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Software for rent

Groupware--those pricey, hardware-needy collaborative software packages that form the communication backbones of Fortune 500 companies worldwide--are quietly being revamped as rental apps in an effort to broaden groupware's appeal.

Groupware--those pricey, hardware-needy collaborative software packages that form the communication backbones of Fortune 500 companies worldwide--are quietly being revamped as rental apps in an effort to broaden groupware's appeal.

A handful of software makers have already begun bringing collaborative tools such as threaded discussion, calendaring, and scheduling capabilities to the mass market of small and mid-sized companies--which normally could not afford to buy the tools--through software rental programs.

Among the early arrivals in what analysts expect to be a major new marketplace for collaborative software are IBM (IBM) subsidiary Lotus Development, Oracle (ORCL), and Digital Equipment (DEC). Lotus and Oracle are partnering with Internet service providers (ISPs) that rent the software as a business service to their customer base. Digital has launched a "virtual office tower" Web site where anyone with a browser can set up an "office suite" for a free two-month trial lease.

These early entrants herald broad new market opportunities not only for groupware makers, but also for ISPs, that will retail the services. And, independent software developers will likely get the business of scaling groupware applications to ISP systems and customizing software into a series of industry-specific applications.

The new trend is destined to remake the groupware market, said Ian Campbell, an analyst with International Data Corporation.

"It is going to be a very important market," as groupware makers team with more ISPs to clear away economic and technology barriers and offer the services more widely, Campbell said.

He said America's wealth of small and mid-sized entrepreneurs, who have never before had the computer savvy and deep pockets needed to deploy groupware, will see an array of new collaborative services. Since pricing will be set by market-sensitive ISPs, Campbell and other analysts predict that these companies--that make up the vast majority of U.S. businesses--will take advantage of new low-cost, pay-as-you-go services.

Last week, Oracle put some of the features of its InterOffice groupware online through Digex, a Washington, D.C.-based ISP that caters to business customers nationwide. A few thousand customers have already signed up and are using the email, calendaring, and scheduling as part of a free 90-day offer, the company said.

Earlier in the year, Digital opened up ForumForum, a "virtual office tower" that offers collaborative tools accessible from any of the tower's 2,000 floors of "office suites." Like Digital's AltaVista search engine, the virtual office tower is primarily a public relations effort, which Digital hopes will result in sales of its Forum collaborative software. After two months of free rent, ForumForum tenants can buy the software and set up their own Web pages that may be linked to the office tower or function as standalone sites, the company said.

Lotus too promises to get a similar Domino Service Provider Application off the ground before the end of the year. Lotus is working with Netcom and other ISPs and telephone carriers on the project to provide both companies and regular Netizens with prefabricated Web sites that can be rented on a temporary basis.

As if they were working on a corporate intranet, groups of Notes users would be able set up the sites to access and share databases as well as to conduct group scheduling and threaded discussions by way of a standard browser.

If Lotus, Oracle, and Digital show a degree of success with the first experiments, it will not be long before they are joined by the other major players including Microsoft, Novell, and Netscape, analysts and industry insiders say.

Beyond offering opportunities for groupware makers to cash in on their technology, analysts say small and mid-size companies will be big winners, taking advantage of the lower prices and the easy access that the new services will afford. For companies that lack the capital to purchase the necessary software, hardware, and the IS expertise to install and maintain high-end groupware applications, rental apps will be a quick and affordable way to enter the world of collaborative computing.

"It's a great product strategy," said Eric Brown, an analyst with Forrester Research. "Users will benefit tremendously. Small companies can build applications to reach consumers [online] without having the IT staff or dealing issues like bandwidth."

"A credit card and an afternoon [to set up the ISP service] is all it will take," Brown said. He expects the market to be robust enough to offer opportunities for the major players and even a few Web-based start-ups such as Radnet and OpenText.

Software makers are also hopeful that they will attract other kinds of customers including academics, home-office workers, and even groups of consumers, such as families members who live in different states and want to keep in touch.

Still, A truly wired world of groupware users may be a way off, say analysts.

The new services won't be for every local business. Companies that take advantage of tools like threaded discussions, shared folders, and workflow tools are likely to be ones that are big enough to have more than one office located in different cities or states.

Although the three groupware providers offering application rental are still in the try-out stage, analysts agree that the emerging market is going to have important implication as early as next year. Oracle is starting off merely with email, calendaring, and scheduling and said it will add more tools next year. Lotus, which announced its plans in October, is still working out the technical details with its first partner Netcom. The company has 13 days left in the year to make its self-imposed deadline for the market trial. And, while Digital's ForumForum site is up and running, a quick tour of its public floors showed discussion groups languishing.

Digital is the only company of the three with a clear pricing strategy. It sells the Forum software to interested customers who face eviction from the office tower after 60 days. Oracle is offering free service for the first 90 days. It may continue to offer free email indefinitely, to attract customers to the little-known groupware product. Both Oracle and Lotus said they are still trying to figure out a new pricing model that departs from the per-seat pricing that corporate customers will continue to pay for shrink-wrapped versions of the groupware.

The ISP customers will pay for usage and prices are expected to be in line with other ISP services. But, details are not likely to emerge until next year, companies said.