Directory:Lotus Software

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Lotus Software
Lotus Software logo
Type Public
Founded 1982
Headquarters Cambridge, Massachusetts, US
IndustryComputer software
ProductsLotus 1-2-3
Lotus Marketplace
Lotus Notes
Lotus Improv
Lotus Sametime
Contact []
Reference {{{reference}}}

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Lotus Software (called Lotus Development Corporation before its acquisition by IBM) is an American software company with its headquarters in Cambridge, Massachusetts. Lotus is most famous for its groundbreaking Lotus 1-2-3 spreadsheet application, which was the killer app in the early days of the IBM PC which helped spread the adoption of the PC. In more recent years the company provided one of the more powerful groupware systems, Lotus Notes, which became fairly popular. It was the strength of Notes in the marketplace that led to IBM purchasing the company in 1995 for $3.5 billion.


Lotus was founded in 1982 by partners Mitch Kapor and Jonathan Sachs. Lotus' first product was presentation software for the Apple II known as Lotus Executive Briefing System. Mitch founded Lotus after working as head of development at VisiCorp (Marketers of VisiCalc) and selling the rights to his products; VisiPlot and VisiTrend to VisiCorp.

Soon after they produced an integrated spreadsheet and graphing program. Even though IBM and VisiCorp collaborated on VisiCalc for the PC and VisiCalc shipped simultaneously with the PC, Lotus was a superior product. Lotus released Lotus 1-2-3 in January 1983. The name referred to the way the product could be used, or at least so they claimed, as a spreadsheet, graph generator and database manager. In fact the later two functions were less frequently used, but users were less interested in these features anyway and used 1-2-3 as the most powerful spreadsheet available. Sales were huge, vaulting Lotus to be the largest independent software vendor in the world.

In 1982 Jim Manzi came to Lotus as a management consultant, and became an employee four months later. In October 1984 he was named President, and in April 1986 he was named as CEO, succeeding founder Mitchell Kapor who had become inactive in the company. In July of that same year he also became Chairman of the Board. Manzi would remain at the head of Lotus well into the 1990s.

As the popularity of the personal computer grew, Lotus quickly came to dominate the spreadsheet market. Lotus introduced other office products such as Ray Ozzie's Symphony in 1984 and the Jazz office suite for the Apple Macintosh computer in 1985, which did very poorly in the market. Also in 1985, Lotus bought Software Arts and discontinued its VisiCalc program.

In the late 1980s, Lotus developed Lotus Magellan, a file management and indexing utility. This period also saw the release of Manuscript, a word processor, Lotus Agenda, an innovative personal information manager (PIM), and Improv, a groundbreaking modeling package for the NeXT platform. Improv flopped, but none of them made a significant impact on the market

In the 1990s, to compete with Microsoft's Windows applications, Lotus had to buy in products such as Freelance Graphics, Ami Pro (word processor), Approach (database), and Threadz, which became Lotus Organizer. Several of the these (1-2-3, Freelance Graphics, Ami Pro, Approach, and Lotus Organizer) were bundled together under the name Lotus SmartSuite. Although SmartSuite was bundled cheaply with many PCs and may initially have been more popular than Microsoft Office, Lotus lost its dominance in the desktop applications market with the transition to 32 bit applications running with Windows 95. Lotus was late in delivering its suite of 32 bit products and failed to capitalize on the transition to the new version of Windows. It now has very little market share. The last significant new release was the SmartSuite Millennium Edition released in 1999. All new development of the suite was ended in 2000 with ongoing maintenance being shifted overseas.

Lotus began its diversification from the desktop software business with its 1984 strategic founding investment in Ray Ozzie's Iris Associates, the creator of its Lotus Notes groupware platform. As a result of this early speculative move, Lotus had gained significant experience in network-based communications years before other competitors in the PC world had even started thinking about networked computing or the Internet. Lotus initially brought Notes to market in 1989, and later reinforced its market presence with the acquisition of cc:Mail in 1991. In 1994, Lotus acquired Iris Associates. Lotus's dominant groupware position soon faced stiff competition from Microsoft Exchange, but Notes's success in large enterprises attracted IBM when it needed to replace its failed OfficeVision/2 software.

Lotus was involved in a number of lawsuits, of which the most significant were the "look and feel" cases which started in 1987. Lotus sued Paperback Software and Mosaic for copyright infringement, false and misleading advertising, and unfair competition over their low-cost clones of 1-2-3, VP Planner and Twin, and sued Borland over its Quattro spreadsheet. This led Richard Stallman, founder of the Free Software Foundation, to found the League for Programming Freedom {LPF) and hold protests outside Lotus Development offices. Paperback and Mosaic lost and went out of business; Borland won and survived. The LPF filed an amicus curiae brief [1] in the Borland case.

In the spring of 1995 IBM launched a hostile bid for Lotus with a $60-per-share tender offer, when Lotus' stock was only trading at $32. Jim Manzi looked for potential white knights, and forced IBM to increase its bid to $64.50 per share, for a $3.5 billion buyout of Lotus in July 1995.[2] On October 11, 1995 Manzi announced his resignation from Lotus (by then known as the Lotus Development division of IBM). He left with stock worth $78 million.


It has been repeatedly alleged that in 1997 the NSA had backdoored the export version of Notes, but this is a mis-characterization of what actually happened. Prior to that year, Lotus had been restricted from exporting software that used encryption keys that were longer than 40 bits by United States law. Under an agreement with the US government, Lotus was allowed to start exporting 64 bit keys, so long as 24 bits of each key were recoverable using a special key issued by Lotus to the NSA. The result was that the newer version of Lotus Notes provided stronger protection against industrial espionage than any previous version had been allowed to provide, and it provided no less protection against decryption by the NSA than the previous versions had given. (US export regulations were changed in 2001, so current versions of Lotus products are able to use longer keys and they no longer provide NSA with access to any key bits.)

Corporate culture

Following in founder Mitch Kapor's footsteps, Lotus has always had a reputation as a progressive company. Lotus's first employee was Janet Axelrod who created not only the Human Resources organization but was the central figure in creating the much respected Lotus culture. As she continued to build her organization and play a central role with the senior management, she eventually hired Freada Klein as the first Director of Employee Relations to help with her emphasis on ensuring a fair workplace. In 1986, Lotus was the first major company to support an AIDS walk. In 1990, Lotus opened a daycare center for the children of its employees. In 1992, Lotus was the first major company to offer full benefits to same-sex partners. In 1998, Lotus was named one of the Top 10 best companies to work for working mothers by Working Mother magazine.

Lotus employs over 4,000 employees worldwide, and IBM's acquisition of Lotus in 1995 was greeted with apprehension by many Lotus employees, who feared that the corporate culture of "Big Blue" would smother their creativity. To the surprise of many employees and journalists, IBM adopted a very hands-off, laissez-faire attitude towards its new acquisition.

However, by the year 2000, the inevitable assimilation of Lotus was almost complete. While the mass employee defections that IBM so feared did not materialize, many long-time Lotus employees did complain about the transition to IBM's culture (IBM's employee benefits programs, in particular, were singled out as inferior to Lotus's very progressive programs).

Lotus's headquarters in Cambridge used to be divided into two buildings, the Lotus Development Building (LDB) (on the banks of the Charles River) and the Rogers Street building, located adjacent to the CambridgeSide Galleria. However, in 2001, then President and General Manager, Al Zollar decided not to renew the lease of LDB. The subsequent migration of employees across the street (and into home offices) generally coincided with what was probably the final exodus of employees from the company.

The integration of Lotus into IBM continues. Today, it is a software brand within IBM's Software Group. Within Lotus, there is still a strong sense of unity. Many employees formerly within Lotus, though they have moved into and embraced the rest of IBM, still identify with Lotus and see themselves as part of the Lotus community.


Mitch Kapor got the name for his company from 'The Lotus Position' or 'Padmasana'. Kapor used to be a teacher of Transcendental Meditation technique as taught by Maharishi Mahesh Yogi. Incidentally, competitor Borland code-named their Quattro Pro software "Buddha", as the software was meant to "assume the Lotus position" and take over Lotus 1-2-3's market. There also was (circa 1995) the assertion by one Lotus cc: Mail employee that "Quattro Pro" was taken from the Spanish word "cuatro", or number four. Thus, "Uno-Dos-Tres-Cuatro" was a spin/play on Lotus 1-2-3. Template:Fact