"The happiest place on earth" is how developers at the Sametime division described their room at the Lotus annual convention in Orlando, Florida last month. Alright, we are talking about the kind of microcosmic exaggeration reserved for software developers, but there is something to it. In the room where Israeli company Ubique (fully owned by Lotus-IBM) staff ruled, there was more of an enthusiastic start-up atmosphere. It was most unlike the other exhibition rooms at the convention, which hosted 10,000 people in one of Disney kingdom's plastic palaces.
Many analysts believed that IBM's purchase of Lotus in 1995 by IBM for $3.5 billion (then considered a fortune), was a terrible mistake. The Internet, they predicted, would deliver a death blow to the company's golden goose, the Notes software.
However, four years later, Notes, which belongs to the groupware market estimated at an annual $12 billion, is alive and kicking. According to an IDC report, Lotus Notes and Domino (Notes Internet server) kept their market lead, with 13.44 million users worldwide in 1998. Second in line is Microsoft, with its two and half year old Excel program, with 11.78 million users. Far behind in third place is Novell's GroupWise.
Not only is Lotus alive and well despite the Internet, it breathes Internet. One of the technologies designed to enable Lotus to keep its competitive edge and be identified with the Internet revolution is Sametime, an application mostly developed in Israel.
Here is how the application was born: In 1998, Lotus purchased two companies developing real-time collaboration software - DataBeam of the US, and Ubique of Israel. The cash was provided by rich parent IBM. This was despite the fact that according to the purchase agreement, Ubique and DataBeam were expected to become a separate division within the Lotus Communications Product division. Ubique's acquisition price was not disclosed. The company was recorded as an acquisition of IBM Israel, which is not a public company and is therefore not obliged to report, although IBM Israel has no connection to Ubique.
The Sametime program was the result of combining these two acquisitions. Sametime provides tools integrating DataBeam's collaboration software and Ubique's chat, awareness and instant messages features. Moreover, Sametime can even identify whether a user is active, not only whether he is connected to the net. If the system records no activity for fifteen minutes, the user's status changes to "I'm away". The status greets you from almost everywhere in Lotus, which is most convenient. On opening the mail, for example, the current status of someone who has sent you mail appears alongside his name, letting you know whether he is active, present and so forth.
Sametime enables employees using the world's most popular groupware, Lotus, the ability to share "live" documents in real time, during online "meetings", and to share documents or applications in working groups using applications such as Microsoft's Browser and Netmeeting. The shared objects technology lets users skip back and forth between applications such as word processing, spreadsheets and project management programs, without the need for each user to have the software installed.
In May 1998, when Ubique agreed to be acquired by Lotus-IBM for an undisclosed amount, it was already "divorced". It was founded in 1994 by Prof. Udi Shapira of the Weizmann Institute. In 1995, the company was acquired by AOL for $14.5 million, the same AOL that a few years later acquired Mirabilis for hundreds of millions of dollars.
In the two years following the acquisition of Ubique, AOL did not retain its full holdings in the company, selling parts of it to other companies and investors bit by bit, all under a cloud of secrecy. Finally, in 1997, AOL "released" Ubique on to the market.
Despite the excellent relations, described by Ubique general manager Avner Shafrir as still existing today between AOL and Ubique, the match was not successful. Shafrir attributes this to the differences in the companies' concepts. "Ubique is a company with profound technology vision," he says, "and AOL is a services company, not a products or technology company. AOL purchased Mirabilis because of the eyeballs, not the profound technology. Whatever AOL did not accomplish in technology, it accomplished in creativity and gimmicks."
Shafrir says that the ties with AOL accord him a great advantage today, because even as Lotus employees (although the company gives Ubique full independence), Ubique personnel need to work with AOL. One of the biggest announcements at the Orlando convention was the cooperation between Lotus and AOL.
According to the agreement between the two companies, AOL contents will appear on Lotus's home page, to which tens of millions of software users connect. Also, Sametime "speaks" the AOL protocol. In other words, the real time collaboration application will connect up to AOL's user base, recently reported to be 15 million subscribers.
"Globes": So, AOL is now getting you gratis?
Shafrir: "I believe AOL gained more by releasing us than if it had allowed us to dissolve within the company, which is what would have happened had we stayed."
One of the most talked about phenomena in the Internet world which loves the community concept, is the corporate community. If the Internet's capital is its user base, it should not be surprising that many players, mainly portals, want to get their hands on the giant community called 'corporate'. The question is how to hook up the corporate community to the great cosmos? How can we bridge between the traditional corporate market and the innovative agile Internet? Collaboration between AOL and Lotus is an excellent way for both companies to greatly benefit from the Internet, each in its own way.
A Gartner Group report published in January forecasting the year's hottest technologies claims that "despite their popularity in online services, the inclusion of chat in groupware such as Lotus Notes in the next two years will lead corporations to adopt chat on the Internet much faster. AOL is aware of this. The company knows that the more chat on the Internet, and the more chat technology it possesses (either via acquisition or on loan), the more traffic, more eyeballs it will have.
The profit AOL stands to gain from the deal with Lotus is in fact an increase in eyeballs, while Lotus stands to gain by turning the Notes into an Internet medium - fast, modern, flexible, connected. This is not only a competitive edge. When it comes to Notes, this means survival.
What drives you now, when you fully belong to Lotus and a giant such as IBM?
"We are aware of our value. When we were acquired, an IBM executive told us: 'You must not feel that a company with hundreds of thousands of employees has bought a company with forty employees - but rather a company with forty employees has bought a marketing and sales force of hundreds of thousands of employees.' Untrue as that statement may be, since we didn't buy anything - we must thank them, because many Internet companies simply disappeared. People forget that, everyone is blinded by ICQ."
The writer attended the annual convention in Orlando, Florida at Lotus's invitation.
Published by Israel's Business Arena February 9, 1999