Double digit contraction

by Volker Weber

When IBM posted financial results in the past, we quickly learned about "double digit growth". Currency rates did not matter much. This time, SILENCE.

Lotus was down 12 percent

And more interestingly:

Across all software brands, we have strong recurring revenue; in fact, annuity content represents two-thirds of our software business.

If you have two thirds maintenance on yearly contracts and you lose 12 percent, that is pretty significant.

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Pretty ...... nasty.

Thomas Schulte, 2009-04-22

I'd like to think they might now start actively promoting / marketing the product but I'm certainly not going to be holding my breath while I wait for them to start......

Kevin James, 2009-04-22

To my knowledge it's possible to seperate the license from the maintenance contract. The latter will give you access to new releases, PMRs and hot fixes. But you can equally use you license without maintenance.

E.g. you can continue using your R8.0 license without maintenance. This would not permit usage of >=R8.5, however, e.g. fix packs can be downloaded from public IBM support sites.

It is pretty simple to calculate the cost savings and compare them to the extra cost for re-entering the maintenance later on. Based on your assumptions how long you want to stay outside, you have a business case or not.

I am not a specialist on Lotus licensing models, but if this was generally true AND Lotus was significantly losing on recurring revenue, this could indicate a slower adoption of new releases rather than a shrinking customer base. Or both. Of course bad news either way...

Dirk Rose, 2009-04-22

IBM needs to come to the (hard) realization that they need to pay their sales team to retain their current customers.

IBM like most companies only pay commission on new business. (e.g. new customer, additional licenses, etc.)

So once they are customers, there really is no financial incentive for an IBM Client Rep to fight if the customer is in jeopardy.

Henry Ferlauto, 2009-04-23

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