Pace 72 PG WEEKNAPPLIGATION DEVELOPMENT DECEMBER 4, 1989 This is the sixth in a series of articles on the strategic dt: rections that Lo- tus is pursuing, and the signifi- cance of those strategies to or- ganizations planning for the 1990s. Lotus Develop- ment Corp. has become synony: mous with its 1- 2-3 spreadsheet, whose success has dwarfed other Lotus products. 1-2-3 was well-designed and has proven to be high- ly durable. Today, with significant changes occur- ring in the industry, 1-2-3 is at a cross- road. Two long-overdue upgrades have finally been shipped, and to a large ex- tent the reaction of the installed base to these new products will define the fu- ture for Lotus. The momentum of 5 million users and millions of 1-2-3 applications dictate that change will take place slowly; but even slow movements of this large base produce big numbers in sales. For exam- ple, upgrading to release 3.0 or release 2.2 by 20 percent of the installed base would represent almost 1 million sales. The strategy devised by Lotus for its spreadsheet products takes advantage of its installed base and positions the company to respond to both technologi- cal and market dynamics. Lotus' strategy with respect to spreadsheets appears to be concentrated... in the following areas: € Protecting and extending the market base. e Responding to the needs of character: based users with larger and more com- plicated spreadsheets, faster execution and better output. ' Solving the "islands of computing" problem by offering highly compatible spreadsheet products on most major platforms under all popular operating systems, including mainframes and mini: computers. ' Offering several levels of data sharing, ranging from simple file compatibility to dynamic exchange of data. " Providing seamless data sharing and application interaction under OS/2 for both Lotus and other software products. ' Integrating other Lotus products such as GraphWriter [Il and Manuscript to make them more valuable when work- ing with 1-2-3. " Continuing to extend spreadsheet products with add-ins developed using a new programming facility called Lotus Opeka Toolkit for release 3.0, [his strategy won't be easy to imple- mefit and is unlikely to be totally toe Cessful, but there are indications that during this highly dynamic period of Change, Lotus has positioned itself to suecessfully meet the challenges and op- portunities of the 1990s. introduction of the Intel 286 mi- Lotus' Future Contingent on Reaction to New Products sheets. Unfortunately, an enhanced op- erating system for this processor, OS/2, was not yet available, making it impos- sible to take full advantage of the mi- eroprocessor's power. Under OS/2, as much as 16M bytes of memory can be accessed. Until OS/2 is commonly in use, the majority of users will expect soft: ware products to operate in the limited DOS environment. For the vendor, this discontinuity in hardware/software capabilities creates a difficult marketing problem. Does the vendor develop highly functional soft- ware products (reguiring the capabili- ties of OS/2) and sell them to a small but growing market? Or does the vendor ' Apple Computer Inc.s Macintosh has achieved a market share of about 15 percent. e Approximately 25 percent of PCs are currently networked. Expectations are that within two years approximately 50 percent of PCs will be networked. € OS/2 is at least one year behind initial projections for market penetration. € The Unix operating system is continu- ing to gain acceptance as an environ- ment for business computing. Lotus resolved the problem of discon- tinuity between hardware and soft. ware by incorporating a DOS extender from Rational Software in release 3.0. DOS extenders (otherwise known as How Spreadsheets Have Influenced Changes In Hardware and Software 1982 1989 1-2-3/1A O t-2:3wasa major reason for the initial popularity of the IBM PC. Apple 1 Presentation Manager, OS/2. DOS, DOS Extenders; 286, 386 The future includes a cross-platform strategy wherein 1-2-3 will reside on zi muttiple N platlorms. Future Platforms Expanded Memory Speciticalion 1-2-3/3.0 As spread- sheet applica- tions became larger and more complex, a shift to 286 and 386 machines has occutred. John Avakan There are indications that during this highly dynamic period of change, Lotus has positioned itself to successfully meet the challenges and opportunities of the 19905. constrain the functionality of the prod- uct so that it will operate in the popular DOS environment? Lotus did not anticipate facing this di- lemma during the development of re- lease 3.0, but it was guickly discovered. Lotus first announced release 3.0 on April 27, 1987, The personal computer market has always been unpredictable, and long«range projections have rarely been very accurate. Changes that have occurred since 1-2- 3 release 3.0 was announced include the following: base of 8088 and 8086 eclipsed 989. ma: by 286 Be DE protected-mode technology) can pro- vide access to 16M bytes of memory while still operating under the DOS en- vironment. 'The figure outlines the major shifts in hardware and operating systems, driven to a large extent by the need to work mo ea, lese shifts occurred, investments in spreadsheet products, applications and training grew so large that solutions unable to protect these investments 0: strategy that have affected the delivery of its new spreadsheet products. As soft- ware has become more feature-laden, limitations on memory size have forced as much as 40 percent of the develop- ment process to be consumed with opti- mization of code. Along, with code, a reasonably sized spreadsheet must fit within 640K bytes in the DOS environment. This is a tech- nical problem shared by all software de- velopers and is one of the primary rea- sons that applications developers seek alternative operating systems. Exacerbating this problem is an ele ment of Lotus' strategy that places 1-2-3 on multiple platforms. Maintenance and enhancements on a software product this size, running on multiple platforms, are almost impossible if the core code modules are not in a platform-indepen- dent common language. To implement the multiplatform strat- egy, it was necessary to develop the new product in the C language. The re- sulting increase in code size (vs. the more compact Assembler implementa- tion) along with the addition of new features caused release 3.0 to exceed the targeted memory limits and miss the an- nounced delivery dates. During the lengthy development pro- cess of release 3.0, the microcomputer s industry was not static. Despite the fact that the operating system for the 286 | chip is lagging far behind the hardware, | corporate purchasers have moved guick- ly to the 286 with 1M byte of memory as a standard for all new purchases. Fewer than 20 percent of new sales are of the older 8088 and 8086 ma- chines. It is estimated that by 1991, 286 personal computers. 1 Challenges to 1-2-3 Even with the product delays, com- petitive threats, changing hardware en: vironments and delayed operating sys- tem availability, 1-2-3 continues to be the best-selling spreadsheet in the world. There are currently more individuals who use 1-2-3 that any other software product. Lotus will continue to face tough mar- keting challenges and strong competitive threats, but the company is now better eguipped to exploit more advanced com- puting platforms, use improved operat- ing systems and serve the future needs of its huge customer base. In the final article in this series next week, Fl discuss personal information managers, a new software category pio- neered by the Lotus Agenda product, that are used to manipulate text and ideas. H To learn more about the subject of these articles, please call The James Martin Report, an information service updated guarterly, at (800) 242-1240. For information on seminars, please contact (in the United States and Can- ada. Technology Transfer Institute, were unpalatable. In short, 1-2-3 had 741 10th St. Santa Monica, Calif. woven itself so successfully and so thor- 90402 (2]3) 9394-8305. In Europe, con- oughly into corporate computing cul- tact Savani, 2 New St, Carnforth, tures that few people wanted to Lancs, LAS 9BX United Kingdom 'There are two elements of Lotus' (0524) 734 505.