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www.idc.com F.508.935.4015 P.508.872.8200 Global Headquarters: 5 Speen Street Framingham, MA 01701 USA COMPETITIVE ANALYSIS Worldwide Integrated Collaborative Environments 2003 Vendor Anal ysis: How to Keep Moving When Surrounded by ICE Mark Levitt Robert P. Mahowald IDC OPINION The worldwide integrated collaborative environment (ICE) market defied expectations and grew slightly in 2003 to $1.661 billion while continuing to be dominated by the long-standing top 3 vendors. A very slight crack in the ICE market appeared as Microsoft, IBM, and Novell represented 96% of overall license and maintenance revenue in 2003, down slightly from the percentage in the prior year. Whether this crack will expand as the overall ICE market contracts will depend on whether ICE vendors do the following: ! Maintain the vision and reality of the dominance of ICE-flavored email inboxes for collaboration in the face of challenges from spam (which makes email use less efficient) and alternative tools offering richer or faster collaboration ! Justify the cost of maintenance contracts by providing product updates at least once a year offering better integrated mobile and portal access, real-time collaboration, and business process contextual collaboration ! Reduce the cost of maintaining ICE deployments through improved server consolidation, automated and simplified server and user management, and outsourcing for appropriate user groups ! Overcome switching costs involved in replacing one ICE product with another by focusing on cost savings to IT and the functionality benefits for end users in the long term and the ability of migration tools, services, and promotions to minimize the cost and effort needed to move users, content, and applications in the short term Filing Information: July 2004, IDC #31625, Volume: 1, Tab: Vendors Collaborative Computing: Competitive Analysis IN THIS STUDY This study examines the integrated collaborative environment (ICE) market by looking at the vendors that provide ICE solutions. A competitive analysis of vendor revenues and market shares of the leading vendors for 2003 is provided, along with profiles of the leading vendors identifying the characteristics that vendors will need to be successful in the future. Methodology See the Appendix for a description of the data collection and analysis methodology employed in this study. Market Definition ICEs provide a framework for electronic collaboration, typically within an organization, based on shared directory and messaging platforms. The core integrated-functionality areas are email, group calendaring and scheduling, shared folders/databases, and threaded discussions. Administration and customization are generally performed by centralized IT staff. Please note that custom application development is no longer a required element for products to be classified as ICEs. Although this capability continues to be present in most ICE products, because application servers and Web services are being used for most custom application development, products lacking this capability are not automatically excluded from the ICE category. Representative vendors in this market include IBM (Lotus Domino/Notes), Microsoft (Exchange/Outlook), Novell (GroupWise), and Oracle (Collaboration Suite). Standalone email applications are not included here but are covered in the messaging applications market. SITUATION OVERVIEW We present here our 2003 vendor revenue and market share estimates for the largest ICE vendors worldwide and by region (see Figure 1 and Table 1). Please note that the total ICE market sizing for 2003 presented here is based on our estimates published in July 2004 (Worldwide Integrated Collaborative Environments 2004–2008 Forecast Update: Asia/Pacific and Europe Asked for a Bit More ICE in 2003 than Initial Estimates, IDC #31539, July 2004), which updated our initial estimates published in May 2004 (Worldwide Integrated Collaborative Environments 2004–2008 Forecast: Keeping Collaboration on ICE, IDC #31244, May 2004). ©2004 IDC #31625 1 FIGURE 1 Worldwide Integrated Collaborative Environments Revenue by Vendor and Region, 2003 Microsoft IBM Novell NEC Oracle HandySoft Other 0 50 100 150 200 250 300 350 ($M) North America Western Europe Asia/Pacific ROW Note: The "other" category consists of vendors with revenue of less than $10 million. Source: IDC, June 2004 2 #31625 ©2004 IDC T ABLE 1 Worldwide Integrated Collaborative Environments Revenue by Vendor, 2002 and 2003 ($M) 2002 2003 2003 Share (%) 2002–2003 Growth (%) Microsoft 725.0 770.0 46.4 6.2 IBM 735.0 709.1 42.7 -3.5 Novell 114.6 116.0 7.0 1.2 18.2 17.1 1.0 -6.0 Oracle 5.0 15.0 0.9 200.0 HandySoft 6.2 14.3 0.9 130.6 29.9 19.6 1.2 -34.4 1,633.9 1,661.1 100.0 1.7 NEC Other Total Notes: The "other" category consists of vendors with revenue of less than $10 million. This data does not include revenue for ICE products licensed for service provider standalone email. Source: IDC, June 2004 FUTURE OUTLOOK Vendor Profiles The following profiles of ICE vendors present our analysis of vendor differentiators and challenges that will influence future success. This analysis is reflected in the IDC Leadership Grid, which presents our view of the relative market positioning of ICE vendors. This positioning was developed by plotting the average scores for the two types of factors on which the vendors are rated on a scale of 1–10, where 1 = very poor and 10 = excellent (see Figure 2A). The detailed analysis of how the vendors compare for each of the two types of factors separately is also shown (see Figures 2B and 2C). For a detailed description of the IDC Leadership Grid methodology, see the Appendix. ©2004 IDC #31625 3 FIGURE 2A IDC Leadership Grid: Worldwide Integrated Collaborative Environments Market, 2004 High Niche Leadership IBM Microsoft Low Ability to gain share Novell Oracle Teamware Open Text HandySoft NEC Crisis Potential Low Legacy Market opportunity alignment High Source: IDC, 2004 4 #31625 ©2004 IDC FIGURE 2B IDC Leadership Grid of the Worldwide Integrated Collaborative Environments Market, 2004: Vendor Ratings for Market Opportunity Alignment (X-Axis) Attributes IBM Microsoft Novell NEC Oracle HandySoft Teamware Open Text 1 2 3 4 5 6 7 8 9 10 (Score) Ability to set industry standards Market share Potential for market dominance Potential for place or show Product and service breadth Note: Scores are based on a scale of 1 to 10, where 1 = very poor and 10 = excellent. Source: IDC, 2004 ©2004 IDC #31625 5 FIGURE 2C IDC Leadership Grid of the Worldwide Integrated Collaborative Environments Market, 2004: Vendor Ratings for Ability to Gain Share (Y-Axis) Attributes IBM Microsoft Novell NEC Oracle HandySoft Teamware Open Text 1 2 3 4 5 6 7 8 9 10 (Score) Third-party applications Service provider partnerships Global presence Mobile and wireless support Multiplatform support Integration with other applications and infrastructure Note: Scores are based on a scale of 1 to 10, where 1 = very poor and 10 = excellent. Source: IDC, 2004 6 #31625 ©2004 IDC IBM Differentiators ! IBM's commitment to support indefinitely both Domino/Notes and the newer Lotus Workplace products, which offer portal-oriented collaboration based on the WebSphere platform, will enable the company to reassure customers that they have the choice of keeping collaboration and application development on ICE or transitioning to WebSphere sometime over the next several years at their own pace. ! In Lotus Domino/Notes 6.5, IBM focused on enhancing end-user productivity by adding integrated instant messaging and presence for real-time collaboration, allowing easier blocking of spam, and offering a Linux client. These offerings will help IBM to convince existing Notes customers, especially those running versions 4.X or 5.X, to upgrade. ! IBM's ability to sell combinations of Lotus and other IBM software products, including WebSphere (Web application development and portals), Tivoli (system management and storage), and DB2 (database and content management), along with its hardware and professional services, will enable IBM to act as a one-stop shop for complex computing environments in which collaboration adds one key element — the human element. Challenges ! IBM will need to continue to tread carefully in pursuing its vision of a portaloriented collaboration, brought to life in the Lotus Workplace products. Otherwise, a portion of existing Lotus Domino/Notes customers anticipating the need to make significant changes to their ICE infrastructure could be tempted to switch to a competing ICE product. ! As long as Windows remains the preferred platform for most ICE customers, IBM faces an uphill battle to persuade companies to avoid the tendency to standardize on Microsoft Windows, as well as Outlook, because of the multiproduct integration and licensing available from Microsoft, whose Windows server and client products incorporate more collaborative functionality than ever before. ! IBM WebSphere offers customers an alternative platform for developing a wide range of applications accessible through the Web and intranets without the need for an IBM Lotus Domino/Notes infrastructure. Microsoft Differentiators ! Microsoft's Exchange 2003 Server addresses IT demands for server consolidation through higher scalability and performance and lower administrative requirements, as well as improved virus API and basic spam filtering capabilities. For end users, Microsoft Exchange 2003 and Outlook 2003 deliver faster connections for more satisfying user experiences by leveraging a new Outlook cache capability and an improved version of MAPI that requires fewer bytes to exchange data over a dial-up or LAN connection. ©2004 IDC #31625 7 ! Positioning Exchange Server as part of both the Microsoft Office System and the Windows Server product families will tie Microsoft's ICE product even closer to its dominant Windows and Office applications businesses. This makes Exchange and Outlook obvious choices for current and prospective customers looking to help information workers to create, share, store, and publish information. ! Microsoft Exchange customers have access to real-time collaboration as the result of Office Live Communication Server licenses being available to all Exchange 5.5/2000/2003 customers as part of software assurance maintenance contracts. Challenges ! Microsoft will need to justify the cost and effort needed for Exchange 5.5, and to a lesser degree 2000 customers, to upgrade to Exchange 2003, especially for customers who are not on maintenance contracts and who are not yet committed to deploying Windows and Office 2003 in the next 12–24 months. Otherwise, a portion of these customers could choose to skip the upgrade and instead migrate to a competing ICE product. ! As Microsoft continues to add new functionality to its Exchange, Outlook, and Windows products, such as team collaboration and antispam protection, the company will shrink the opportunities for third-party vendors whose add-ons may be perceived as being less worthy of separate investment, at least for Exchange customers whose needs can be satisfied by basic capabilities. Novell Differentiators ! GroupWise 6.5 will enable Novell to address IT staff requirements for antispam controls and reduced administrative resources to manage GroupWise users and servers, as well as attract end users looking for secure, integrated business instant messaging and support for a wide variety of smart handheld computers running both Palm OS and Windows Mobile for Pocket PC and RIM and Synch ML wireless devices. ! Novell's acquisition of SUSE LINUX and its commitment to supporting Linux on the server and the desktop will lend GroupWise credibility as a powerful ICE offering for Linux environments. By offering GroupWise clients for Linux and Mac OS, Novell will be able to support end users who are often left out in the cold unless they embrace Windows. ! Novell's NetMail standalone email product, with calendaring/scheduling, will give the vendor a complementary product with which it can address the needs of deskless workers at customers that may have otherwise chosen a competing ICE product or standalone email product for all of their users, not just for deskless workers. 8 #31625 ©2004 IDC Challenges ! Despite a nicely stable third-place market share and more aggressive marketing, including bold print advertising, Novell will continue to struggle to shake the common perception that the ICE market is a two-horse race that does not include Novell. ! In remaining focused on the midmarket, Novell will continue to keep itself out of the running for supplying larger organizations and service providers requiring high scalability, reliability, and performance. ! For most of Novell and its customers, GroupWise will remain a solid product that lives in the shadow of Novell's resource, identity, and access management products. GroupWise will even need to compete with Novell's SUSE LINUX Openexchange server and Evolution client that can deliver collaboration with GroupWise or its competition. Oracle Differentiators ! Oracle's redefining of ICE by including in its Collaboration Suite not only email and group calendaring/scheduling but also universal search, file management, Web conferencing, and instant messaging on top of a shared Oracle platform will help to differentiate it from the competition and attract the attention of prospective customers. The only exception to this approach of being more inclusive than the competition is that the company does not have its own custom application development environment, wisely letting the Oracle Application server provide that capability. ! Oracle will be able to leverage its database, portal, and business application customer base to sell its ICE offering as a natural extension to an Oracle infrastructure that can be managed by the same administrators who manage the rest of the Oracle infrastructure. For firms committed to this Oracle infrastructure, the Collaboration Suite will look like a very natural fit. ! Reliance on Oracle's relational database platform enables customers to achieve high levels of scalability (up to 10,000 concurrent users on a single server, according to Oracle) to help consolidate the number of existing email/ICE servers needed and to leverage existing Oracle database administration (DBA) staff expertise in managing corporate email and collaboration along with other mission-critical business applications running on Oracle databases. Challenges ! Oracle will need to continue to prove itself as a viable competitor in the ICE market in light of its past entries into the high-end email market (with minimal success) and its recent entry into a mature ICE market heavily dominated by very established competitors also pursuing scalability and email server consolidation in the most recent versions of their ICE products. ©2004 IDC #31625 9 ! Oracle must work hard to ensure that the first generation of each new collaborative capability added to its Collaboration Suite, such as Web conferencing and instant messaging, remains as good as or better than the bestof-breed competitors that have had years of market experience and customer feedback to refine their offerings. Other ICE Vendors Other notable vendors with products that meet all or most of the requirements for ICEs include the following: ! HandySoft BizFlow Groupware features Korean-language email, bulletin boards, schedule management, approval workflow, registration of shared resources, contact/business card management, log and statistics, and electronic meetings. It is written in Java and based on a relational Java database and electronic forms. An English-language version of the BizFlow Workflow product is the only HandySoft product that is actively marketed in North America (corona.handysoft.co.kr). ! Hitachi Groupmax features Japanese- and Korean-language email, bulletin boards, address books, document management, workflow, agents, electronic forms, and calendaring/scheduling management. It uses Sendmail as the SMTP email server. It is sold in Japan as well as in Korea through its partner, Samsung (www.hitachi.co.jp). ! Korea Information Engineering Services (KIES) HiExpress intranet groupware features Korean-language document approval workflow and delivery and integration with HanSoft's Hangul word processor. Client access is through Web browsers (www.kies.co.kr). ! NEC StarOffice features Japanese-language email, document management, directory, and portal capabilities (www.nec.co.jp). ! Open Text FirstClass features unified messaging and collaboration (email, voice messaging, fax, online workspaces, and instant messaging) for educational institutions, businesses, and service providers. It is available on Windows, Mac OS, Linux, and Unix and supports PDA and voice access. FirstClass complements the company's flagship product, Livelink for enterprise collaboration and content management (www.opentext.com). ! Teamware Office features Windows and Linux support, and its corporate affiliation with Fujitsu and 3i helps it establish a market presence in Japan and Western Europe (www.teamware.com). 10 #31625 ©2004 IDC ESSENTIAL GUIDANCE ! Maintain the vision and reality of the dominance of ICE-flavored email inboxes for collaboration. The future of ICE and corporate email (which is dominated by ICE solutions) is facing challenges on two fronts: First, the surge in spam has made email use less efficient than before because of the time and effort required of most ICE users to find and act on the legitimate important information often buried in a sea of spam in their inboxes. ICE solutions should embrace third-party antispam solutions and some native antispam technologies to make spam more manageable. Second, during the past five years or so, ICE users and their solutions providers have identified the limitations of ICE and email, and have been looking at alternative tools for more structured or real-time collaboration. ICE solutions should take the high ground and embrace these other collaborative tools by offering integrated access and shared content (especially email) to these tools. This will help ensure that the ICE inbox remains the primary starting and jumping off point for other forms of collaboration. ! Justify the cost of maintenance contracts by providing product updates at least once a year. Nearly all of the ICE products have been around for many years and have become stable, proven, and reliable infrastructure in the minds of end users and IT staff. This situation can lead to ICE customers increasingly wondering aloud why they need to write significant checks every year or two to ICE vendors. To ensure that ICE customers are running the latest and greatest versions of ICE products, ICE vendors should continue to look for ways to refresh their products with features that make it worth the cost and time needed to roll out a new version. There are several areas on which ICE vendors should focus their attention: First, ICE products should offer more integrated mobile and portal access to satisfy existing users and extend the reach of ICE to new users whose primary user interface is not the ICE inbox. Second, ICE products should embrace real-time and structured collaboration. Third, ICE products should provide templates and integration to make ICE a key element of contextual collaboration within other business processes and applications. ! Reduce the cost of maintaining ICE deployments. Whether customers are considering switching to a different ICE product or just want to reduce the costs of their current ICE infrastructure, ICE vendors should be responsive by providing ways to reduce the time and other resources needed to keep ICE up and running. There are several areas that ICE vendors should focus on: First, ICE vendors should continue to enable customers to reduce the number of servers needed to support end users. Second, ICE vendors should make it easier to manage ICE servers and clients through automated and simplified server and user management — often through tools that can manage more than just ICE. Third, ICE vendors should continue to educate customers on the value of outsourcing a full set or subset of ICE functionality for appropriate user groups that are either located at remote work sites or whose collaborative needs may be limited. ©2004 IDC #31625 11 ! Overcome switching costs by focusing on cost savings and functionality benefits in the long term and the ability of migration tools, services, and promotions to minimize the switching costs in the short term. Too often ICE vendors market their products as better alternatives to what companies are currently using, while ignoring the huge investments already made in the existing ICE infrastructure, end-user and administrative expertise, and home-ground and third party applications and add-on products. Too often vendors focus solely on total cost of ownership (TCO) for two or more products through side-by-side comparisons, without considering the return on investment (ROI), which looks at the payback to be had by deploying a new ICE product to replace an existing one. With very few opportunities to deploy ICE in an ICE-less environment, there needs to be greater attention paid to the costs and benefits over time of replacing one form of ICE with another. This Essential Guidance section, except for the last bullet, remains unchanged from what we published in May 2004. LE ARN MORE Related Research ! Worldwide Integrated Collaborative Environments 2004–2008 Forecast Update: Asia/Pacific and Europe Asked for a Bit More ICE in 2003 than Initial Estimates (IDC #31539, July 2004) ! Worldwide Integrated Collaborative Environments 2004–2008 Forecast: Keeping Collaboration on ICE (IDC #31244, May 2004) ! Worldwide Conferencing Applications 2004–2008 Forecast: A First Look at FY03 Performance (IDC #31128, April 2004) ! Worldwide Messaging Applications 2004–2008 Forecast: An Early Look at FY03 Performance (IDC #31030, March 2004) ! Worldwide Team Collaborative Applications 2004–2008 Forecast: Shifting Teams to Larger Leagues in 2003 in Preparation for Next Season (IDC #31005, March 2004) ! Going Mobile: Hopes, Realities, and Solutions from IDC's 2003 Wireless and Mobile Enterprise Survey (IDC #30861, February 2004) ! IDC's Software Taxonomy, 2004 (IDC #30838, February 2004) ! An Assessment of the Market Demand and Opportunity for Collaborative Software as a Service (IDC # 30177 , November 2003) ! Microsoft Office System 2003: A System Is Born? (IDC # 30319, October 2003) ! Worldwide Email Usage Forecast, 2003–2007: Spam and Instant Messaging Take a Bite Out of Email (IDC # 30195, October 2003) 12 #31625 ©2004 IDC ! Out of the Inbox and into the Fire: Three Scenarios for the Future of Collaboration (IDC # 29889, July 2003) ! Worldwide Integrated Collaborative Environments Forecast and Analysis, 2003– 2007: Raising the Melting Point of ICE (IDC #29673, June 2003) Appendix A: Methodology The IDC Software Research Group (SRG) market sizing and forecasts are presented in terms of "packaged software revenue." Packaged software is defined as programs or codesets of any type commercially available through sale, lease, or rental, or as a service. Packaged software revenue typically includes fees for initial and continued right-to-use packaged software licenses. These fees may include, as part of the license contract, access to product support and/or other services that are inseparable from the right-to-use license fee structure, or this support may be priced separately as software maintenance. Upgrades may be included in the continuing right of use or may be priced separately. Packaged software revenue excludes service revenue derived from training, consulting, and system integration that is separate (or unbundled) from the right-touse license but includes the implicit value of software included in a service that offers software functionality by a different pricing scheme (e.g., the implicit or stated value of software included in an application service provider's [ASP's] or other hosted software arrangement). It is the total packaged software revenue that is further allocated to markets, geographic areas, and operating environments. IDC's industry analysts have been measuring and forecasting IT markets for more than 30 years. IDC's software industry analysts have been delivering analysis and prognostications for packaged software markets for more than 25 years. The market forecast and analysis methodology incorporates information from five different but interrelated sources, as follows: ! Reported and observed trends and financial activity. This study incorporates reported and observed trends and financial activity in 2003 as of the end of April 2004, including reported revenue data for public companies trading on North American stock exchanges (CY 1Q03–4Q03 in nearly all cases). ! IDC's Software Census interviews. IDC interviews all significant market participants to determine product revenue, revenue demographics, pricing, and other relevant information. ! Product briefings, press releases, and other publicly available information. IDC's software analysts around the world meet with hundreds of software vendors each year. These briefings provide an opportunity to review current and future business and product strategies, revenue, shipments, customer bases, target markets, and other key product and competitive information. ©2004 IDC #31625 13 ! Vendor financial statements and related filings. Although many software vendors are privately held and choose to limit financial disclosures, information from publicly held companies provides a significant benchmark for assessing informal market estimates from private companies. IDC also builds detailed information related to private companies through in-depth analyst relationships and maintains an extensive library of financial and corporate information focused on the IT industry. We further maintain detailed revenue by product area models on more than 1,000 worldwide vendors. ! IDC demand-side research. This includes thousands of interviews with business users of software solutions annually and provides a powerful fifth perspective for assessing competitive performance and market dynamics. IDC's user strategy databases offer a compelling and consistent time-series view of industry trends and developments. Direct conversations with technology buyers provide an invaluable complement to the broader survey-based results. Ultimately, the data presented in this study represent IDC's best estimates based on the above data sources as well as reported and observed activity by vendors and further modeling of data that we believe to be true to fill in any information gaps. In addition, please note the following: ! The information contained in this study was derived from the IDC Software Market Forecaster database as of June 2004. ! All numbers in this document may not be exact due to rounding. For more information on IDC's software definitions and methodology, see IDC's Software Taxonomy, 2004 (IDC #30838, February 2004). Appendix B: Methodology for the IDC Leadership Grid The IDC Leadership Grid is a tool that graphically depicts the leadership potential of various vendors by assessing two major competitive factors with specific inputs: ! Market opportunity alignment. This term defines a vendor's ability to meet current market demands. Factors evaluated include: 14 # Ability to set industry standards # Market share (revenue, customers, and users) # Potential for market dominance (ranking first) # Potential for place or show (ranking second or third) # Product and service breadth (across and beyond collaborative applications) #31625 ©2004 IDC ! Ability to gain share. This term defines a vendor's ability to gain market share in the future. Factors evaluated include: # Third-party applications (document management, workflow, unified messaging, antivirus, antispam, email archiving, CRM, SFA, and HR) # Service provider partnerships (hosted, managed, and professional services) # Global presence (sales and support offices, customers, and resellers) # Mobile and wireless support (handheld and telephone device access) # Multiplatform support environments) # Integration with other applications and infrastructure (server, desktop, and handheld operating IDC selects the vendors to rate based on current market share, mindshare (name recognition and familiarity among customers, prospects, and industry observers), and customers (number and diversity). Other companies for which information is not available or whose market presence and opportunity are limited are not selected due to the limited value and accuracy of any ratings that would be done for them. For each vendor, IDC rates each input on a scale of 1–10, where 1 = very poor and 10 = excellent. The average scores for the market opportunity alignment and ability to gain share inputs for each vendor are then plotted on the x-axis and the y-axis, respectively, of the IDC Leadership Grid. Vendor placement in the four quadrants of the IDC Leadership Grid should be understood as follows: ! Upper-right quadrant. This is most desirable for vendors that are pursuing maximum revenue and the broadest market reach. It reflects very successful past performance and points to a promising future. ! Upper-left quadrant. This is desirable for vendors focused on becoming leaders in specific target markets. It reflects poorly on moderately successful past performance and points to a promising future. ! Lower-right quadrant. This is somewhat less desirable for vendors. Although it reflects very successful past performance, it points to a less promising future unless changes are made. ! Lower-left quadrant. This is least desirable for vendors. It reflects poorly to moderately successful past performance (possibly due to recent market entrance) and points to a less promising or an uncertain future. ©2004 IDC #31625 15 Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or [email protected] for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2004 IDC. Reproduction is forbidden unless authorized. All rights reserved. Published Under Services: Collaborative Computing; Integrated Collaborative Environments 16 #31625 ©2004 IDC