Lotus's Share Of Pc Applications example essay topic

Executive Summary & Problems In The Beginning Lotus Development Corporation was created by Mitch Kap or, a software designer whose initial goal was to develop a sophisticated spreadsheet program. The company was founded in 1982 and its headquarters based in Cambridge, Massachusetts. In 1983 Lotus created the first killer application, 1-2-3 DOS for the IBM PC, catapulting them into the largest software company in the world. Lotus was noted as being one of the finest franchises in their business sector. The Rise and Fall Up to 1983 Lotus operated in a largely college industry were only a handful of companies created killer apps such as Word Perfect. Between 1983-1986, Lotus had created Symphony and Jazz which were the first fully integrated application programs to combine word-processing, spreadsheets, graphics, and database management.

However, the market responded negatively to the introduction of these products. During 1986, Imitation by Borland and the limited success of Symphony and Jazz prompted newly elected president Jim Manzi to approach product development in at a new angle. Jim Manzi began an acquisition program that would give Lotus, products in every applications category, ultimately resulting in Notes... Competition Heats Up Competition in the industry was intense during 1990. Borland and Microsoft had both emerged as large competitors of Lotus.

Each had develop duplicate versions of Lotus's 1-2-3- program. The popularity of Microsoft surprised the industry when the company introduced a bundled! SS suite!" that included its spreadsheets, word processors, graphics package, and database manager. There strategic approach to software development and marketing led to a growing market share for the company.

Initially Lotus did not write a version of 1-2-3 for Windows because they did not want to help Microsoft build their contribution margin and attain market acceptance. However, over time Lotus could not ignore the growing success of Microsoft so they eventually rushed a flawed a version of 1-2-3 for Windows to market in 1991. The release of the product caused Lotus great embarrassment, because they reacted to the situation instead pf being proactive in the beginning they made a decision and introduced a product that was not ready for market. Lost Opportunity In 1990 Lotus made an attempt to gain a significant share of the network application industry by initiating merger negotiations with Novell.

The merger of the two companies would have created the largest computer software company in the world. The combined sales for Lotus and Novell in 1989 were $978 million, compared with Microsoft's $804 million during the same year. Novell would benefit from the merger by having access to Lotus's suite of desktop products and would increase their influence to shape networking environments Lotus would have benefited from Novell's expertise in NO Ss and its dominant position in the $2.6 billion market. However, both companies could not discard their corporate ego's and politics in order to allow the merger to proceed. The deal was eventually abandoned due to an inability to compromising about a decision regarding the board. Different Direction After the dissolve of the negations and a fall in the companies shares Manzi reverted back to Lotus's original network applications development plan instead of seeking new partners.

Recruited a new management team and the company introduced a new strategy called! SS Working Together!" , which signified a commitment to integrating PC applications and to writing versions for every major GUI and operating system. Lotus created a new version of 1-2-3 for Windows and tested and released it to favorable reviews. By 1992 the development group also standardized products that were also centrally coordinated and the products were bundled in to a! martSuite!" and priced to compete against Microsoft's! SS Office!" suite of products. Due to intense competition Lotus's share of PC applications had slipped from 50% in 1986 to about 15% in 1990.

But the success of 1-2-3 for Windows helped recovered the firms share to 25%. By 1993, Lotus held 22% and Microsoft 38% of unit sales. Both companies offered full lines of products, with Lotus concentrated more on spreadsheets due to the sales growth of that product. Word Perfect was 17% of the market and specialized in word processors. Borland International was 12% of the market and sold spreadsheets and database managers. Lotus word processor and graphics, packages were the highest rated in their category but at the same time held low shares in their respective market.

The company's version of 1-2-3 for DOS accounted for 35% of its revenue. Other version of 1-2-3 accounted for 15% of its revenue. By 1994, Lotus's stock prices had more than quadrupled from $18.75 to an all-time high of $86.50. Notes The Notes application was a highly acclaimed software program used to manage computer network. Notes allowed users to simultaneously revise documents while it automatically tracked the changes to maintain security. The product had become increasingly popular among sales force management because it allowed remotely located sales people to exchange customer information.

Many companies did not initially take advantage of the opportunities of Notes. Consumers complained that not enough notes applications had come to market. So the success of Notes would depend on Lotus's ability to build an installed base before competitors offered new lines and products to customers. Over half of Lotus development budget in 1993 was allocated to projects related to! SS Notes. !" Since the introduction of Notes Lotus often closed a sale by offering customized Notes applications for users.

The practice of offering customized Notes eventually provide to be very expensive. The company estimated that Lotus would have to spend between $50 - $100 million per year to achieve the success of the product. So Lotus was coming to an end the team staring with upper management working down to lower level employees would need to make a decision to take a strategic approach on saving the company. Lotus Strengths fae Being one of the first company to enter the PC software Industry fae Introducing their 1-2-3 for DOS created the first killer application for IBM PC fae Lotus's word processor and graphics package were the highest rated Lotus Weaknesses fae Not having enough Notes applications come to Not being a full service Concentrating only on spreadsheets, while competitors were advancing Lotus Opportunities fae Not merging with Novell fae Not forming an alliance with AT&Tfa e Not focusing on the Home & Business Market Lotus Threats fae Microsoft Conclusion Lotus knew that it could not stand a chance in becoming the number one company in the PC Software Industry.

Microsoft was primary Lotus's only competitor with significant share. Microsoft applications were available in versions for most operating systems. It held 60% of the market for windows applications, as segment that grew from 284 million in 1990 to 2.5 billion in 1992. Microsoft had a strategic approach on doing thing they seemed to be more organized and worked as a team.

Lotus Notes Program on the other hand needed extensive planning, custom programming, and training. Which would cost Lotus money that they didn! |t and couldn! |t afford to spend? Lotus lacking on being a full service provider hurt ed the companies prospects long term goals. Consumers of course are only going to purchase products from companies that are well worth it. Lotus had opportunities to become one of the top companies with merging with companies like AT&T and Novell that would! |ve definitely been a backup plan for the company. Recommendations I believe Lotus was a company that was not prepared to stay in business in a long term perspective due to their lack of vision.

Microsoft said we are going to be number one and believe it or not they are and will maintain it due to their vision. Lotus from the beginning should! |ve taken a different approach, rather then the company waiting on a miracle to happen then should! |ve took action and maybe today they could! |ve been a success. Again the main thing that would! |ve helped Lotus would! |ve been the mergers due to lotus being so small and hurt financially both companies would have helped lotus financially at least. Again lotus failed to take action not once but twice.

Lotus didn! |t offer there consumers differentiation of products they mainly focused on their basic spreadsheets, rather then creating and going above and beyond the product. I feel that if the overall company looked at business and took it in a strategically long term approach and worked as a team the company today would have been a success. Consumers were reluctant to switch vendors when purchasing new software or hardware due to the less to offer deal. Consumers would rather purchase Microsoft due to their strong focus on consumers within the Home & Business Segment. Consumers could access their files through home computers and also at their employment. If a new vendor was selected their would be new costs but the consumers weren! |t concerned about the money they just wanted overall satisfaction.

Lotus could not offer consumers a variety of programs it was much more worth while to purchase Microsoft. Lotus had difficulty with there systems also and they would charge for customer service so it overall wasn! |t worth it. Customers were spending more money and wasting a lot of time with Quality. Microsoft today remains a successful company due to their quality, reliability, and reasonable cost. Lotus should! |ve been aware of the problems and never had just waited they should! |ve taken action while still having time.