focus topic: Lotus Domino: Year Two

To hear IBM people tell it, Lotus Domino for the AS/400 (from Lotus Development Corp., Cambridge, Mass.) is a "killer app." Just as Lotus 1-2-3 spurred sales of early PCs, users of NT servers and other platforms are now buying AS/400s largely so they can use the midrange version of Domino.

Sales figures are truly impressive, if not quite precise. Revenues exceeded $500 million in the first 10 months after the March, 1998 release. During that time, Lotus sold 23,000 licenses with an average of over 100 seats each. A reasonable estimate is that of all the AS/400s that could run Domino, 20 percent have it installed. Since Domino only runs on Northstar and Apache models, AS/400s purchased before mid-1997 are not eligible.

Kelly Schmotzer, worldwide groupware marketing segment manager for the AS/400 at IBM Corp., boasts that in 1998, Lotus sold more Domino for the AS/400 than it sold for all flavors of Unix combined. (Lotus is only now considering developing a Linux version.)

Domino for the AS/400 has serious competition, however, from Microsoft's Windows NT with Exchange and Outlook. Each has its advantages and vulnerabilities, so there is no empirical right choice. Last year, sales figures varied by only a few percentage points between Lotus and Microsoft.

Lotus, however, as a wholly-owned IBM subsidiary, claims the AS/400 platform as its own. Schmotzer touts an IDC (Framingham, Mass.) study that praises the total cost of ownership of Domino. This is largely based on the AS/400's ability to cluster multiple servers in a single box: IBM has successfully tested running 30 subsystems simultaneously. In theory, 99 could work together. At the Rochester, Minn. plant, 17 servers were consolidated onto a single AS/400 and currently run in harmony. The AS/400s fabled reliability and its native security are strong pluses for midrange users.

Schmotzer offers the choice: 30 NT servers or a single AS/400. Obviously economic considerations favor Big Blue, and the 99.97 percent reliability is a favorable factor as well. "On the 400," Schmotzer intones, "applications all run independently. If a Domino server flakes out, you can bring it down and back up without effecting the other operations. You can move Domino operations over to a clustered server, bring the failing one down and up, and the users never feel a hiccup."

Domino 5.0

Domino version 5.0 was released in January to great hoopla at Lotusphere in Orlando. The three major components of Domino -- mail server ($700), application development server ($1800), and enterprise server ($5000) -- have all been strengthened. The attractive prices are designed to be appropriate for the wide range of users of the AS/400: A smaller shop will enjoy the client access license fee of $40 per browser while there is a cap of $25,000 that benefits the largest users.

Prospective customers who only want e-mail and messaging find a very competitive situation between Domino and Microsoft NT with Exchange. When users want to move beyond that to web-based application development, however, major differences emerge. Lotus is confident in its superiority.

"If a customer wants application development," expresses Don Harbison, marketing manager for the Domino Enterprise Server at Lotus' Westford, Mass., development lab, "we compete against Back Office. Microsoft has a set of products to be integrated, and the AS/400 does accommodate NT integration, so for just e-mail, it is a very tight race. Do you want to stop at just e-mail? When application development is the goal, Domino wins hands down."


Improvements in Domino 5.0, according to Lotus marketing manager Don Harbison:

1) Messaging: 5.0 completes the journey from Lotus Notes to a fully internet-standards-based message server that uses standard routing configurations.

2) The Enterprise Directory now zooms to a million entries.

3) Messaging management has been simplified.

4) 5.0 supports native S-Mime.

5) Domino now uses native standard internet addressing.

6) Standard web browsers now work as well as Notes clients.

7) Upgrade services now published with 5.0 consolidate multiple servers.


How Far Do You Want to Go?

The key question that will have a strong impact on Domino's success is: how much functionality do AS/400 users want from their software? Are they satisfied merely using Domino for e-mail and messaging, or do they want to move on to application development for e-commerce, enterprise serving, and even knowledge management?

A MIDRANGE Systems survey of Domino users taken late last year showed that over three-fourths of qualified respondents used Domino primarily just for e-mail. At face value, that is not encouraging for Lotus, but sales have exceeded expectations, so there is no immediate alarm.

"We have looked on 1998 as an infrastructure year for our first customers," opines Jelan Heidelberg, worldwide technical marketing consultant for groupware and e-business at IBM's AS/400 plant in Rochester. "That means they're getting their network and desktops set up and learning about the product. The natural place to start with Domino is e-mail. That's where most people start, no matter what platform they use. We expect that in 1999, that first set of customers will be moving on to other, more sophisticated applications.

"We know from our partners that they are doing a lot of work with various customers in applications that take advantage of database integration capabilities," she continues. "Many of our customers have plans -- and some are definitely in progress -- to do applications beside e-mail."

Partners in Development

Heidelberg's reference to partners is another key to Domino's future. At the point of decision, will resellers, integrators and software developers such as Infinium and Lawson Software choose to promote Lotus/IBM or Microsoft? Lotus counts 19,000 business partners worldwide. (Domino for the AS/400 has been especially successful in Europe.) IBM adds untold thousands of AS/400 Partners in Development.

The degree of the product's success will depend considerably on whether these partners aggressively market the application development and enterprise server capabilities of Domino. It is not necessarily an easy sell.

Eric Woodruff is a senior consultant for Systems Consulting Group (SCG), St. Paul, Minn., a Lotus Premium business partner. Woodruff is certified on Domino for the AS/400. He agrees that Domino meets expectations and performs as promised. Still, there are significant obstacles to sales.

"Just because you have an AS/400, it doesn't mean that you are willing to make the upgrade to run [the required] V4R2," he notes. "If customers still have a CISC processor, they are looking at a major hardware and software upgrade. And consolidating servers is OK, providing the servers are all at the same level of Domino OS. You can't use different levels of the Domino operating system, though."

SCG's Mike Boyer counters that there are situations where Domino is the perfect solutions. "For example, the five campuses of the Wisconsin Regional Technical College system are all connected by Domino for the AS/400. They wanted a workgroup messaging system and they needed more horsepower than a Wintel system could give them. Their AS/400 has plenty of resources, so they designed a collaborative AS/400 network. Initially, they are exchanging mail messaging throughout the campuses. Soon they will tie in the main databases through the Domino engine. Then state high schools will get thin clients to access course work posted on their web site."

That kind of development, from e-mail to more powerful and sophisticated solutions, is the crux of Domino's future. If customers demand it and business partners deliver it, Lotus will have a very good year, and AS/400 sales will get a significant boost. Lotus and IBM are highly optimistic about sales in 1999, but only time will prove them right or wrong.

Gordon E.J. Hoke is a principal in IMERGE Consulting. He can be reached at or (507) 534-2293.