AT THE COMPANY'S annual Lotusphere user conference this week, emerging developments in knowledge management and wireless functionality have held a majority of the spotlight. InfoWorld Editor in Chief Michael Vizard and Senior Writer Cathleen Moore sat down at the show with Al Zollar, Lotus president and CEO, and Steve Mills, senior vice president and group executive at IBM Software Group, to discuss these issues as well as Lotus' role as a subsidiary of IBM.

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InfoWorld: Given the company's knowledge management strategy and emphasis on collaboration tools, it seems that Lotus is intent on becoming a major player in the corporate portal space, bringing it into competition with Yahoo's Corporate Yahoo, Microsoft and its knowledge management allies, and eventually America Online-Time Warner. Why do you think Lotus/IBM will prevail here?

Zollar: That's a great question. I think we've seen through the development of the Internet that a lot of ideas spring up in the consumer space and sort of get hardened, or made fit, for businesses. So one way to view Lotus is that we have taken some of these ideas and extended them in ways that are much more vocational. For example, take a capability such as instant messaging, which in the United States is a teenager's preferred way of communicating these days. We saw that this was more than just a tool for socializing; we saw that it was a tool for real things like location of experts, exchanging of business-critical messages, and so forth. Look at some of the things we are doing around our Lotus Discovery Server and K-station, [such as] the ability to really filter business-critical information into a well-designed portal, deliver the right portlets that not only include external Web sites but internal documents and libraries, and access to important activity-based functions like e-mail and calendering. That is another example of making these technologies fit for business. So we are focused on the enterprise customer set at the end of day, ranging from small and medium-size enterprises all the way up to the largest companies in the world -- and we think if we maintain that focus we can do well.

Mills: I think Lotus was ahead of its time. Others are now coming to terms with the fact that this idea of collaboration between human beings is extremely important -- it's not just about information access. We've seen this with the Web now, over and over again, where somebody says, "Well, simple access to the Internet can replace the following ..." and then you begin to realize it is not just about getting at the information, it is about the interaction between people. We always expected to have competitors, so it is not a surprise, but Lotus was there first.

InfoWorld: Is Yahoo the strongest competitor in that set right now?

Zollar: I never see them in corporate accounts.

InfoWorld: Let's talk about IBM and Lotus. In terms of software offerings, there seems to be a lot of complementary packages and some overlap; for instance, IBM has a corporate portal offerings in the form of frameworks. Where does Lotus end and IBM begin? Is Lotus going to continue as a stand-alone subsidiary or has it become a component of IBM's overall software strategy?

Zollar: We are a business within IBM. IBM has multiple businesses. We are focused on marshalling the resources for engineering, sales, services, and marketing that are required to make the business successful. At the end of the day, software tends to be an asset with multiple touch points. And of course there are multiple touch points between Lotus and the rest of our colleagues in [IBM's] software group. We are working together to leverage as much common technology as possible. And what we are doing in the area of portals is an example of where we have a common architecture [in order] to share portlets -- or the portals inside the portal, if you will -- across the various products within the software group. Portal is a very broad term: There are business-to-consumer portals, business-to-business portals, business-to-employee portals, [and] employee-to-employee [portals]. So we want to make sure we can cover the full range of uses that people envision for portals. Our focus at Lotus is on those portals that are aimed at knowledge workers who have to make decisions based on the information content and knowledge content of assets they deal with in the enterprise. And turning that knowledge into action, I think, is again what distinguishes our offering from the rest.

Mills: At $90 billion of total revenue, IBM has many, many businesses that make up the sum total of the company, broken up into various product areas and services we offer to our customers. And each one of these entities is self-contained, in terms of development. Al [Zollar] has full development capability to build anything the customers are asking for. What Al is trying to do is look for ways to leverage other pieces of technology that come from different parts of IBM -- be it one of other software group labs or IBM Research. Lotus has a fully self-contained marketing structure, but again looks for ways to gain efficiency and leverage by piggybacking on IBM's buying power -- and obviously we are looking for ways to find complementary impact on the market between IBM-branded things and Lotus-branded things. And finally, there is a sales and services structure that is made up of thousands of people who sell the Lotus products and that is all they sell. Al has a fully self-contained business inside IBM's software business, which is inside IBM's [entire] business. And these things are all nested one under the next.

InfoWorld: Do you envision taking any of IBM existing portal software and moving it over to Lotus?

Zollar: We certainly do move technology back and forth, and that has been going on for the past couple of years. Lotus has been sourcing things out of [IBM] Research, and there has been extensive sharing of Java-related development activities between Lotus and IBM.

InfoWorld: What about existing products, rather than technology from the labs?

Zollar: Well, at the end of the day it is the technology that makes products. I think another great example is our Lotus translation services for SameTime. There we are using machine translation technology that comes from IBM and also will be re-purposed for use inside of WebSphere. But at the end of the day it gives us the ability to offer a very compelling solution to global corporations with employees that have to cross the language barrier as they use different forms of in-synch communications like our SameTime product. So it is about using common technology building blocks to build a compelling customer solution.

Mills: And that is how I manage across my whole organization. I don't approach it from the context of taking a product and moving it around, I move around technology. Product is a naming convention. If you understand development labs, technology is about what they feel, what they own, what they do. They are happy to take technology that helps them get ahead in a certain project and incorporate it into what they are delivering. That is way we operate across the whole organization.

InfoWorld: What has been the adoption rate of Notes R5? Although R5 added some nice management features for IT departments, it seems to have been little more than a facelift for end-users on the client. Will the new Rnext offering rectify that, and what do they think are the most compelling features of Rnext?

Zollar: I think the adoption rate for R5 has been what we would expect, given the year-2000 bubble that existed in the middle of customer deployments. Customers are loath to reach out and touch hundreds of thousands of desktops on a very frequent cycle. So it is no surprise that the server upgrades have happened faster than the client upgrades, but they are moving along at a very rapid clip. We know that more than 50 percent of our customers are at R5 at the moment, and I expect that to continue. As for the additional functionality in R5, the customers that I have talked to say they are in a much better-integrated environment, especially between the browser world and the world of the Notes client. And in addition, R5 has become a pathway into some of the most advanced functions that we're delivering from Louts -- capabilities like Domino.doc. So it is a stepping stone along the way of extracting value from the technology that Lotus provides.

InfoWorld: Is there a timeframe for Rnext yet?

Zollar: Well, we previewed it in the opening general session here at Lotusphere, and we showed some of the features we are working on. I think there were moments of applause around some of the replication improvements we have to offer. We have early design partners that have hands on the code, and we have it deployed internally. We will be more explicit about the beta schedules in the weeks and months ahead, but we are moving down the path in a deliberate way that will be based on customer feedback.

InfoWorld: What are the top three compelling features in Rnext?

Zollar: Greater scalability on the server side is one of the key things we are focused on. The second thing is really the harmonization of the programming model to include more of the server-side programming we see today in the Web -- JavaServer Pages (JSPs), for example. On the client side, I think it is more fit and finish and usability features. Again, the improvements are in replication, greater multitasking, much improved calendaring and scheduling. These are things that our customers have been asking us for and our engineers have been clamoring to get to market.

InfoWorld: Can you explain the pricing strategy in terms of SameTime and K-Station as they relate to Notes? Do you plan to bundle these products or make people buy them as extras?

Zollar: We are interested in new growth and new markets. New growth comes from our ability to take our large base of existing customers and look at new ways to offer them value through up-selling products like Domino.doc, SameTime, QuickPlace, Domino Extended Search, [and] our integration components for SAP and PeopleSoft. All these things represent opportunities to create more value for our customers. Because we have been building our more recent products to [conform to] Web standards, we can go into a customer who has some other infrastructure for messaging and offer the instant meetings and instant messaging that Sametime offers, or virtual workspaces that QuickPlace offers. And we are building our knowledge management and e-learning offerings in a way that integrates and leverages the Domino environment but doesn't pre-require it, so we expand the addressable market opportunity in front of us.

InfoWorld: Why would I pay for SameTime when I can use other instant messaging products for free?

Zollar: If you care about things like encryption, if you care about things like ability to really scale these capabilities to business uses for applications like audio and video over IP, if you care about having functions for an e-meeting, like whiteboard sharing -- these are things we focus on. [SameTime] is not an isolated e-utility. We focus on it as a component of multiple types of Web-based applications. So the ability to plug this into various applications that people are using is one of the key advantages SameTime brings. The ability to see the online status of people related to the tasks or activities you are working on through a browser is a powerful capability. So we think our focus on the enterprise customer is very strong. An example of a capability we have that others haven't really thought about is the need for simultaneous on-the-fly language translation. Global companies have some employees who only speak Japanese, some only English, some only German, but still have a strong need to collaborate and communicate. We now offer simultaneous language translation through an instant messaging session, and that is something our competitors haven't begun to understand let alone deliver.

InfoWorld: What role will peer-to-peer technologies play in collaboration, given that Notes creator Ray Ozzie is now at Groove Networks? Will peer-to-peer find its way into the Notes architecture, and if so, how?

Zollar: Associating peer-to-peer with Notes I think would be a mistake. Peer-to-peer is something Lotus finds really interesting. Ray [Ozzie] is an innovative guy, and he is testing a new model that will be of interest to enterprises -- and this model has received a lot of validation in the consumer space with things like Napster. So we are watching this space with a lot of interest. We do know that the model of browsers connected to servers is a model that works in the enterprise setting, and we are selling millions of seats of use in that environment while [Groove Networks] is still in beta [testing]. I think it is a little bit of a strange comparison at the moment, but we are watching it.

Mills: It is also a space where the definition tends to be a little bit murky. Peer-to-peer server application functions and relationships have been around a long time. In fact, that is what Notes is: Notes and Domino are server-side, peer-to-peer network servers with shared function. They coordinate and synchronize with each other. There is that similarity, but [Domino] is more server-centric from a control standpoint.

Zollar: I think there is hype in a lot of peer-to-peer discussions. But if you look at our Domino offline services capability -- which allows an iNotes Web access user to go offline with a browser-based mail, calendar, and scheduling system -- it strips down the Domino server into a client-installable package to allow that client to appear to the network as just another server.

InfoWorld: But there is a core technology there that you could leverage?

Zollar: It depends on what your definition of the peer is. We've been doing this for years, if you consider the peer a server. If you make the client a server -- poof, you are into peer-to-peer.

InfoWorld: The wireless deal with Research in Motion (RIM) is certainly a step forward, but in terms of RIM and Palm, Notes still seems to be an add-on client support, versus a core supported application such as Microsoft Exchange that comes bundled with the devices. Why is this, and what will you do to improve it?

Zollar: We are announcing these deals all the time and there will be more. If you are one of these device makers and you look at consumer market and you see Microsoft's presence in the consumer market, you will prioritize that very highly. But it doesn't take long for these device makers to realize that big enterprise customers who use Lotus products are an attractive market. We are working with them, we are delighted that RIM has announced support for Lotus Notes and Domino. We have strong support for Palm. We estimate about half a million people among our customer base use Palm connectivity into their Notes/Domino infrastructure. And, of course, as new devices come on the market we will focus on them. We think WAP [Wireless Application Protocol] is a huge area, and we have put a lot of our attention into the WAP market, as we have seen that develop outside the United States more quickly than inside.

InfoWorld: So we'll see a lot of deals between Lotus and phone makers and telecom companies around integrating Notes and WAP?

Zollar: Yes. We've made announcements with Nokia and Ericcson, and with RIM and Telstra. Our strategy is quite simple: We want to get the market-leading device makers and network operators to work with our infrastructure.

InfoWorld: How is Lotus doing in the big accounts like Exxon-Mobil and General Electric? And are they starting to appreciate not just e-mail but the whole knowledge management infrastructure, and how much momentum is there?

Zollar: We've always differentiated our messaging offering with collaboration. I think it shouldn't be surprising that as organizations merge and gain scale, the value of collaboration goes up. So as mergers have happened and organizations have become larger entities, they see the need for a unified communication infrastructure that allows their employees to collaborate. If you talk to people at Exxon-Mobil, they would tell you that that was the reason for their decision. As much as I would like to say GE has made the decision to switch off the Exchange messaging platform, they haven't quite done that. What they have decided to do is use Lotus products to extend that environment with things like instant meetings and instant messaging with SameTime. They have over 7,000 QuickPlace sites up and running that interact with their backbone infrastructure. They are using Domino.doc and LearningSpace as two application-oriented uses of Lotus technology. And we will keep talking to them about core messaging.

Mills: GE, among others, sees the potential to put collaboration into classical applications such as supply-chain and procurement-related processes that always have a lot of human interaction taking place. You get yourself beyond the basic battle over e-mail. The battle over e-mail is mundane. There is free e-mail all over the world. E-mail is not the future of where this set of capabilities lies. It lies in adding collaborative functions to design, to engineering applications, to procurement, [and to] supplier relationships.