HCL and IBM Domino

A very interesting view of HCL, a company that has bought the Intellectual Property (IP) of several companies, IBM included.

HCL’s strategy is underpinned on investments of $1.1 billion in licensing intellectual properties (IPs) from companies and then building products around them for clients.

The trouble is some of the acquired IPs are decades-old and are ceding share to rival offerings. A case in point is HCL’s acquisition of International Business Machines Corp.’s (IBM’s) Lotus Notes, a product that is fast losing relevance in today’s world.

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“Building products around them for clients.” Maybe that will allow for increased awareness of Domino within the existing customer base. But it doesn’t appear that it will translate in gaining market share from Google or Microsoft. However, I don’t think that gaining market share is what HCL is hoping. Hoping for a cash cow, it’s more believable that HCL wants to get more revenue out of existing customers to recoup their investment. If they win a few new customers, well, that’s just gravy.

6 Responses to HCL and IBM Domino

  1. I guess I don’t really read that the way you do. If you consider Domino the IP in question, for example, building products on top of Domino and selling those expands the Domino base. You could theoretically hide the Domino, but why bother? Instead, you could expand the user base while selling the new product, then sell other products into those customers. That may not be how it pans out, but I certainly don’t reach the conclusion you do from the article.

    Clearly, the author of the article doesn’t believe HCL’s strategy will work, preferring instead the strategy by other firms of “investing in cutting-edge technologies such as blockchain and artificial intelligence platforms”. But an equally valid conclusion is that HCL is paying low rates to get proven technology it thinks it can revitalize, while the others are paying top dollar to get what are currently very speculative investments. Both are somewhat risky, but I think HCL’s strategy may be the less risky.

  2. “A case in point is HCL’s acquisition of International Business Machines Corp.’s (IBM’s) Lotus Notes” tells me everything I need to know. The article is ill-informed (“acquired”) and out-dated (“Lotus Notes”). Anyone who has paid attention to what’s happened since the announcement, who has an understanding of those who are involved on the HCL and IBM sides knows there is no basis for the claim. Although it’s possible HCL may build solutions for specific verticles (as IBM has for e.g. healthcare in other areas), that article is a complete mis-reading of everything I’ve seen and heard.

  3. Mark Schuster says:

    Lookup on LinkedIn, Paul Withers, and you will see many people that call themselves still “Lotus Notes developers”. Maybe they are outdated, too.

    Clearly it is in IBMs best interest to collect some money for their IP. And to let figure out HCL the rest. Otherwise they wouldn’t sell the IP and use their own resources. But hey, now they get money for their IP AND have moved many of their employees off their own payroll. Smart move, IBM, smart move.

  4. Richard says:

    The article clearly focuses on the deal from an HCL investor’s perspective and doesn’t delve much into the technology and how HCL may innovate going forward. I tend to agree with Ben that HCL may be viewing this as an investment in less-risky, proven technology (similar to buying into a restaurant franchise for example). For certain parties (IBM Business Partners), though, the IBM/HCL deal is a “good thing” — it demonstrates a clear investment in the Notes/Domino product line and therefore a protection/vindication of customers’ existing assets. However, I can understand how an HCL investor might not see it so favorably. There’s likely more money to be made investing in cutting-edge technology (assuming it becomes successful).

    I think what’s going to matter is exactly what HCL brings to the table in the next 12-18 months. Just tinkering around the edges of the current feature set isn’t going to work. Both customers and partners are going to need to see compelling new features introduced to really reignite the N/D market.

  5. Gregg Eldred says:

    I hope that you are all aware that the article is from an investment point of view. Would it be wise to invest in a company that has bought the IP of “Lotus” Notes and a banking platform that no top-tier bank will touch?

    And, I say “Lotus” Notes because, if I am honest, that’s how people refer to the program. Even people who have been using the re-branded “IBM” Notes. That is a legacy that is extremely difficult to change. It’s also an indictment of the marketing that has come out of IBM. They can’t even get people to refer to their product by the correct name.

    HCL could create game changing updates to a platform that’s been around for 20+ years. But will it matter if the vast majority of the decision makers still see it as “New Lotus Notes” with all of the baggage that name brings? They also like to add the word “legacy” to it as well.

    Lord knows, we need something to change. But I am skeptical that with HCL’s coding and IBM’s marketing, we will see material gains for the product.

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