I.B.M.'s Hostile Takeover Bid for Lotus: A Battle for Software Supremacy

I.B.M., a stalwart of the technology industry, faces a significant challenge in its stagnant software offerings, particularly in the personal computer market. In an effort to bolster its presence and create a formidable competitor to Microsoft, I.B.M. has proposed a hostile takeover of Lotus Development Corporation, the maker of the popular Lotus Notes software. This move would merge I.B.M.'s extensive distribution network with Lotus's cutting-edge networking software, creating a powerhouse capable of taking on Microsoft. However, the success of this takeover is far from guaranteed, as both companies have a history of missteps and Lotus's management may resist being absorbed by I.B.M.

Key Takeaways:

• I.B.M. lacks exciting software to retain customers and attract new ones, particularly in the personal computer market, where it lags behind Microsoft.
• Lotus Notes software allows computers to share files, data, and electronic communication, making it a vital tool for businesses.
• The proposed takeover would put I.B.M.'s distribution network behind Lotus's networking software, creating a formidable company capable of taking on Microsoft.
• Businesses attach various application programs to Lotus's Notes, making it an attractive target for acquisitions.
• Microsoft's Windows operating system has already beaten I.B.M.'s version, and Microsoft's version of Notes is due out later this year, posing a significant challenge to Lotus.
• The hostile takeover could create a stronger opponent for Microsoft, introducing competition to the increasingly concentrated software market.
• I.B.M. and Lotus have both misstepped in the past, with I.B.M. losing control of the personal computer market to Microsoft and Lotus failing to keep its market-leading application software, 1-2-3, up to date.

Statistics:

• I.B.M. has a distribution network with which it sells everything from mainframe computers to business consulting services (no specific number mentioned).
• The proposed hostile takeover bid for Lotus is valued at $3.3 billion.
• 1-2-3, Lotus's market-leading application software, was used by millions of businesses and households (no specific number mentioned).
• Microsoft's version of Notes is due out later this year, posing a significant challenge to Lotus.

Sources:

• Brien, R. (1988, November 17). "I.B.M. Bids $3.3 Billion for Lotus Development." **Business Week**.