Why IBM's Sale of Lotus Notes to HCL is Positive for Everyone

By Nigel Cheshire

Ten years ago, an Indian company called Tata Motors acquired two car manufacturing businesses from Ford Motor Company: Jaguar and Land Rover. After years of decline as part of British Leyland, the two British car brands, both steeped in history but struggling to compete, went through a succession of acquisitions, including British Aerospace and BMW before coming together under Ford’s ownership in 2000.

Ford put the two brands together with Volvo, Lincoln and Aston Martin to form a group of luxury brands that was supposed to contribute more profits to the group, but that plan never came to fruition. Allegedly, Ford tried too hard to integrate the luxury brands into its global product set, which meant that it never managed to turn a profit from Land Rover or Jaguar. All five of its premium brands were sold to different buyers in 2008, with Jaguar and Land Rover going to Tata.

At the time, there was some skepticism as to whether Tata, an Indian company whose experience in the industry was primarily based on inexpensive cars targeted to the domestic Indian market, could compete in the premium luxury segments that Jaguar and Land Rover operated in.

In fact, as you are probably aware, Tata’s ownership of the two brands has been nothing but a success story. Sales have increased by almost 150%, the last eight years have all been profitable, and JLR is now the UK’s largest and most successful automaker. (Although it’s Indian owned, most of the manufacturing is still done in the UK.) Unlike Ford, Tata’s approach has been to invest, but keep the companies as stand-alone entities.

You can probably guess where this post is headed. Last week, IBM and HCL announced HCL’s purchase of a gaggle of software products from IBM, amongst which were IBM Lotus Notes and Domino.

Although I’ve been known to make some dodgy analogies in the past, there are some parallels between this deal and the Tata-JLR deal from 2008. HCL is an Indian company with limited experience in the collaboration application platform space, although it has of course been responsible for the development of Lotus Notes and Domino since 2017. And, like the acquisition of JLR by Tata, there is some skepticism in the press about the deal, and HCL’s share price even dropped by more than 7% on the day of the announcement.

On the positive side however, HCL is far better placed and more incentivized to put development and marketing resources into Notes than IBM was. IBM has been accused of not paying enough attention to Notes & Domino in the past decade or so: in this Techcrunch article, analyst Alan Lepofsky says “HCL is far more interested in Notes/Domino than IBM has been for a decade.” He goes on to say that HCL is “investing heavily, trying to rejuvenate the brand.”

On his own blog, Lepofsky is a bit more circumspect, but makes some good points in favor of the deal:

  • Connections and Websphere Portal are included in this deal, which means that HCL now essentially owns all of what previously fell under the ICS banner at IBM. That gives HCL more scope for integrating the collaboration suite of products and developing them in parallel.

  • HCL now has responsibility for product sales and marketing, again giving them freedom to innovate in ways that weren’t possible under the terms of the 2017 deal.

  • HCL has the freedom to rebrand some of these products, potentially shedding some of the baggage that comes with a 20+ year old product portfolio.

For many of us, this announcement raises as many questions as it answers. Current IBM Notes/Domino customers will all eventually transition across to HCL. Some have speculated that some of those customers may not make the transition, seeing this as a reason to migrate off the Notes & Domino platform. Only time will tell.

Here at Teamstudio Towers, we’re seeing nothing but positives. We’ve already seen key IBM-ICS employees transition over to HCL and we can only assume that others will follow and continuity will be maintained. We have seen a significant uptick in development effort since HCL took over, with the release of Notes & Domino 10 and a commitment to another major release of the product in 2019. There’s even been a strong suggestion of a new, modernized replacement for the Notes client, named HCL Places. And, HCL has just announced that it is putting together a partner program to help transition the strong ecosystem that exists around the ICS products. If HCL is prepared to invest in the platform without trying too hard to integrate it into some larger entity, then this will likely turn out positive for everyone: customers, partners and HCL themselves.

So for us, it’s onwards and upwards. We look forward to watching what HCL can do with the venerable Notes & Domino platform once it has complete ownership of the product. And we sincerely trust and believe that, like Tata’s acquisition of JLR, this will be another Indian success story!