IBM losing marketshare ? Organisations migrating without a business case ?

Today, I received a rather lengthy comment from Ian Randall who works for a Lotus partner in Australia. Thanks for your time Ian ;-).

The questions are apparently still not answered clearly or scattered over my and other blogs too much. Maybe this is again a good opportunity to consolidate some information I have gathered over time … here we go …

Peter,

I hear the comment from Microsoft that IBM is rapidly loosing marketshare to Microsoft all the time, but little in the way of actual facts and figures to back up that statement. There are also many examples of organisations defecting from Microsoft to Lotus Domino.

Ian you are partly right. Microsoft nor IBM are explicit about the actual number of conversions either way. The only public statement I have been able to find in my 3 years of blogging was a statement made mike IBM’s Mike Rhodin. Read this post and the comments to it. Apparently Ed didn’t ‘clear’ this interview. I am skeptical to say the least to believe this. In the comments is lot’s of discussion on claimed migrations and marketshare stuff.

My approach is quite Simple. If IBM would convert more clients than Microsoft by any measure (seats, revenue or what you have) their marketshare would increase wouldn’t it ? Show me 1 analyst report of the last 3 years that proves that.

I can refer to a lot of reports (and not only by Radicati) that validate Microsoft’s constant increase of marketshare. This growth ofcourse is more than IBM Lotus Notes clients converting but it sure makes sence they are an important part of this …

The email market has become saturated of late but I believe that Microsoft dominates the market in smaller organisations while IBM has a greater market share in larger multi-national organisations or in industries that grow primarily through mergers and acquisitions.

The reports by Gartner Group, IDC, Radicati and others are quite detailed and do show Microsoft leads in all segments, specifically also the enterprise market. Unfortunately almost all reports are copyright protected so you have to gain access to them.

So what are the actual statistics? How many organisations have moved from IBM to Microsoft in the last few years and how many organisations have moved from Microsoft to IBM during the same period?

Again, Microsoft nor IBM are specific about this (see my earlier comment). If a measure would be the number of casestudies Microsoft would lead by far. For now I will settle this discussion by Microsoft showing continued and projected growth in marketshare. IBM for that matter is loosing marketshare substantially in the same period. I claim that is a solid link between the two.

What is the Size and Industry breakdown of these organisations? In which countries is the trend greatest or lowest?

Some reports show this detail others don’t. I can tell you from personal experience it does differ per country / geography.

What is the primary reason that organisations give for moving from IBM to Microsoft? It can’t be simply an economic decision, because Microsoft has no cost advantage and the cost of retraining every one is dead money.

The reason organisations give are multiple and ofcourse very depended on the type of organisation, the platform they are on, etc. Some examples

  • Mergers / acquisitions leading to a rationalistion / standardisation of the email / calendar platform
  • IBM’s (lack of a clear)strategy around Lotus Notes Domino.
  • Microsoft strategy and platform for Unified Communications & Collaboration
  • The Microsoft Platform providing a more favorable ROI.
  • Leverage of Microsoft solutions already in the organsiation

And yes, these may work the other way around, so less rational factors may very well play an important role in this process …

You claim there is no cost advantage; why you say this ? This may very well be true in some cases but I am confident (and know) cases with a clear ROI.

The issue of application migration is also a valid one for many organisations that use Lotus Domino, because some organisations have developed hundreds or even thousands of collaborative applications over the years, and the migration of these applications that you call "legacy" is not simple nor cheap for them to do when moving to the Microsoft platform.

Good point. How many organisations do you know actually depend their core business on thousands of business applications ? I know no / little companies that do.

Nobody is talking about / should talk about simply "moving applications over" in my opinion. I have said it time and time again it is a process of analysing what you have, determining what you need and rationalising to get there. This is absolutely not unique for Domino applications, this goes for MS Access, MS Excel and what you have just as well.

My simple approach to applications is :

  1. Analyse all the applications in scope using whatever tool suits you best
    1. How many applications (gross)
    2. How many instances / replica’s
    3. How many not used over period x
    4. Ho many derived from standard templates (off the shelf or developed)
    5. Dependency on external applications / interfaces
  2. Functional drill down
    1. What functionality do the databases provide
      1. Is this available out-of-the-box in the latest version of you current platform or competitive platforms
    2. Is this functionality also provided in your ERP system or other backoffice systems
    3. What are the functional components in the applications
      1. Workflow, forms, database, etc …
  3. Target platform
    1. What is you target platform given today’s standards
      1. ERP
      2. Other Back Office Applications
      3. Software Development Platform
      4. Communication / Collaboration platform
  4. Retire / Migration strategy
    1. Rationalistion i.e. what would justify maintaining / migrating applications "as is"
    2. Business case
    3. Risk Analysis
    4. Tools required for migration / interop

I am by no means a migration expert, so the list above may not be complete, But you know what, this approach is not unique for Microsoft, or IBM or whoever it is a typical approach in any standardisation / migrations process. So my question to you / Loti would be. Why is IBM so unique with it’s Domino applications that the apporach should be any different ?

The tools that Microsoft provide to assist in this migration are also woefully inadequate, so many organisations retain both their Microsoft AND Lotus Domino platforms indefinetly.

This is your statement not mine. I do not claim Microsoft makes the perfect tools providing the solution in every case. I know we can make the perfect tool if there would be a standard practice for the development of applications. We all know that not all Domino applications are developed using a standard practice. This also goes for any other developed application, macro, excel sheet, etc…

I think the selection of tools to be used is mart of your migration strategy and may very well include other 3rd Party tools as well; totally depended on what needs to be migrated. My motto ‘a fool with a tool is still a fool’

So I am intrigued to understand why an organisation would migrate from IBM to Microsoft, if there was no clear economic justification nor a realistic opportunity to eliminate the Domino platform altogether in many cases. Unless their decision was entirely emotional or unless they are being decieved by false and misleading marketing practices.

As you can read in my humble opinion there is no silver bullet. If there was you were talking to a rich man and I would certainly not blog the answer but sell it 🙂

Let’s not go the way of false and misleading marketing practices. I think of all organisation Microsoft does business with very highly. I know Microsoft customers employ very intelligent and bright people that need to be convinced with the right arguments especially in such important business decisions, so tricking them with slick advertisements or a one off PowerPoint show does not get anywhere. If you do business with enterprise clients you should know this.

Peter de Haas
Peter de Haas
Artikelen: 3803

21 reacties

  1. Peter, how do you reconcile your position with the 8 straight quarters of growth for Lotus Software, including 2006 being the best year ever for them? Notes and Domino had a 30% growth in revenue Q4 2006 over the previous year. Is that what losing marketshare looks like?

  2. Charles,
    I do not make the marketshare figures up; they are from various / all analysts on the email / calendar / collaboration space.
    That is a question you should ask IBM I think.
    Explanations could be :
    1. You don’t grow as hard relative to your competitors
    2. You don’t grow your core products enough (or they decline ?)
    3. IBM growth rate is not reflected yet in the most recent reports (up to Jan 19, 2007)Although all reports include future projections
    Again it is funny you ask me, because I think IBM has some explaining to do. But maybe competion is not that important anymore 😉

  3. Peter, it was explained quite clearly at Lotusphere that the growth was specifically in the core Notes/Domino product (Ken Bisconti statement, Lotusphere keynote). 30% Y2Y in fact. And no analyst says the market is growing 30%, so that must necessarily mean that Lotus is taking share from someone.

  4. Ed,
    Yes it does, but if Lotus is growing on let’s say 11% or so per year on average for let’s say the last 3 years. How do *you* explain the loss in marketshare over the last 3 years and also the analysts predicting a further loss in the years to come? These analysts are very much aware of Lotus financials I assume

  5. Ed,
    Yes I’ve read the Gartner piece. It is not an update on the report I referred to earlier but a highlevel overview of their finding on Lotusphere. They are positive and rightfully so, no argument about that
    With regards to the marketshare I don’t think it is faulty data, not by so many analysts in so many different reports. We could argue about the exact numbers and even the latest Gartner report being not spot on, but not the trend that is a given based on all the different sources of information.
    On the 30% I just reminded myself. This is for the *quarter* not the full year. The foll year avarege *for the whole of the Lotus reporting line* is 11% (your Q1 was 0% growth for example). I am not sure what the growthrate of the market is seat and revenue wise but it is increasing quite a bit maybe more than 10%.

  6. Personally I’m inclined to believe the data is faulty. The most it can hope for is a best guess because they can’t talk to everyone. Most of these types of surveys only focus on the Fortune XXX companies anyway, and I really don’t care what they use. But that’s just me.

  7. Charles and other disbelievers
    Let’s agree to disagree.
    I do wonder why in the past people like Ed and others at IBM where so fund of quoting dataquest and Gartner to prove Lotus’ leadership in the industry.
    Now that it’s the otherway around we no longer believe the figures ??
    Maybe we need to stop believing Industry analysts all together and go to the IBM website or weblogs of IBM employees for objective and acurate market related information 😉

  8. http://www.ecommercetimes.com/story/55291.html
    Research published by Gartner (NYSE: IT) Latest News about Gartner shows that both IBM and Microsoft are frustrating some business customers with their rather basic collaboration tools, including e-mail Email Marketing Software – Free Demo and shared calendar functions. Many businesses are exploring new options as well, Gartner analyst Tom Austin said.
    “Both Microsoft and IBM are losing customers to each other,” Austin added.

  9. Ed,
    Very true, however, there more to the most recent report than just this quote of Mr Austin ;-)It is quite explicit with regards to marketshare and trends …

  10. I’ve never really cared about market share, so ignoring the analysts is nothing new for me. What I do care about is fair and balanced coverage. Smearing the competition, from either side, is distasteful to me.

  11. Charles,
    Nobody is “smearing”. I encourage a facts based discussion and always try to have as uch objective leverage as possible to support my statements …

  12. Well Jason I shouldn’t be the one answering this when you look at my faulty English 🙂
    But I had a look and this is what encarta says :
    Word Usage
    loose or lose?
    Lose is a verb only, meaning variously “to mislay,” “to fail to win,” etc., as in Don’t lose [not loose] possession of the ball, or you’ll lose the game.Loose is an adjective, adverb, and verb. As an adjective it means variously “not firmly fixed,” “not restrained,” etc., as in loose [not lose] floorboards;loose [not lose] dogs running through the alley. As an adverb it means “freely,” as in dogs running loose [not lose]. As a verb it means variously “to untie,” “to make less tight,” and “to fire a projectile,” as in loosed her grip;loosed the taut anchor line;loosed a volley of arrows.
    http://encarta.msn.com/dictionary_/loosing.html
    So my conclusion : it should be losing as in : “IBM is losing marketshare :-)”

  13. I have been tracking the published growth rates of both Micrsoft Exchange and Lotus Notes for over the last ten years, and if the user base figures announced by both are factual, both companies have continued to significantly grow their user bases over that period.
    During that same period, the email market sector has also grown significantly, which has allowed both companies to dominate this market sector, swallowing other second tier vendors at a dizzying rate.
    However, until both organizations agree to release the full details of their user base to public scrutiny, I regard the actual market share details to be somewhat speculative.
    The practice of hiring external consulting firms to conduct surveys based on relatively small samples or who employ dubious surveying techniques is also of little help, and both competitors are guilty of “Guilding the Lilly”.
    Any speculation about the actual market share is also being distorted because many organisations use both Lotus Notes and Exchange. And both IBM and Microsoft seem to count these hybrid organisations in their own user base calculations.
    My original question was prompted because Peter made an emphatic claim that “IBM was rapidly loosing market share to Microsoft”. If all Peter has to back-up this statement is the “Evidence” provided by external survey consultants such as Radicati (who have been commissioned by Microsoft to generate a report that places them in a better light) and the relative volume of Case Studies on the Microsoft Web site, then I seriously question the validity of this statement.
    I suspect that this statement is mostly wishfull thinking and an honest misrepresentation based on Peter fallen into the trap of believing that only facts emerge from the Microsoft Marketing Department.

  14. Is “loosing” a real word in the USA? I keep seeing it around – mostly on US sites, and maybe its like Valor or Color where they just decided to make it up as they go along – but i believe in the Kings english it should be Losing – as in “Losing my Religion” – REM?

  15. No – its a serious question – i see it A LOT – maybe its just a typo in this case- but it must be coming from somewhere? I looked it up in Wikpedia etc, online dictionaries thinking it might be like oriented/orientated – but it seems more prevalent than just a typo…

  16. Heh heh – so i guess if you take the original tagline of “IBM Loosing Marketshare” – it means “freeing” market share or “unrestraining” market share, or that its market share is “not firmly fixed” …which I’m sure could add many interpretations to the comments above…from both sides of the discussion
    And who knows where “to fire a projectile” could lead too 🙂

  17. @ Ian good points.
    As I said in this past / comments and various others over time. IBM *is* losing marketshare *and* many organisation move from Lotus Notes / Domino to Microsoft.
    I am under the impression that because the marketshare of IBm is declining and Microsoft’s is increasing in this space, Microsoft is winning more clients from IBM than the other way around.
    Marketshare Information is created by various analysts who specialise in this field and although they use different methods, sample sizes, etc. they *all* show the same trend. So again my claim is not based on 1 report, but on roughly 15 diffrent publications (reports and articles) over the last 3 years.
    You have to face the fact that Microsoft and IBM will never come to an agreement on markshare / seats installed at least that is my opinion.
    My point is that for years IBM has touted marketshare figures as evidence of their market domination and the last 2-3 years it has gone silent.
    As little as I may know of Lotus Notes Domino, I think that marketshare of the foundation of this platform, email and calendaring, is essential just as Exchange and Active Directory are essential to Microsoft.
    O and by the way the remark on the volume of casestudies was a joke (it must be the Dutch humour ;-)) although I am proud of so many Microsoft customers willing to express the value they see in the Microsoft platform.
    That’s the end of it I think we’ve all debated this topic enough for now let’s agree to disagree on this topic.
    Anybody have good suggestions how we measure progress relative to competitors in the communication and collaboration market ?

  18. The study is biased but does bring up some valid points. IBM/Lotus has not done a good enough to compete in the SMB market. IBM is ignoring businesses that are under 250 employees. Microsoft on the otherhand has successfully marketed SBS server.
    Lotus needs to do more to capitalize on it’s existing advantages. Lotus should be emphasizing things such as scalability and it’s relational database support for notes. Microsoft has made some serious missteps with their Exchange roadmap.

  19. @ Randall :
    “The study is biased but does bring up some valid points.”
    I don’t see Gartner Group as particularly biased towards Microsoft at all, so I do not agree with this personally …
    “Microsoft has made some serious missteps with their Exchange roadmap.”
    This maybe so, on the other hand, what if Microsoft will do an ever better job with MS Exchange. This will increase the gap even more won’t it ? 🙂

Reacties zijn gesloten.