LotusLive spurs IBM's entry into the hosted services market

A year ago, IBM Lotus announced its foray into the hosted services landscape with Lotus Bluehouse. A year later, realizing their strategy needed to change; they acquired the Hong Kong-based company Outblaze and merged it with Bluehouse to become LotusLive. In this article, you'll get an overview of the hosted services market, how Bluehouse became LotusLive and more.

Last year, IBM Lotus announced its intentions to join the hosted service provider landscape launching its Bluehouse cloud-based social software strategy. One year later, in January 2009, the company acquired Outblaze, a Hong Kong-based provider of outsourced messaging and online community tools, and re-branded Bluehouse as LotusLive. Contributor and industry analyst Karen Hobert traces what IBM is doing to get into the hosted services market and explains the strategy behind LotusLive.

The hosted service provider model is not a new concept. Web 2.0 technologies have made it easier for application vendors to build Web browser-based interfaces that offer robust features and functionality similar to an installed client. Complex applications such as email, calendars and data visualization that once relied on native operating systems for functionality can now be brought to users via Web browsers.

IBM Lotus launched its Bluehouse hosted business collaboration and social software services project in January of 2008. Originally intended as social tools for SMBs, Lotus Bluehouse tested the hosted business services waters by offering a limited beta program to interested customers and partners. The lessons Lotus learned over the last year have shaped its current hosting strategy.

In particular, to be successful, IBM's Bluehouse strategy needed to change two of its initial assumptions: messaging was not critical for social networking and that the service focus is based on individual users. The new LotusLive offering is promisesd to provide both integrated email services and the ability to build communities around entities, as well as individuals.

Still, challenges exist on the road to hosting. One value of hosted messaging services is lower prices, which is not only attractive to SMBs but also to enterprises looking to reduce the cost of supporting large corporate systems. Hosting providers must offer products, services and packages that meet the needs of all organizations.

Hosted services must also be flexible and adaptable enough to support an array of customer requirements -- without diverging too far into customization. For example, a small business may not be concerned about having dedicated data storage, but a large regulated company will likely require that data is stored on dedicated devices to meet compliance regulations.

IBM's OutBlaze acquisition strategy

IBM's OutBlaze acquisition is both tactical and strategic. It is tactical in that no significant Bluehouse go to market advancements were made over the course of a year. However, because OutBlaze has a large customer base in emerging markets, the acquisition positions IBM well for future customer adoption. The move is strategic in that OutBlaze provides the system and administrative infrastructure required to support customers of all sizes and business requirements.

LotusLive is the result of the merger between IBM Lotus and OutBlaze. The initial product offering, LotusLive Engage, which according to IBM is due out later this year, encompasses messaging, collaboration and social software services. Although the announcement cleared up questions regarding Lotus' next steps in the hosted market, it also created some questions. The OutBlaze acquisition introduces a new email service into a product line that is already built around Lotus Notes mail.

iNotes 8.5 is ready for the enterprise and well executed. How Lotus will resolve the two Web-based email interfaces is currently shaping up as a complex array of email service choices -- starting with LotusLive Engage Notes and LotusLive Engage iNotes.

Karen Hobert
Karen is an IT industry research analyst focused on communication, collaboration, content management and social software technologies. She offers over 20 years of hands-on and market expertise to enterprises planning, designing, and deploying shared information systems. You can see more of her thoughts at Karen Hobert's Connecting Dots blog.

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