When IBM bought Lotus for $3.5 billion in 1995, it looked as though the venerable computing giant was just about to lock up the software industry and coast to unstoppable profits.

Eighteen years later, Lotus looks more like a millstone around IBM’s neck than a flywheel giving it extra speed.

According to a report in the Wall Street Journal, in advance of IBM’s Q4 earnings release today, Lotus was the weakest performer in IBM’s software portfolio, shedding 6.4 percent of its sales volume in the first nine months of 2012.

It probably accounts for about $1 billion in annual revenue, according to estimates sourced by the WSJ, or one-sixth to one-fifth of IBM’s overall software business.

Ironically, Lotus once led the way toward today’s hottest enterprise technologies, the collaborative software that helps teams communicate and work together on projects. One of the success stories of that niche is Yammer, which Microsoft acquired last year for $1.2 billion. So, why is IBM sitting at the back of the pack instead of leading from the front?

Lotus, which made the first blockbuster “killer app” in the 1980s (Lotus 1-2-3, a phenomenally successful spreadsheet program), went on to create Lotus Notes, a powerful groupware suite that came out in the early 1990s before anyone had any idea what “groupware” was.

I used it extensively at several companies I worked with. Initially, it was mysterious and powerful. Like most end-users of Lotus Notes, I used it primarily as an email program. It had its quirks, but it worked. But there was another dimension to Notes, a powerful, programmable backend that let you create databases and workspaces for collaborative work, contact management, information sharing, and communication.

Today, we’d call it a collaboration tool or a corporate social-media tool, and it would be web-based and standards-compliant, like Yammer, Jive, and Huddle. In the absence of standards, Notes’ engineers had to invent everything themselves, making it a clever but proprietary solution.

But long before those web-based startups came along, Notes was already losing its cool. The client software became huge and bloated. It was expensive to implement and difficult to customize.

As the Internet gained popularity in the late 1990s, Lotus added standards, like POP3 and IMAP email interfaces. They didn’t do so well with the standards department, however, driving anyone who had to use an Internet mail client with a Lotus Notes mail server absolutely insane.

The upshot is that, just as the Internet became widely used, Lotus Notes became annoying and out of date.

Sure, it was still powerful, but unlocking the power of Notes often required specialist knowledge, giving rise to a sector of Notes consultants. No surprise that these consultants are having a hard time getting taken seriously today. The WSJ quotes a Notes consultant who complains about his reception:

“I go to a party, and I almost immediately get insulted,” says Eugen Tarnow, a director of the consultancy Avalon Business Systems, which sells the aging email software to businesses. “They say, ‘Lotus Notes, that’s still around?’ It’s no fun.”

Unfortunately, IBM’s engineers realized the importance of standards compliance too late and didn’t bake interoperability into Lotus Notes well enough or early enough. So, as powerful as Notes could be, it was and is ill-prepared to work in today’s API-rich cloud environment.

IBM has more modern social-media software, too, but only makes about $55 million per year from that segment of its business. So the challenge for IBM is to continue milking as much revenue as it can from Lotus, while gradually shifting the branding and the revenue to newer, sexier lines of business. One example: Renaming its annual Lotus conference, Lotusphere, as “Connect2013.” Yeah, that’ll help.

We’ll be watching to see if the earnings report sheds any more light on IBM’s efforts to turn Notes around. But as for me, I’m not holding my breath.

Photo credit: Andrew Mason via photopin cc

In building an intuitive and fluid alternative to PowerPoint, startup Prezi is helping presenters reimagine their productions. Tuesday, the company announced that it surpassed 10 million users, and released a PowerPoint import tool to help members transition from outdated presentations to the zooming future.

Founded in 2009, Prezi is a venture-backed startup that makes an unconventional, non-linear, web-based presentation and collaboration tool built around cognitive science and spacial-relativity constructs. Prezi members can collect all of their ideas in a single canvas, zoom in to tell a single story, and zoom out to highlight the bigger picture.

“Prezi is a tool where we move beyond the slide and think beyond ideas that don’t fit in an email,” Prezi CEO Peter Arvai said in an interview with VentureBeat. “We’ve found it to be a powerful way of conveying a message.”

Prezi's growth

The company’s recent hockey-stick growth supports Arvai’s statements. The web, mobile, and desktop tool has attracted more than 10 million users who are creating a “prezi” every second. Prezi also has more than doubled its user base in less than a year, is being used by people in every country around the world, and has attracted employees at 80 percent of Fortune 500 companies, Arvai added.

Tuesday, PowerPoint-switchers can make the complete leap over to Prezi. The company has released a PowerPoint import tool for uploading PowerPoint presentations and slides — all at once or one at time. During the import process, slide elements are coded into objects that can then be easily inserted into prezis.

“This was not a simple solution,” Arvai said. “We’ve been working on this for seven to eight months.”

PowerPoint import will be a popular feature for the startup if the response to an early beta test of the product is any indication. More than 200,000 PowerPoints were uploaded during a pilot period, Arvai said.

Prezi has offices in San Francisco and Budapest. The startup employs 70 staffers, has raised $15.5 million in funding to date, and is cash-flow positive.

Rather than make users learn new tools to work in remote teams, oneDrum is an online tool that seamlessly allows users to share and edit documents in programs such as Microsoft Xcel, Powerpoint and MS Word, spanning as far back Microsoft Office XP, which was released in 2002. With oneDrum, users get the fast and easy functionality of programs like Google Docs, but for the most popular desktop apps.

“We designed oneDrum to be insanely powerful and with as few compromises as possible,” says oneDrum co-founder and chief executive officer Jasper Westway. “Users want files to be accessible and editable offline, and co-authoring, file sharing and chat messaging are all experiences that people have become accustomed to and need for productivity.”

It’s important to remember that while personal computing races ahead, there are tens of millions of business technology users who are still stuck with applications their companies can’t easily update, because it would be cost prohibitive to update Windows software company-wide at an organization with 1,00o or more employees.

Without divulging names, Westway told us that one of America’s top five management consulting firms had approached them about using their software to make their business teams more efficient. While on a tour of Silicon Valley, with a delegation from the UK, oneDrum was meeting with everyone. Well, almost everyone. Westway says Microsoft was the notable exception, because they would be a direct competitor.

Westway says he sees a future for the company where oneDrum is the technology that companies use to make their desktop applications collaborative and social. Software developers who may use the product to collaborate with their teams may be building on top of it down the line, for consumers to use.

The oneDrum platform was developed in the Stirling University Innovation Park, adjacent to a college campus, and Westway says college students were regularly tapped as beta testers, both to see what could be broken, and also to gauge how people not involved in the creation would use it.

A Windows version of oneDrum is available today, with a Mac version expected to be launched in beta some time in Q4 of 2011.

[Image Credit: noonday/ShutterStock]

Google Wave was a colossal flop. So why are the founders of Stypi trying to revive the idea of Wave-style collaborative software?

We caught up with the Stypi team at VentureBeat’s San Francisco office and asked them exactly that. This Y Combinator-backed startup is revisiting the concept of cloud-based, collaborative work. It enables multiple people to work on the same document together in real time by sharing a link amongst themselves.

This is familiar ground for those of us keeping a close eye on the tech space. Google Wave launched in mid-2009 as a “communication tool of the future.” While press and users alike were initially ecstatic about the potential of the product, few people could actually figure out how to use it, and Google shuttered Wave just one year later. Late in 2010, Wave was made an open-source Apache project.

The Stypi team is starting out a bit differently. Rather than debuting a feature-filled, bells-and-whistles product to a worldwide audience of everybody, the current version of Stypi begins with a simple, pared-down, developer-oriented feature set. In the near future, the team hopes to bring collaborative, web-based features to all kinds of Internet users — normal folks who simply need to work on documents together.

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The new Office is geared toward small businesses, and businesses with remote employees who telecommute. It integrates cloud services like SharePoint and Exchange with its traditional Word and PowerPoint office applications, bringing everything online with a subscription service.

“End users aren’t going to see much of a difference, they’re using the same tools they use today,” said Chris Capossela, senior vice president of the Microsoft’s Office division. “Word on the PC, phone and browser are really unchanged — they’re just connected to the Internet.”

Office 365 brings video conferencing and a public-facing website provided by Microsoft, as well as intranet software for internal collaboration. The service will come as a “basic” package for small businesses, or an a la carte pricing package for larger businesses that only need specific services. It will be a subscription-based service, unlike Google Apps, at $6 per user per month for the basic package. For larger businesses, Office 365 can cost anywhere from $2 to $27 per user per month, based on the services they purchase.

Microsoft has come under a little bit of pressure from companies like Google that are offering similar Web-based services that have become de facto collaboration tools for businesses with employees strewn across multiple locations. As companies have become more virtual and business collaboration services like Yammer have become increasingly popular, cloud services have become a necessary strategy for enterprise software providers like Microsoft.

Office 365 will launch next year, along with the traditional educational discounts for students and faculty. A beta program is launching today at noon in the U.S. and a few other countries.

Chatter was marketed more as an add-on to Salesforce’s customer relationship management platform, rather than a new innovation to help its customers with business collaboration, he said. That made it difficult to attract new users and help the service grow into something that could generate a lot of revenue for Salesforce.

“The way you get the most value out of a platform like Chatter or Yammer is in making them as pervasive as you possibly can,” he said. “Salesforce has made it hard for people who are not Salesforce customers to get on the platform, use it, get value out of it.”

Meanwhile, Yammer recently revamped its business micro-blogging software to behave more like a Facebook for enterprise users and has seen a lot of success as a result. With Yammer, it’s free to join, and the company makes money off subscription models for premium services and off IT servicing, Spain said.

Chatter is available to people who already use Salesforce’s CRM software, and companies have to pay $15 per user per month to be able to access Chatter without the Salesforce CRM software. That makes it hard to justify introducing the business collaboration service into a work environment that hasn’t had any time to try it out — whereas Yammer users can try it out before they invest in the software’s premium services.

“Because of the way Salesforce approaches the Chatter business model, it’s hard to justify,” he said. “Until you make it easy, and in my opinion free, to get access to it you’re never going to maximize your value.”

Salesforce, one of the largest CRM software providers, was one of Emergence Capital’s first investments. Emergence also invested in Yammer, which launched two years ago. Yammer has already attracted more than 90,000 companies, and about 80 percent of the largest companies in the world on the Fortune 500 list use the social enterprise network.

Sococo is one of 70 companies chosen by VentureBeat to launch at the DEMO Fall 2010 event taking place this week in Silicon Valley. After our selection, the companies pay a fee to present. Our coverage of them remains objective.

Most of a conversation is made up in body language and tone. Unfortunately for the denizens of the Internet, that means one of the most ubiquitous forms of communication, instant messaging, loses a fair bit of meaning in transmission.

Today at the DEMO conference, Mountain View, Calif-based Sococo is unveiling its first commercial service, Team Space, a communication tool that provides some visual and sensory cues to make communication more efficient.

Sococo was founded in 2007 and currently employs 25 people, including CEO David Van Wie, the former co-founder of InterTrust Technologies — an early developer of digital rights management, or DRM, software. The company said it is privately funded, and would not disclose its funding details.

Its direct competitors span pretty much all avenues of Internet communication. Team Space occupies the same space as just about any messaging tool, whether it is VOIP like Skype or just text like Google Talk. But Sococo offers users a persistent communications channel that requires no scheduling or coordination — drop in and drop out. Connections are managed with peer-to-peer and cloud-based software.

http://c.brightcove.com/services/viewer/federated_f8/980795693