As Lotus Falls From Grace, HP Rages Back

COLUMN:

The Lotus IBM subsidiary, which 10 years ago was one of the largest and most powerful software companies in the world, is struggling to assert its identity within IBM and find the right strategic plan in the face of increased competition, both in the market and within Big Blue. Meanwhile, HP is grappling with a weak U.S. business and a struggling enterprise systems group, and it's trying to regain the trust and confidence of a once powerful channel that was stung by the complicated Compaq merger. What HP did have, and what Lotus did not, is the right message to partners and a sound go-to-market strategy.

Comparing the two situations is like juxtaposing apples and oranges, of course; Lotus is a software vendor, while HP is a large and more diverse technology giant. Still, I came to the conclusion that what HP had going for it was much more important than what Lotus had in its favor. That's why I'm down on Lotus and up on HP.

The Down Side
It's hard to figure out what you're getting with Lotus these days. After a long stretch of unexciting technology visions, lame strategies and product delays, the IBM subsidiary released the latest version of Notes and Domino, as well as Sametime and Quickplace, in the fall. Notes and Domino 6, in particular, received much praise, and many partners believed that the release would help Lotus recapture some of the momentum it lost in recent years to Microsoft Exchange.

However, Lotusphere 2003 showed a different shade of the company. For one, attendance was down to approximately 5,000 people, half of what the event drew three years ago. In addition, long-time Lotus partners have become frustrated by the lack of support from parent company Big Blue and the neglect of Domino in favor of the blossoming IBM WebSphere application server platform. The hastily-made executive change didn't boost partner confidence, either. Ambuj Goyal replaced Al Zollar as general manager of the software brand shortly before the conference. That time span was so short, in fact, that the Lotusphere attendee guide still listed Zollar as GM two weeks later. Goyal is just one of many new faces at Lotus, and partners say they are tired of the revolving door of executives and mixed messages from both IBM and Lotus.

There is some good news. IBM has pledged $1 billion to Lotus during the next three years for channel and marketing initiatives, but many partners are skeptical. Perhaps they should be: One IBM channel executive referred to Lotus partners as "stepchildren." I'm sure that's not how Lotus solution providers, which are some of the most dedicated and diehard in the business, want to be seen.

I also have to question the recent statement from IBM Software Group that its business grew just 1 percent last year. This is remarkably low, considering that WebSphere and DB2 took off like rockets and became dominant in their respective market share categories; DB2 alone grew 11 percent in 2002. If that's the case, you have to wonder how much Lotus' business fell and if the once shining brand has become a liability for Big Blue.

The Upside
Hewlett-Packard, of all companies, seems to get the channel business these days like no other major vendor. After getting slammed over the last two years for massive channel conflict and the lack of organization around the enormous Compaq merger, the company is now emerging from the hole it dug for itself. Even coming off of the unpopular decision to do away with its Hard Deck channel policy, which named direct accounts for HP, in favor of the sprawling, uniform PartnerOne program, HP officials are winning back partner confidence support. How? By getting in front of them with a powerful, persuasive and consistent message.

At HP's recent Americas Partner Conference in Orlando, the company had 90 of its top executives, including CEO and Chairman Carly Fiorina, on hand to speak to partners, both privately and publicly. They worked diligently to communicate the value of PartnerOne and the company's new "Utility Computing" vision. Above all, HP didn't take a condescending, vendor-knows-best attitude and instead tackled touch issues. Fiorina acknowledged the difficulties that HP partners had endured during the merger and didn't shy away from perception that partner support had waned for the vendor. Kevin Gilroy, vice president and general manager of commercial channels for the Americas at HP, said PartnerOne "is admittedly not perfect," but pledged to keep working on the program to best meet the needs of all partners. Gilroy also told the audience at the APC event to hold him personally responsible for any channel conflict issues.

Some may say that Gilroy and Fiorina have put themselves in the line of fire with the channel, but sometimes putting it all on the line is the best way to get solution providers behind you. Fiorina, for one, has taken a lot of flack since the merger was announced -- one technology publication bashed her on everything from her business decisions to her wardrobe and told her to "go away." She could have easily skipped this partner event (IBM and Oracle, take note) and other public appearances, but hasn't. She and her team have met the challenge head on, and that kind of warrior mentality may well put HP back in favor with the channel.