ORLANDO – IBM jumped headfirst into the small and midsize business market at Monday's opening of its annual Lotusphere conference, introducing server appliances and a set of hosted software services for companies with fewer than 500 people.

IBM Lotus Foundations will evolve into a set of server appliances, based on Intel hardware and the Linux operating system, that offer up a bundle of collaboration features. IBM said a limited beta with about 500 companies is already under way with the first appliance, which includes Domino mail/collaboration, file management, directory services, firewall, back-up, recovery and the Lotus Symphony productivity applications.

IBM also introduced Bluehouse, the code name for services built on Foundations and delivered over the Internet. The services, built on a multi-tenant architecture and available in limited beta, www.bluehouse.lotus.com are designed to help business partners share contacts, files, project and interact via chat and Web meeting.

“We think Foundations is a great product set for the market,” said Mike Rhodin, general manager of IBM Lotus Software. “But we know the bulk of activities revolve around external businesses that need to find each other and communicate and collaborate.”

Rhodin said IBM Lotus would engage partners to deliver services for small businesses that can integrate with Bluehouse. And that the model would include capabilities that run locally, augmented with services hosted in the cloud.

The model is similar to what Microsoft has been pushing with its software-plus-services strategy developed by Microsoft CTO Ray Ozzie, who created the Notes platform.

“We think we can change the speed in which we can build products,” said Rhodin.

Some observers said IBM Lotus would have to explain how small businesses that grow up on the Foundations/Bluehouse platform cross over to Notes/Domino if they happen to grow.

“I’m seeing SMB as a separate concern,” says Karen Hobert, an analyst with the Burton Group. “It’s good to have the focus, but what is the cross over [strategy]?”

The opening presentation ran nearly two hours before Rhoden spilled the Foundations/Bluehouse message. The build-up included not only how IBM Lotus views the evolution of collaboration, but the products released last year and the coming enhancements planned for 2008. (Learn more about collaboration products in our Collaboration Buyer’s Guide.) 

Rhodin laid out three generations of collaboration starting with electronic versions of physical tools such as overhead projectors that were made obsolete by presentation graphic applications. He continued to the advent of the mobile phone and IM for a generation that expects instant communications.

The third generation is what Rhodin called “community-centric collaboration” that is tied up in social networking tools. Rhodin characterized it as revolutionary rather than evolutionary and said it is more open and allows people to connect in ad hoc ways that don’t relate to any diagramed organizational chart.

IBM Lotus said in June it would release Lotus Connections 2.0, its lineup of social networking tools, with support for more languages such as Arabic and Russian, and a language translator.

It will also feature a tool called Lotus Mashups, which will go into beta mid-year, that includes an IT tool for tapping into systems and creating widgets that can be combined into applications. Lotus Mashups also includes a client interface and an end-user tool for linking together widgets.

With Connections 2.0, users also will get new attention management features and Atlas, the code name for software that lets users visualize their social networks and replicate that visualization among various devices.

IBM Lotus said Notes/Domino 8.1 would ship in February and include a Web 2.0 feature called My Widgets, which will let users click on links to execute widgets, and Lotus Notes Traveler for automatic replication of mail and collaboration services to mobile devices.

The 8.1 version will also add support for Ubuntu Linux and re-introduce Apple Macintosh client support. The Mac beta is now open, according to Lotus officials.

The 8.5 version of Notes/Domino will feature the Domino Designer tool built on Lotus Expeditor and Eclipse. The server will feature new security, directory, identity and storage features.

In addition, Lotus introduced IBM Lotus Protector for Mail Security, an appliance for antivirus and antispam based on IBM’s Proventia Network Mail Security.

The company also said Lotus Symphony Beta 4, which is expected to be available this month, will include APIs for integrating Symphony documents into other applications.