Lotus Notes gets upgrade

The next version of IBM Corp.'s flagship collaboration software, Lotus Notes, will challenge the dominance of Microsoft Corp.'s Office suite by offering built-in word processing, spreadsheet, and presentation graphics software.

''This is the first time that Notes code itself has actually included a document editor," said Ken Bisconti, vice president of IBM Lotus Workplace, Portal & Collaboration unit, based in Cambridge and Westford.

The software to be introduced to Notes will also challenge Microsoft by saving data files in the new OpenDocument Format (ODF), a universal format that can be used by any software company.

Microsoft Office uses its own proprietary format to store data -- a practice which some say has locked in Microsoft's 90 percent share of the office software business, by making it risky for companies to use non-Microsoft programs.

IBM estimates that 125 million people worldwide use Notes; users who switch to the new version will find it easier to move away from Microsoft Office.

''That's going to be a challenge to what Microsoft had as a monopoly," said Amy Wohl, president of Wohl Associates, a consulting firm in Narberth, Pa.

Lotus isn't new to the office software business. The company first came to prominence through the success of its 1.2.3 office spreadsheet program, which was supplanted in popularity by Microsoft's rival Excel program. As Lotus's office software business weakened, one of the company's top programmers, Ray Ozzie, developed Lotus Notes, the first program designed to help groups of people share information and work together over a corporate network.

Ozzie went on to found his own groupware company, Groove Networks Inc. Groove was acquired by Microsoft Corp. in 2005, and Ozzie is now Microsoft's chief technical officer.

Microsoft Office, which contains word processing, spreadsheet, and graphics software, can sell for as much as $400. It's one of Microsoft's most profitable products, rivaled only by the company's Windows operating system. The company's Information Worker unit, which sells Office, generated over half of Microsoft's $14.5 billion profit in 2005, and Microsoft is set to unveil a new version of Office sometime next year.

But next year's version of Lotus Notes will include an ODF-based word processor, spreadsheet program, and a graphics program similar to Microsoft's PowerPoint program. The programs will be integrated with Notes, so that a user won't have to launch the software separately. But users will still be able to link Notes to Microsoft Office programs. That way, said Bisconti, workers can keep using Office to access existing Microsoft-formatted files, while storing newly created files in the universal ODF format.

IBM has not yet set a price for next year's version of Notes. A basic setup of the current version costs $1,195 for the server software, and $101 per user. Bisconti said that including the features in Lotus Notes would add little to the cost of the software, because word processors and other office software have become low-cost commodity products. Indeed, Sun Microsystems Inc. produces an ODF-based office software suite called OpenOffice, which can be downloaded over the Internet free. Bisconti said admitted that the Lotus office software won't have all the advanced features of Microsoft Office, but most people rarely use these tools, he added. ''Most customers tell us that 90 percent of my users use 10 percent of the functions," Bisconti said.

An ODF-compatible version of Lotus Notes could boost IBM's prospects in Massachusetts. The executive branch of state government will require that all documents be stored in an open format, beginning next year. The state has cited ODF as an approved format. Microsoft has submitted a new data format of its own to an international body for approval as an open standard, and the state government has said it might be acceptable. But it could take years for Microsoft's format to gain international certification, and so far Microsoft has refused to modify Office so that it can store files in the ODF format.

Microsoft officials declined to comment on IBM's announcement. But software industry watchers said that introducing ODF to millions of Lotus Notes users might quickly establish it as a major alternative to the Microsoft document standard.

''When you're trying to get a standard started, the biggest problem is to get a lot of that standard out and people using it," Wohl said. The size of the Lotus Notes user base ''gives you a real kickstart in the marketplace."

Anne McFarland, director of data strategies and information solutions at Clipper Group in Wellesley, called IBM's move ''a really interesting challenge to the hegemony of Microsoft." But, McFarland said, the rise of ODF was mainly important because the new format includes features that make it far easier for organizations to sort, categorize, and search the data in their files.

''The flexibility that the Open Document Format gives to businesses to use their information is stunning," McFarland said.

Hiawatha Bray can be reached at bray@globe.com.