IBM Exits the Collaboration Market, Sells Notes to HCL

by Jim Lundy

In a final culmination of the collaboration era at IBM, on December 6th, 2018, IBM announced it was selling Notes, Domino, Portal (on-premise), Commerce (on-premise), and other assets to HCL for $1.8 billion.

To us, this move isn’t about capitalizing on the future revenue potential for these software assets—it’s about a quick exit for IBM. This blog discusses IBM’s exit from collaboration technology and its renewed focus on cloud and AI.

The Collaboration Wars

When IBM bought Lotus, it was king of the hill and had many of the best customers in the world. Things changed after Microsoft Exchange launched. Having managed collaboration analysts for years, I also lived the collaboration war era—also referred to as the email wars, which was a showdown between Notes mail and Outlook/Exchange. The competition was fierce and in the end, Microsoft won. In reality, IBM probably should have exited the business a few years ago, after the IBM Software Group was broken up.

It is ironic that IBM decided to sell now—Domino was just relaunched and on a recent webcast, IBM had over 7,000 attendees. IBM indicated that it had to decide on what it wants to focus on and these markets were not part of that core.

A Surprise Sale: Portal and Commerce

What was not discussed in the IBM press release was the sale of Commerce and Portal. Websphere Portal is still dominant in many banks and it is a money maker. At the same time, demand for Commerce is greater than ever.

These changes, along with the sale of Unica (which was only bought a few years ago) pretty much decimate the IBM Watson Experience division.

The Future of IBM Is Cloud and AI

These moves point to a clear future for IBM: cloud and AI. IBM is going all-out on AI, leading with IBM Watson. It’s also pushing hard with Watson Conversation and the conversational AI (i.e., chatbots) technology that it offers out-of-the-box; it can also assist customers with building their own.

Even with some acquisitions, such as SoftLayer a few years ago, IBM is behind in cloud. Its biggest competitors are Amazon AWS, Google Cloud Platform, and Microsoft Azure. IBM has chosen to focus more on its traditional businesses and in cloud—but AI will be its biggest opportunity. IBM is also competing in blockchain and this, too, presents a strategic opportunity for the company.

By letting go of IBM Notes and its other collaboration assets, and honing in on AI and cloud, IBM is in a better position to start consolidating its resources and take on its competitors. This is a good move in today’s software markets, which are increasingly cloud-based.