IBM Bets $1B on Communications Strategy

IBM will pour $1 billion into efforts to better compete with rivals like Microsoft in unified communications, company executives said today during a press conference, during which they also talked up an enhanced version of IBM’s Lotus Sametime communications platform.

At stake for IBM (NYSE: IBM), Microsoft and other contenders is dominance in an increasingly lucrative area of enterprise software and services, which industry researcher IDC has said could total $17 billion by 2011.

IBM executives agreed such unified communications (UC) tools are becoming “critically important” for business, particularly as work environments become more complex.

“There is a market and synergy change taking place in the workforce,” said Mark Rhodin, IBM Lotus’s general manager. “It’s a distributed and virtualized environment and we aim to make it easier to thrive in this type of environment.”

The hefty research and development investment — which will be split up over three years — is a shot aimed at keeping competitor Microsoft at bay.

Microsoft, which commands a huge portion of the enterprise communications software space with its Exchange Server offering, is working to parlay its success with Exchange and its popular Office productivity suite into supremacy in UC.

“Our approach is very different,” said Steve Mills, IBM’s software senior vice president. IBM is a “carrier grade” vendor, he said, which can provide the reliability, scalability, security and backup/recovery requirements needed with a UC infrastructure.

But its chief rival certainly hasn’t been idle in its own quest to lead the UC market. In October, Microsoft launched a new edition of its platform, Office Communications Server.

The product supports VoIP, video, instant messaging, conferencing and presence and integrates with Microsoft Office applications. Nortel Networks, Ericsson and Mitel Networks also signed on to release applications that tie into the Office Communications Server.

Central to IBM’s response will be the upcoming launch of a new Lotus Sametime version, slated to debut March 28. Lotus Sametime Advanced, as it’s known, will add additional tools for knowledge sharing and data-retrieval. Features include persistent group chat, community tools, instant screen-sharing with IM users.

“It’s about rapid connection to people, to information and displaying that information in context to the work that people are doing,” Mills said.

IBM executives are also betting that a focus on Sametime’s extensibility will win converts. During today’s press conference, several stressed the importance of its ecosystem of 400 partners and IBM’s dedication to ensuring easy integration with other enterprise apps and services.

For example, IBM today announced VBrick Systems will be introducing a video plug-in for Sametime, adding support for streaming live broadcasts and on-demand digital video content within the application.

In addition to the upcoming Sametime Advanced launch, IBM also recently detailed further UC-related efforts, unveiling plans at Lotusphere for integrating voice and data communications with Lotus Connection, and showing off its social computing platform.

One industry watcher said IBM’s $1 billion commitment to those strategies will be critical for Big Blue’s market hopes.

“This is what IBM needs to do to maintain the viability of Lotus,” said Charles King, principal analyst at Pund-IT, adding that Lotus has a “minority presence” in U.S.-based enterprises compared to Microsoft’s Office and Exchange solutions.

“But what IBM has always done well is put seed money into a platform to get it up and running and draw developers into play,” he told, citing grid computing, high-performance computing and Linux platforms as earlier successes.

While acknowledging that “true unified communications” is at an “embryonic” stage in terms of what businesses are doing today, IBM — like others in the space – is wagering that will change in a just a few years, with UC technology ultimately permeating all business processes.

“It’s about having everywhere, anytime access” to others, Mills said, adding UC would appeal to businesses eager to take the “latency” out of decision-making. He cited the example of several customers who successfully adopted UC, including Colgate Palmolive, which halved time-to-market cycles by accelerating product development processes using the technology.

“It’s about the tight connection between data, communications and being effective wherever you are,” he said.

King has similar expectations for the technology’s appeal and integration into business processes.

“We’re in the early stages but I can see it happening within the next two to three years. Adoption, though, will happen incrementally,” he said.

News Around the Web