Lotus Claims Growth,
Unconvincingly. To help it retain its customer base, Notes/Domino management
feels it needs to pump out statistics showing growth. And it regularly pumps out
statistics that are gems of not-being-persuasive. Here's a recent selection from
- "2005 double-digit
growth in the Lotus Software brand." What sort of growth? Is that revenue
growth in the professional services group? Or profit because expenses have
been reduced at a greater level than revenue reductions? Or actual deployed
seats? Or customer awareness? Or what?
- "Workplace has
grown exponentially, we've got thousands of new customers." Sounds great,
but with a very small number of deployed seats, exponential growth is to be
expected and doesn't translate to success. And "customers" probably
means "seats" -- perhaps even planned seats rather than "deployed
- "Over 125 million
licenses sold today." That suggests live seats. But that's way too high
a figure. Maybe it means all licenses sold during the history of Notes/Domino,
including those never actually deployed.
- "Met internal targets."
No comment, since we don't know what those internal targets are.
- "Lotus products
grew 7% in Q405 at constant currency." No idea what that means.
- "Gain in market
share." What gain in what market? For example, it might mean that market
share has grown in the world of Icelandic fisheries, at the expense of Eudora.
Notes/Domino is an excellent
product with substantial market share and a loyal customer base. It's a great
business. We would be delighted to own just 1% of it.
But if Lotus is successful
in the way it wants these statistics to imply, it should avoid citing obscure,
ad hoc statistics. Any business can find statistics that suggest success, even
when they're headed for bankruptcy tomorrow. Read any venture capitalist's prospectus
To be persuasive, Lotus
needs to make clear statements like: "Software revenues up 12% in calendar
2005 over calendar 2004, and up 25% over calendar 2003," or "We have
30 million seats on maintenance controls -- that's up 15% over this time last
year." ... David Ferris