Lotus CEO: Notes, Domino going gangbusters

Notes and Domino are selling like Valentine's Day roses, no one questions Lotus Development Corp.'s marriage to IBM anymore, and even archrival Microsoft Corp. is receiving more bouquets than brickbats from the folks at Lotus. Against that upbeat backdrop and in anticipation of this week's Lotusphere '98 customer conference, CEO Jeff Papows last week sat down for a state-of-the-company chat with Network World Editor in Chief John Gallant, News Director Bob Brown and Senior Writer Paul McNamara.

What themes will be stressed at Lotusphere?

I look forward to [spelling out] our focus from a product standpoint in 1998, which in part will be R5, the next major re-lease of Notes [and Domino]. Remember that we just shipped 4.6, but we'll ship R5 in the second half of the year, hopefully in the early part. But the honest answer is we don't know yet.

Will there be more details about Version 5.0 at the show?

Three or four major focus items. The first is a radical focus on [user interface] simplicity, so it will be a fairly significant UI change. R5 becomes a much more integrated product, a whole Web information management environment.

We also finished the last pieces of standards value, meaning we deal with native [Multi-purpose Internet Mail Exten- sions] and HTML consumption in a very powerful way. We complete the [Lightweight Directory Access Protocol] support for the client. At the same time, we're going to do some things with same-time/real-time asynchronous capabilities on R5. Knowledge management is going to be a major phenomenon in 1998, and the next logical step beyond it is [incorporating] messaging, groupware, accounting and scheduling, and we intend to own and dominate that market.

Another thing we'll be more clear about [at Lotusphere] is the client strategy. [In] the R5 time frame, we will congeal to two clients - a development

client, Domino Designer, and a run-time client, Notes.

The other big issue there is the development model. [When R5 is released, it] will be the first time we'll have a single rapid application development and design model for these knowledge-based applications that can be fielded transparently to either a Notes client or a browser.

What's the point of the Notes client then?

It's about integration. It's about providing a place where you live, where all of the information from the Web - from your messaging, groupware and knowledge management applications - comes together.

Other Lotusphere goals?

Part of the message will be one of momentum. [1997] was a banner year by anybody's expectations. The public expectation that was set at Lotusphere a year ago was to ship 8.5 million seats. In fact, we shipped 10.5 million.

My guess is that we [ended] 1997 with something close to 25% or 26% of the paid Web server market, which was again materially ahead of our expectations. Domino server growth in 1997 was up 260%, which was tremendous.

Where does that '97 performance leave the Notes installed base?

That will put us over 20 million units, which is a big deal for us. We don't break out revenue [and] haven't since the merger [with IBM], but I will tell you that 1997 was the greatest year of revenue growth in [Lotus'] history post-1990.

You've said that you don't see Lotus' eSuite Java-based productivity applications as Microsoft Office killers. But as your software becomes more stable, do you see hardware manufacturers that have a fair level of animosity toward Microsoft using eSuite as their offering?

It's an alternative. [But] we have to be very careful not to get into another industry food fight here. When I say "we" I mean Lotus, because eSuite will fail if we don't deal with the realities of interoperability in the same way that we do with Notes and other Microsoft products, like NT and Windows. [This means] if you've got an eSuite spreadsheet you've got to be able to ingest an Excel spreadsheet. I don't want the historic notion of this industry tension to screw up the customer value.

Do you have an ongoing dialogue with Bill Gates then?

Yeah, [we have] regular e-mail exchanges every month. I talk to him every six or seven weeks by telephone. I was out [in Redmond] last year for two meetings where I took people out to the corporate campus and brought development executives. [We] sat down with the Windows guys, NT guys and [Internet Explorer] team. I would describe our relationship as practical. And, I think customers have really appreciated us putting down the rotten tomatoes. . . . We simply cannot continue to act like kids in a schoolyard when the customers' interests are affected. . . . It doesn't mean we can't compete aggressively or that we won't.

Bill has got his quirks [and] I've got my own, but when you get down to face-to-face kinds of conversations and you're trying to be generally evenhanded, more often than not people react in kind, and Bill's no different.

Can that relationship be so friendly when the issue is Java?

No. We disagree on it and some of the most heated conversations Bill and I have had are around Java, although it's not as one-sided as you might think.

He supports [Java] as a language. There's absolutely no issue [about that]. He doesn't support [Java] as a platform for reasons that it doesn't take a rocket scientist to understand; because it lessens his control. I support [Java] for exactly those same reasons. So we agree to disagree.

This is probably a good time to segue into another matter: Given the current situation between Microsoft and the Department of Justice, what is Lotus position?

We're agnostic about the browser argument. We support both IE and Navigator, always have . . . and we'll do an equivalent job of integrating them both [with our software] and letting the users choose.

You've had a number of high-level executive defections recently, including Deb Besemer, your executive vice president of worldwide field operations. Are you concerned?

Well, it gets overblown. Let me put it in perspective: Lotus had about 5,200 employees when the IBM acquisition took place. Today we're very close to 10,000. So half a dozen executives leave and get pretty prominent attention, with Debs being the [most talked about departure]. OK, a half dozen people left, but put in perspective, we've also employed an incremental 5,000.