| Type | Subsidiary |
|---|---|
| Industry | Computer software |
| Founded | 1982 |
| Headquarters | Cambridge, Massachusetts, US |
| Products | Lotus Connections Lotus Domino Lotus Domino Web Access Lotus Expeditor Lotus Forms Lotus Magellan Lotus Notes Lotus Notes Traveler Lotus Quickr Lotus Sametime Lotus Symphony Lotus Foundations IBM Lotus Web Content Management |
| Parent | IBM |
| Website | Official website |
Lotus Software (called Lotus Development Corporation before its acquisition by IBM) is a software company with headquarters in Westford, Massachusetts. Lotus is most commonly known for the Lotus 1-2-3 spreadsheet application, the first feature-heavy, user-friendly, reliable and WYSIWYG-enabled product to become widely available in the early days of the IBM PC, when there was no graphical user interface. Such a useful tool certainly helped to spread the adoption of the PC, both for administrative and scientific applications. Much later, in conjunction with Ray Ozzie's Iris Associates, Lotus also released a groupware and email system, Lotus Notes. IBM purchased the company in 1995 for $3.5 billion, primarily to acquire Lotus Notes and to establish a presence in the increasingly important client–server computing segment, which was rapidly making host-based products like IBM's OfficeVision obsolete.[1]
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Lotus was founded in 1982 by partners Mitch Kapor and Jonathan Sachs with backing from Ben Rosen. Lotus' first product was presentation software for the Apple II known as Lotus Executive Briefing System. Kapor founded Lotus after leaving his post as head of development at VisiCorp (the distributors of the Visicalc spreadsheet) and selling all his rights to the VisiPlot and VisiTrend products to VisiCorp.
Shortly after Kapor left VisiCorp, he and Sachs produced an integrated spreadsheet and graphics program. Even though IBM and VisiCorp had a collaboration agreement whereby VisiCalc was being shipped simultaneously with the PC, Lotus had a clearly superior product. Lotus released Lotus 1-2-3 on January 26, 1983. The name referred to the three ways the product could be used, as a spreadsheet, graphics package, and database manager. In fact, the latter two functions were less often used, nonetheless 1-2-3 was the most powerful spreadsheet program available. Sales were huge, turning Lotus into the largest independent software vendor in the world almost overnight. The business plan had called for $1 million in sales in the first year, but actual results were $54 million.
In 1982 Jim Manzi came to Lotus as a management consultant, and became an employee four months later. In October 1984 he was named President, and in April 1986 he was named as CEO, succeeding Kapor. In July of that same year he also became Chairman of the Board. Manzi would remain at the head of Lotus until 1995.
As the popularity of the personal computer grew, Lotus quickly came to dominate the spreadsheet market. Lotus introduced other office products such as Ray Ozzie's Symphony in 1984 and the Jazz office suite for the Apple Macintosh computer in 1985. Jazz did very poorly in the market. (In Guy Kawasaki's book The Macintosh Way, Lotus Jazz was described as being so bad, "even the people who pirated it returned it.") Also in 1985, Lotus bought Software Arts and discontinued the latter company's VisiCalc program.
In the late 1980s, Lotus developed Lotus Magellan, a file management and indexing utility. This period also saw the release of Manuscript, a word processor, Lotus Agenda, an innovative personal information manager (PIM), which flopped, and Improv, a groundbreaking modeling package for the NeXT platform. Improv also flopped, and none of these products made a significant impact on the market.
Lotus was involved in a number of lawsuits, of which the most significant were the "look and feel" cases which started in 1987. Lotus sued Paperback Software and Mosaic for copyright infringement, false and misleading advertising, and unfair competition over their low-cost clones of 1-2-3, VP Planner and Twin, and sued Borland over its Quattro spreadsheet. This led Richard Stallman, founder of the Free Software Foundation, to found the League for Programming Freedom (LPF) and hold protests outside Lotus Development offices. Paperback and Mosaic lost and went out of business; Borland won and survived. The LPF filed an amicus curiae brief in the Borland case.[2]
In the 1990s, to compete with Microsoft's Windows applications, Lotus had to buy in products such as Ami Pro (word processor), Approach (database), and Threadz, which became Lotus Organizer. Several of these (1-2-3, Freelance Graphics, Ami Pro, Approach, and Lotus Organizer) were bundled together under the name Lotus SmartSuite. Although SmartSuite was bundled cheaply with many PCs and may initially have been more popular than Microsoft Office, Lotus quickly lost its dominance in the desktop applications market with the transition to 32 bit applications running on Windows 95. In large part due to its focusing much of its development resources on a suite of applications for IBM's then new (and eventually a market failure) OS/2 operating system, Lotus was late in delivering its suite of 32 bit products and failed to capitalize on the transition to the new version of Windows. It now has very little market share. The last significant new release was the SmartSuite Millennium Edition released in 1999. All new development of the suite was ended in 2000 with ongoing maintenance being shifted overseas.
Lotus began its diversification from the desktop software business with its 1984 strategic founding investment in Ray Ozzie's Iris Associates, the creator of its Lotus Notes groupware platform. As a result of this early speculative move, Lotus had gained significant experience in network-based communications years before other competitors in the PC world had even started thinking about networked computing or the Internet. Lotus initially brought Lotus Notes to market in 1989, and later reinforced its market presence with the acquisition of cc:Mail in 1991. In 1994, Lotus acquired Iris Associates. Lotus's dominant groupware position attracted IBM, which needed to make a strategic move away from host-based messaging products and to establish a stronger presence in client–server computing, but it also soon attracted stiff competition from Microsoft Exchange Server.
In the second quarter of 1995 IBM launched a hostile bid for Lotus with a $60-per-share tender offer, when Lotus' stock was only trading at $32. Jim Manzi looked for potential white knights, and forced IBM to increase its bid to $64.50 per share, for a $3.5 billion buyout of Lotus in July 1995.[3] On October 11, 1995 Manzi announced his resignation from Lotus (by then known as the Lotus Development division of IBM). He left with stock worth $78 million dollars.
While IBM allowed Lotus to develop, market and sell its products under its own brand name, a restructuring in January 2001 [1] brought it more in line with its parent company, IBM. Also, IBM moved key marketing and management functions from Cambridge, Mass., to IBM's New York office [2].
Gradually, the Lotus.com web site changed the "About us" section of its web site to eliminate references to "Lotus Development Corporation". The Lotus.com web page in 2001 clearly showed the company as "Lotus Development Corporation" with "a word from its CEO" [3] by 2002 the "About us" section was removed from its site menu, and the Lotus logo was replaced with the IBM logo [4]. By 2003 an "About Lotus" link returned to the Lotus.com page on its sidebar, but this time identifying the company as "Lotus software from IBM" and showing in its contact information "Lotus Software, IBM Software Group" [5]. By 2008, the Lotus.com domain name stopped showing a stand alone site, and started redirecting to the IBM.com domain name, to the page www.ibm.com/software/lotus. The assimilation was complete.
It has been repeatedly alleged that in 1997 the United States National Security Agency (NSA) had backdoored the export version of Lotus Notes, but this is a mis-characterization of what actually happened. Prior to that year, Lotus had been restricted from exporting software that used encryption keys that were longer than 40 bits by United States law. Under an agreement with the US government, Lotus was allowed to start exporting 64 bit keys, so long as 24 bits of each key were recoverable using a special key issued by Lotus to the NSA. The result was that the newer version of Lotus Notes provided stronger protection against industrial espionage than any previous version had been allowed to provide, and it provided no less protection against decryption by the NSA than the previous versions had given. (US export regulations were changed in 2001, so current versions of Lotus products are able to use longer keys and they no longer provide NSA with access to any key bits.)
Following in founder Mitch Kapor's footsteps, Lotus has always had a reputation as a progressive company. Lotus's first employee was Janet Axelrod who created not only the Human Resources organization but was the central figure in creating the much respected Lotus culture. As she continued to build her organization and play a central role with the senior management, she eventually hired Freada Klein as the first Director of Employee Relations to help with her emphasis on ensuring a fair workplace. In 1986, Lotus was the first major company to support an AIDS walk. In 1990, Lotus opened a daycare center for the children of its employees. In 1992, Lotus was the first major company to offer full benefits to same-sex partners. In 1998, Lotus was named one of the Top 10 best companies to work for working mothers by Working Mother magazine.
In 1995, Lotus had over 4,000 employees worldwide and IBM's acquisition of Lotus was greeted with apprehension by many Lotus employees, who feared that the corporate culture of "Big Blue" would smother their creativity. To the surprise of many employees and journalists, IBM adopted a very hands-off, laissez-faire attitude towards its new acquisition.
However, by the year 2000, the inevitable assimilation of Lotus was almost complete. While the mass employee defections that IBM feared did not materialize, many long-time Lotus employees did complain about the transition to IBM's culture (IBM's employee benefits programs, in particular, were singled out as inferior to Lotus's very progressive programs).
Lotus's headquarters in Cambridge used to be divided into two buildings, the Lotus Development Building (LDB) (on the banks of the Charles River) and the Rogers Street building, located adjacent to the CambridgeSide Galleria. However, in 2001, then President and General Manager, Al Zollar decided not to renew the lease of LDB. The subsequent migration of employees across the street (and into home offices) generally coincided with what was probably the final exodus of employees from the company. Today, IBM's offices at 1 Rogers St supports mobile employees, Watson Research Center on User interface, and IBM DataPower.
The integration of Lotus into IBM continues. Today, it is a software brand in IBM's Software Group. Within Lotus, there is still a strong sense of unity. Many former Lotus employees, though they have moved into and embraced IBM, still identify with Lotus and see themselves as part of the Lotus community.
Mitch Kapor got the name for his company from 'The Lotus Position' or 'Padmasana'. Kapor used to be a teacher of Transcendental Meditation technique as taught by Maharishi Mahesh Yogi. Incidentally, competitor Borland code-named their Quattro Pro software "Buddha", as the software was meant to "assume the Lotus position" and take over Lotus 1-2-3's market. There also was (circa 1995) the assertion by one Lotus cc: Mail employee that "Quattro Pro" was taken from the Italian word "quattro", or number four, thus asserting that it was one better than Lotus 1-2-3.
IBM sponsors the "Lotus Greenhouse", a community web site featuring software from IBM and its business partners.
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