January 27, 1998 (TOKYO) -- Lotus Notes groupware reached a 1997 sales target of shipments to serve 3 million client users, according to the results of a market survey conducted by Nikkei Watcher - on IT Business magazine.

Notes is extending its lead in Japan and it has become the market leader for groupware products.

In terms of total client user numbers, second place in 1997 sales shipments was earned by Fujitsu Ltd.'s TeamWARE, which leapfrogged ahead of Microsoft Co., Ltd.'s Exchange Server, from the fourth position that it held in the spring of 1997. Exchange Server is still expected to be second in terms of shipments measured on a server basis.

According to Nikkei Watcher's estimates, in the January-June period, Notes posted shipments for 20,000 servers, or 1.2 million client users. Its total shipments for 1997 reached 40,000 servers, or 3 million client users.

Makoto Yasuda, managing director of Lotus Development Japan, Ltd., said that large companies and organizations with more than 10,000 employees had mostly completed their plans to introduce groupware. He also said that sales to businesses with between 3,000 and 10,000 employees were still growing, and that the trend would likely continue this year.

Yasuda predicted that 1998 would see a higher rate of sales growth to enterprises with 1,000-3,000 employees. Also, Yasuda explained that a major objective this year is to boost sales to smaller companies with fewer than 1,000 workers. He said that the different ways in which groupware providers approached this segment of the market would determine the year's winners and losers.

In 1997, Lotus began selling a product called First Step Kit, targeted at small and mid-sized businesses that don't need full-scale user support services. For 1998, the company plans to increase its promotional activities aimed at users.

Microsoft's Exchange posted shipments for 14,000 servers, or 460,000 clients, in the January-June period. For the full year, Nikkei Watcher estimates that sales of Exchange will reach a total of 30,000 servers, or 1 million client users.

The total number of clients that Exchange can support on a single server is limited to around 30, which is fewer than the other major groupware products. For this reason, in the ranking of total sales for 1997 it is expected to hold the number two position in terms of the number shipments for servers, but it will rank third in terms of client numbers or behind Fujitsu's TeamWARE.

The TeamWARE product from Fujitsu has jumped to the number two position in shipments to client users. The company emphasizes sales to regional and small-to-medium sized business users.

In the first half of fiscal 1997 (April to September), TeamWARE recorded sales for 8,000 servers, or 600,000 clients. In the entire fiscal year through March 1998 it is expected to post total sales shipments for 20,000 servers, or 1.5 million clients. Half of the 8,000 shipments for servers in the first fiscal six-month period were bundled with hardware shipments.

StarOffice, from NEC Corp., recorded shipments for 4,100 servers, or 400,000 client users, in the first half of fiscal 1997. Total shipments in the fiscal year through March are anticipated to reach 10,000 servers, or 1 million clients.

NEC is targeting indirect sales to small and mid-sized businesses, and in October 1997 it established StarOffice SI trust centers to enhance its dealer support operations. Those centers can handle a wide range of operations, such as consulting, holding educational courses and operating help desks.

Hitachi Ltd.'s Groupmax had sales shipments for 3,600 servers, or 300,000 clients, in the April-September period. Total shipments for the fiscal year through March 1998 are expected to reach 8,500 servers, or 800,000 client users.

Direct sales account for a large part of Hitachi's business, but it is now exploring ways to expand indirect sales. The company hopes to increase the ratio of its indirect sales to 35 percent of total sales, up from the current level of 25 percent.

However, it's not clear if any of these groupware providers will be able to maintain the current level of product sales growth through this year. Yasuda of Lotus Japan said that in a typical year the October-December quarter sees sales at a level double those of other quarters, but that in the most recent October-December quarter sales did not match such standard levels.

With the gradual saturation of the market, in combination with Japan's faltering economy, the fact that businesses are cutting back on their investments in information technology is beginning to have an effect on groupware sales prospects.

(Nikkei Watcher on IT Business)