or gaining market share in each of its submarkets against the competition. The problem is the whole pie is shrinking. Microsoft is losing more seats than IBM is."

OK, I understand the logic of what is being said here regarding market segments (sales of Connections are good but sales of Notes are bad), but what does this 'pie is shrinking' comment refer to? Notes seats might be moving to LotusLive but isn't that all considered as part of the same email pie?

Anyone got any ideas on this one?


Erik Brooks said...

Perhaps the market's approaching saturation? Not sure about that.

Competition causes prices to drop. Maybe they *are* giving away some stuff for free and/or reduced price?

Was the Outblaze acquisition for LotusLive during this time? That could be used to claim a huge jump in install base... though revenues should have gone up somewhat too.

Bill Dorge said...

Well, I could think of several reasons the market has been shrinking for Microsoft and IBM.

Companies that just quit paying maintenance to save some money. I'm not sure where these fall in the bucket counts, but neither company is making any money on them.

Companies just disappearing, although we haven't had a lot of these ourselves, I know it's happening, you can see that just driving down the street.

I have 2 teenagers and one son that is 22, they don't use email except to communicate with their teachers at school. They text, twitter, facebook, and god knows whatever else they are using. Google gives them everything they need, and they usually want it on their phone.

The young people coming out of college into the work force really don't care to much about collaboration in how maybe you and I think about it, and we're not going to change them I don't think.

Will email go away, I doubt it, but I do see it getting the same attention as the home phone number, you have one, but it's the last resort anymore. I'm still on the fence about the whole Connections,Vulcan thing from IBM, I think they are great products and ideas, I'm just not sure the young people building businesses today won't thing all the traditional business rules IBM builds into their products to restrictive.

Gonna be fun to watch!