A billion dollars is a lot of money
Adam Gartenberg has a good page covering IBM's announcement yesterday that is is investing $1B in Unified Communications development. This is definitely major news, and I'm not surprised to see it picked up so quickly in the industry press - Adam has a number of links at the end of the article.
He also points out that the CNET headline "IBM muscles into Microsoft unified communications turf" implies that Unified Communications is a Microsoft invention, and that IBM is trying to jump on the bandwagon. It is sad how many people, including the press who ought to be better informed, assume that if Microsoft is not doing X then nobody else is doing X either, and are happy to ignore any evidence to the contrary. Sloppy journalism. To be fair, though, the article doesn't really reflect that, so the sloppiness is primarily confined to a poorly-chosen attention-grabbing headline. But for the large percentage of CNET readers who never get past the headline, it still leaves a misleading impression, and CNET is doing them (and every software company who isn't Microsoft) a disservice by perpetuating the illusion that software=Microsoft.
More seriously, though, this part of the CNET article depresses me:
The focus of its strategy is business, particularly large corporations, where purchases and margins are larger, said Steve Mills, senior vice president of IBM's software group.and similarly in the InfoWorld article
... IBM is ramping up its investment in products like Lotus Sametime to provide unified communications to the largest business customers, which the company defines as having 1,000 or more employees. This is also the sweet spot for IBM's Lotus Notes collaboration software, the latest version of which includes the Sametime unified communications client.(See Adam's posting for the links to these articles)
That's a short-term view, in my opinion. The vast majority of software revenue over the coming years will not be in large corporations (which make up only a tiny portion of the total business market) but in small/medium businesses. If this is really their approach then IBM runs the risk of once more (as with Notes) being a big fish in a small pond, with (pardon the mixed metaphors) the Microsoft sharks circling ever-closer as they use the cash generated in the small/medium business market to invest in the product and make it a worthy competitor for larger businesses. This is exactly what has happened with Exchange, and with Microsoft Project, to name but two. They were pretty average products to start with, but Microsoft marketed them to death, competed aggressively on price, and eventually built up enough revenue momentum to invest seriously in the products and turn them into something decent. Exchange has its critics, and I'm one of them (trying to sqeeze a semi-structured email world into a half-baked relational database technology was a bad decision the consequences of which they and their customers are still suffering from), but there's no denying that it has received major investment and has turned into something decent in version 2000 onwards. The same with MS Project: a shoddy bug-written pile of rubbish up to and including Project '98, but since then it's gone from strength to strength, and in the meantime Microsoft were successful in fragmenting the PM tools market and starving their competitors of revenue. It's clever market manipulation, no doubt about it, and it works. Whether its good for you, me, or anybody else other than Microsoft shareholders, is 'open to question'.
But enough about 'them' - back to Lotus. The heart of the problem in the decline of Lotus Notes (apart from the deaded 'W' word of course), was that IBM completely failed to realise that the VAST majority of 'seats' (seats -> licences -> money -> investment -> growth -> market share -> seats -> ...) are in smaller organisations. For every seat in a 1000+ business there are many times more in 50+ businesses. And many 50+ businesses are sufficiently mature, complex and wealthy as to have a need for a top quality collaboration infrastructure. In that market, IBM/Lotus is invisible, and Microsoft IS the market. So, unless some of this $1B goes towards making the Lotus strategy both visible and easily accessible to smaller businesses, IBM is playing the wrong game.
So, having had a go at journalists, IBM strategy, and Microsoft tactics, can I say something positive? Er ... it's stopped raining in London for a bit ... will that do?
