Lotus `Notes' Leaves Microsoft in the Dust the Software, Which Allows People to Share Information More Easily in a Computerized Group, Dominates the Market

Article excerpt

ALMOST a year ago, software mogul William Gates was asked in a Boston appearance about Notes, a popular computer program made by Lotus Development Corporation.

"That structure of product won't exist even a year from now," predicted the chairman of rival Microsoft Corporation, trying to downplay the importance of Notes, which allows people to share information more easily in groups. Mr. Gates said many of the capabilities embodied in Notes should reside in a computer's most basic software, the operating system (Microsoft's stronghold). Unchallenged leader

Whether his vision will ultimately win out remains to be seen. But for now Lotus, based in Cambridge, Mass., is the virtually unchallenged leader in the important "groupware" market - software that enhances computer workgroup productivity. Microsoft, the world's largest software company, is struggling to bring its vision to reality. Some analysts say the Redmond, Wash., company would need a major breakthrough to stand any chance of catching up to Lotus.

"Lotus Notes ... has really defined in many people's minds what {computer} groupware is," says Bob Flanagan, senior analyst with WorkGroup Technologies Inc., a market research firm in Hampton, N.H.

Notes, introduced in 1989, provides the richest variety of features and has had the broadest appeal of any product in this category. The product is so rich and broad, in fact, that it has spawned a host of products, made by other software developers, that help companies take advantage of Notes for their specific needs.

Thus, Notes has become much more than just another piece of software. Many users see it transforming the way their organizations work, decentralizing information among employees and making it easier for managers to track the flow of work.

"Notes is the lens through which we want people to see their work," explains Don Evans, chief operating officer of the West Coast law firm of Bulivant, Houser and Bailey.

The software allows users to customize the way they gain access to the computerized information they use at work. John Bartlett, Lotus's product manager for Notes, shows how his computer screen is set up with graphical icons that he can open with the click of an electronic mouse. Behind each icon is a database of information. Notes users can customize both the icons, which organize the retrieval of data, and also the way the data itself is presented.

Mr. Flanagan says Lotus is expected to ship about 260,000 copies of Notes this year, at a suggested retail price of $495 a copy, with discounts for volume purchases. "We think they're going to be crossing the million-seat boundary in the next six months," John Donovan, another WorkGroup Technologies analyst, projected in October.

The strong sales are rooted not only in a lack of competition, but also in the solid results users see. A survey commissioned by Lotus last year found that, due to productivity gains, the system pays for itself in about three months.

Moreover, the study concluded that the more widely used Notes becomes in a company, the greater the return on investment. This is because the product enhances the flow of communications with several features:

* Sophisticated electronic mail messages.

* "Bulletin boards" that serve as forums for discussing specific issues, storing questions, answers, and comments where anyone in the company can get at them any time.

* "Replication" of databases, whereby a company with branch offices in 20 cities can arrange to automatically update databases in each location at regular intervals, such as every day or every few hours. …