Lotus Notes Market Share

“An approximate answer to the right problem is worth a good deal more than an exact answer to an approximate problem.” — John Tukey

The issue of market share has been long debated within the Notes community. It reached a peak just over ten years ago when Exchange first gained a lead over Notes/Domino in the “Enterprise email” market. The market share for Notes continues to be questioned today. Sadly not as part of a debate over market leadership but that of market relevance. Red Pill Now’s customer’s regularly seek our guidance about the market position (and direction) of Notes to determine how best to invest in the future. For this reason we have tried to put as much science as possible into an area that lacks a lot of credible data to help formulate a picture of the Notes market now and moving forward.

Note: Red Pill Now makes no claim to be a market research company. The following analysis is used for the purpose of understanding the underlying dynamics of the market rather than accurately measuring market positions of IBM and its competitors.

Notes Revenue

For a period of time IBM would regularly quote the total number of Notes licenses it had sold. This stopped around 2009 when the number reached 150 million. As many analysts have noted this statistic was never a true indicator of current market position as it allowed IBM to place a greater emphasis on past sales when IBM was the clear market leader.

At the end of 2015 it is estimated that IBM had 36,000 active Notes/Domino customers, each having an average of 1,000 user licenses at an average license fee of $25 per user per annum. This equates to an annual revenue of $900 million.

Market Size

The market for Notes has long been defined at being the “Enterprise Mail Market”. This is widely held to represent organizations with 500 employees of more. We could debate the merits of this market definition as it ignores the many smaller companies that use Notes and does not account for the significant use of Notes for application development. In fact, it is estimated that 40% of IBM’s current customers for Notes now use the product for applications only.

There are an estimated 16,000 companies in the US and 462,000 worldwide that meet the definition of “Enterprise”. Annual revenue for Enterprise Mail for 2015 has been estimated at $5 billion.

Market Share

For enterprise mail, our best guess of IBM’s market share is 12% (based upon revenue). There may be as many as 20% of enterprises using Notes in one form or another but they are either no longer paying maintenance and/or using a combination of Notes/Domino with other mail platforms such as Exchange or Google.

Outside of the Enterprise…. well lets just say Notes doesn’t rate among the top ten mail clients.

Note: I am sure there are many at IBM who believe their market share is higher than 12% just as I know there are many at Microsoft, Google, and Salesforce who claim it is even less.

Market Momentum

At a time when estimated expenditure on email is growing by around 20%, it is believed IBM’s revenue for Notes is falling at a rate of 10%. So Notes clearly continues to lose market share. IBM’s market share for Notes peaked at 60% in 2006 and has steadily fallen to 12% while Microsoft’s market share has grown over the same time to 80%. With the trend towards cloud-based email services, Notes’s position as the number two email platform will come under increasing pressure from Google and others.

Verse was released last year to much fanfare. It addresses a number of the challenges faced by the Notes client in the modern IT landscape but it is total marketing hype that is a “New way to work”. The initial indications are that its appeal will be largely limited to the existing base of 23,000 IBM customers still paying IBM to use Domino as a mail server. IBM will be able to cite a few new gains for Verse but these will not come even close to matching the number of companies now moving away from Notes/Domino.

Ramifications for Mail/Social

Perhaps the biggest issue that IBM faces with its market share position is the pressure it places on IT executives for Notes shops to follow the crowd and also move away from Notes. There are fewer and fewer ISVs building solutions that integrate with Notes/Domino. IBM has had to respond with Traveler, a technology that makes Domino servers look like Exchange servers so that mail can be delivered onto iOS devices and (using Project Hawthorn) Outlook clients.

The same market share dilemma holds true for Connections. The primary market for Connections is that small group of 23,000 organizations still paying to use Notes mail. Many of the ISVs (including Red Pill Now) are developing social tools that integrate with Office 365, Box, Drop Box, Jira, Jive etc. leaving Connections out in the cold. Verse and Connections are great products technically but IBM is struggling to make them relevant outside of those 23,000 companies.

Ramification for Notes Applications

If you went to the IBM web site for Notes you could easily think that Notes was an email product only. As many of us know applications have long been a significant part of Notes. As enterprises move away from the Notes client for mail, Notes applications are coming under significant pressure to be replaced by something else that doesn’t require the Notes client. Flash is not the only thick client now under threat.

Notes Client

Even though the last point release of Notes (9.0.1) was over two years ago many organizations continue to rely on the Notes client for applications. As many as 50,000 organizations are still using Notes to provide access to 10 million applications. Just like COBOL, many of these applications may still be around in their current form in 20 years time because the cost to replace each and every one is too expensive. A market should continue to exist for Notes (client) developers for quite some time. Just like an aging car, organizations need to take care to maintain these applications on a regular basis or risk having them break down at the worst possible time. It is a shame that IBM has done so little to enhance the Notes client since the release of Notes 8.0 in 2007. But for the many applications written prior to 2007 there are still a great many ways to enhance those applications to keep them looking “OK” and running for a few more years.

XPages

The future of XPages is tightly tied to Notes. There is no sign that IBM plans to utilize the technology behind XPages in any of its other product offerings (including Connections). And while XPages is now offered as part of BlueMix, it is unlikely this is going to appeal to an audience outside of the existing Domino/XPages development community. For many organizations XPages is still the fastest (and cheapest) way to take existing Notes client applications and make them available from modern Web browsers. So what happens as the revenue base from Notes continues to decline? How long will IBM continue to invest in the development of XPages, a proprietary server-based web development platform? I personally would be surprised to see IBM continuing to invest in this platform beyond the next five years. As this happens a new market will develop for migrating applications from XPages to something else.

Conclusions….

There is nothing earth shattering or new in the numbers. Deep down most of us have known the general direction Notes has been taking for the past ten years. We can debate the numbers, but ultimately organizations have to make a decision on how they will respond to the global warming of application development. Neither the Notes client or XPages development seem to offer a long term solution for existing Notes databases. I have been a big fan of Notes over the past 20 years but the ship is sinking and most companies probably have five years left to find a lifeboat to save their applications.

2017-07-28T20:22:17+00:00

About the Author:

Peter Presnell
CEO at Red Pill NOW. Strategist, technologist, blogger, presenter, and IBM Champion 2011/12. For years many companies have invested heavily in the Notes/Domino platform and I see my role as helping to find paths forward for that investment.

10 Comments

  1. Glen January 28, 2016 at 9:33 am - Reply

    I’ve worked for companies who have used Notes at two or three releases behind the latest and who didn’t pay maintenance for years. And other companies who’ve migrated to Exchange and Sharepoint years ago but are still running Notes applications.

    If your happy with your old Notes app then you don’t need to set yourself a time limit to migrate even if IBM call it a day. The old Domino server in the corner will keep on running regardless of updates, point releases or IBM’s so called “support”.

  2. Peter Presnell
    Peter Presnell January 28, 2016 at 12:40 pm - Reply

    @Glen, I used to think the same thing…. there is no rush to replace existing Notes applications if they work. But lately there have been a few things happen that have changed my mind. One of these is the devices that people now use. Not only is there an issue with accessing Notes client applications from mobile phones running mobile OS but we are starting to see larger devices appearing with retina displays on which Notes applications just look terrible. If this is not addressed in a timely manner not only does the reputation of the Notes product go down the toilet but so too does the reputation of the IT department that supports them. Customer expectations have been changed in a substantial way with the advent of the “App Store” and 99 cent apps. IBM are investing heavily to make their more recent applications like Verse and Connection look good for a reason. It is now being demanded by their customers. They have admitted they can no longer “ship sh*t”.

    • Rob Kirkland September 8, 2017 at 5:54 pm - Reply

      With the release of Notes 9.0.1 FP9, IBM finally fixed Notes’s “retina display” issue that you mentioned above. Notes now properly resizes all objects, no matter the display resolution and settings. Better late than never, eh?

      • Peter Presnell
        Peter Presnell September 8, 2017 at 9:17 pm - Reply

        Yes, its certainly better late than never. One of the downsides of working with a platform on its way out is that each wait gets longer than the one before. Responses to new technology such as retina displays don’t appear in the early stages of adoption but well after they have become mainstream.

  3. Adam Osborne January 31, 2016 at 11:20 pm - Reply

    Thanks for taking the time to put this together and sharing your insight on this. As always it is very enlightening.

  4. […] Presnell from RedPillNow.com posted a blog that attempts to answer the question “what is the Lotus Notes Market Share?”.  In that post he suggests that in 2009 IBM had approximately 60% of the enterprise […]

  5. Red Pill Now - Beyond XPages June 6, 2016 at 2:08 pm - Reply

    […] some time ago, but there has not been a new release of Notes/Domino since 2013. With IBM’s market share declining, the situation is not going to get any better. The XPages team are active members of our community […]

  6. Ray March 2, 2017 at 4:59 pm - Reply

    As a Notes user, I am surprised at how terrible it is for searching and sorting. For example you cannot search by “From”. You can search for a name, and get every email in which that name exists whether in the from or too field, resulting in way too many hits when looking for an email “from” someone who is frequently copied on everyone’s correspondence.

    To search for email “from” someone:
    1. enter their name
    2. scroll down the resulting long list to find an email from them -select, but don’t open that email
    3. clear the search results (Lotus has no concept of further filtering on results)
    4. sort by name column so the name you selected goes to the top along with the rest of emails by that name.

    Now compare this to common sense. There is a column listing “from” although Notes labels it something else. Why not allow search top be constratianed by a column to search? As in search for “Bob Smith” in “from”. Just one step.

    Our email provides a history of memos, discussions, and activity that has come to be a valuable data base. Lotus is incompetent at simple search and sort.

    Many people sort their email into folders. Lotus allows received email to be sorted this way and the “inbox” can then be empty. The “sent” mail however, always displays all mail sent since the beginning of time unless the file is deleted as in not there anywhere on your machine. You can’t even have the illusion of moving the email by having only display in a folder you drag it to. So dragging old emails to a folder always leaves you wondering if you got them all, since they don’t disappear from the main sent view. Lotus does a Microsoft “This is by design” defense -but it is not consistent with how incoming files are handled and annoying to users.

    Outlook has a long history of quirkiness. Susceptible to security breaches, for home users it blocked ALL email attachments by default (I learned this when parents would not get the pdf attachments I sent if they were Outlook users). For organizers of large events Outlook might keep sending the same email repeatedly to the same recipient due to a number of causes. At least they seem to be learning and improving the product. Notes is still terrible from a simple features standpoint.

    I would say good riddance to Lotus. As you mention, my company has written a lot of applications in Lotus. Frankly, they almost without exception, have clunky interfaces requiring multiple steps and screen to do what should be done on one screen.Unfortunately, I believe the badly formed apps are more due to the low-tech executives who may have micromanaged the design of the applications. We don;t have a cure for that yet.

    I am hoping to save all my emails into eml format onto my local drive (corp has automatic backups of mail on the server, so this won’t be like IRS loosing email when users hard drive crashes) and write code to search emails based on the plain text info in the files. Some of which is already covered by windows file manager.

    • Peter Presnell
      Peter Presnell March 6, 2017 at 3:43 pm - Reply

      Hi Ray, The interface for Notes mail dates back to CC:Mail. At the time (20 years ago) Notes was pretty much in line with user experiences for mail. We have of course seen a lot of changes in mail clients, especially over the past five years. Rather than invest in updating the Notes client mail experience IBM have instead focused on a new product (Verse) that not only catches up with many of these changes but also tries to lead in a new direction aka “New Way To Work”. The problem is that many people are still relying on the Notes client for e-mail (or iNotes) and the advances being made with Verse are not available to them. Its the same story with social. Notes is no longer described as “Groupware” in part because IBM want to sell Connections as its social platform leaving those without Connections behind.

    • obiwan103 March 23, 2017 at 12:31 am - Reply

      The issues with searching are dependent on whether or not the notes server admin decides to allow full text indexing on the mail files. If the admin allows indexing to be enabled, searching is wonderful, fast, precise, easy and flexible – comparable to gmail searching, but better in precision because you can do field searching. If they don’t allow indexing, searching is painfully slow, doesn’t work, and very few options are offered (no field searching, no date range searching, etc.). It all depends on how it’s configured.

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