July 31, 2008 10:54 ET

IBM Growth in Emerging Markets Fuels Lotus Momentum

ARMONK, NY--(Marketwire - July 31, 2008) - Led by strong sales of IBM (NYSE: IBM) Lotus Notes and Domino 8 in the second quarter of 2008, IBM's Lotus software business outgrew Microsoft by winning millions of customer seats worldwide in direct competition with Microsoft, aided by key wins over its Redmond-based rival in emerging markets.

IBM's emerging markets represented 18 percent of IBM's overall geographic revenue in the second quarter of 2008, and together grew 21 percent as reported. In addition, the Brazil, Russia, India and China subset grew 31 percent in the second quarter, led by strong growth in India.

Among those customer wins was Lotus' largest Asian customer engagement to date -- a major bank licensing 300,000 Lotus Notes seats as well as Lotus Symphony, IBM's free personal productivity software based on the the OpenDocument Format. Lotus Symphony has been downloaded by over 1.3 million individuals and businesses, including scores of Microsoft Office customers. Customers that chose Lotus Notes and Domino over Microsoft in key markets included Max New York Life, Reliance Industries, Vedanta, and Aviva in India; GD Development Bank, Johnson Electric, HKG Environ Protect, CED, DL Cosco Shipyard in China; Affin Bank and Trakando in Singapore; and Russian Railways in Russia.

"Enterprise customers -- especially many rapidly-growing businesses in emerging global markets -- are choosing Lotus software for its open, flexible design," said Bob Picciano general manager, Lotus Software. "These companies prefer open standards over the restrictions of legacy proprietary technology for their long-term collaboration investments."

The second quarter saw the largest historical client win for Lotus in North America as well. A member of the so-called "big six" accounting/consulting firms purchased more than 150,000 seats of the entire Lotus portfolio, selecting Lotus Notes, Lotus Sametime, Lotus Connections, IBM Lotus Quickr and WebSphere Portal over Microsoft Exchange and SharePoint, among other products. Other large companies that chose Lotus Notes and other Lotus software over Microsoft products included several leading banks in the U.S., the United Kingdom and Germany, as well as the Australian government.

Other clients who have recently invested in Lotus Notes and other Lotus software over the competition include consumer goods giant Colgate-Palmolive, chemical manufacturer Ineos of Belgium, the U.S. Federal Aviation Administration, NutraFlo, Dutch Railways, Rohm Haas, Imerys and the Salvation Army. Specifically moving to Lotus Notes 8 were CFE Compagnie d'Enterprises of France, Virginia Commonweath University, Winsol International, The U.S. General Services Administration, the U.S. Internal Revenue Service, Standard Insurance, New York Life, Kentucky Baptist Convention, Verizon, Publishers Printing, Hyatt Hotels, Union Pacific and Nationwide Insurance.

Many clients of all sizes are questioning their investments in legacy Microsoft software products. Migrating to new versions of Microsoft Exchange has proven to be a daunting and expensive task. Ferris Research recently published a report (Exchange 2007 Implementation Issues, December 2007) that indicated 70% of Microsoft customers felt that migrating to Exchange 2007 was either "Difficult or Very Difficult."

Large companies are concerned with the prospect of upgrading to Microsoft's Vista operating system and continued high percentage of IT costs devoted to personal computers amid challenging economic conditions. Meanwhile, more strategic IT investments that could spur top-line revenue growth go unfunded and unrealized.

Increasingly, both public and private sector companies are looking at open alternatives such as IBM Lotus Symphony and other solutions from One such organization that is making the switch to Lotus Symphony is the Anglican Church of Australia, which stated publicly that it will save an estimated AU$150,000 a year.

Industry analysts credit Lotus with a more innovative, open portfolio that gives businesses freedom of choice, lower IT costs, and more insightful employee tools. For example, the industry's first enterprise social networking product, IBM Lotus Connections, doubled its client base this year after debuting as the fastest growing new IBM software product in 2007. At the recent Enterprise 2.0 conference in Boston, attendees witnessed a demonstration comparison pitting IBM Lotus Connections against Microsoft SharePoint. Moderator Mike Gotta of the Burton Group summed up the audience's reaction in his blog, "Collaborative Thinking." He wrote, "IBM was the clear winner across the board. Maybe Microsoft underestimated IBM. And in some cases, decision-makers are more open to at least considering alternate solutions they might not have even entertained before (which would be good news for IBM and Jive in particular)."

IBM Lotus Sametime, IBM's platform for unified communications and collaboration, vaulted to over 100 million individual licensed seats in the second quarter with one-third of sales going to Microsoft customers. IBM WebSphere Portal software with Web 2.0 technology has won marketshare leadership for seven consecutive years by leading research firms, Gartner and IDC (see separate release today). Lotus has also launched new products in the software mashup, computer appliance, and software-as-a-service categories.

With 15 consecutive quarters of revenue growth, IBM's flagship Lotus Notes and Domino products has been transformed into a versatile tool that consolidates the individual's work world onto one screen, employs Web 2.0 technologies and reduces time spent on email. Lotus Notes and Domino adoption has grown to more than 140 million licenses with gains across small-medium business, more than half of the largest 100 corporations in the world, 80 percent of the top 10 global companies in banking, telecommunications, aerospace and defense, consumer products, electronics, insurance, and pharmaceuticals.

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