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Lotus: a case study

When it comes to growing businesses, software companies like Lotus are looking to bring the same technologies to mom-and-pops as they do to Fortune 500s.

    Lotus: a case study
    By Erich Luening
    September 18, 1997, 6:00 a.m. PT

    special report When it comes to growing businesses, software companies like Lotus are looking to bring the same technologies to mom-and-pops as they do to Fortune 500s.

    Analysts point to Lotus as a good example of a It's been a gradual transition, but now everybody wants to get a piece of this market. major software maker who, like its competition, traditionally sold its products to Global 2000 companies but recently has begun targeting small- and medium-sized companies in an effort to expand its product market and grow revenue.

    "It's been a gradual transition," said Gary Rowe, an industry analyst with Georgia-based Rapport Communications. "But now everybody wants to get a piece of this market."

    Indeed, Lotus is not alone in the drive toward the small- and medium-sized business market. The company's groupware competitors--Microsoft, Netscape, and Novell--also have begun targeting it, Rowe said.

    A Lotus spokesman said the company's strategy for the small- and medium-sized business market is simple. The company is making an effort to "broaden the market reach of our collaborative technology, create a product appealing to small and midsize businesses, and expand our channel and partner relationships to reach these segments."

    Last June Lotus, an IBM subsidiary, launched a string of products and initiatives designed to give small- to medium-sized businesses easy and affordable access to Web-based collaboration and customer interaction by reinventing its Domino Web applications server.

    One such product is the Domino Intranet Starter Pack, a package that lets companies create an intranet as well as establish Internet email and calendaring, information sharing, and network collaboration. The package includes the Domino Web applications server, a choice of Web browsers or Notes clients, and 12 ready-to-use and customizable business applications for intranets.

    The Massachusetts-based Lotus also launched Instant Teamroom, a Domino-based, rentable application that allows workgroups to establish a private workspace outside of a corporate firewall on the Web. Teamroom also allows for collaboration on projects in an accessible and secure manner.

    Lotus executives tout the company's new products as powerful new tools for the small- and medium-sized business user, offering the same Internet access big businesses have but at a lower cost.

    Forrester Research analyst Eric Brown said the reason the small- to medium-sized business is exploding is that those businesses can get more value from the Internet than the larger ones.

    "As a small business, you are dependent on business-to-business relationships, so email makes sense and Web pages make sense," he said. But a larger business can exist on an internal email system alone, he added.

    However, this doesn't mean Lotus or its competitors are dropping the big guys, said Rowe. "Lotus and Microsoft have had great success in the Global 2000 market. But now what you look at is the number of businesses in the small- to medium-sized market?and the room that exists to expand in that market."

    That expansion room already has caught the eyes of the mega-enterprise software makers like SAP, PeopleSoft, Baan, and Oracle, who have saturated the multinational market with their products.

    In fact, Rowe said, the success of these companies in selling their products to the big Fortune companies is what allowed them to cut prices on some products and provide more packages and Web-based offerings. End of story

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