A couple of aspiring software makers plan a sales surge
Software companies are playing king of the hill. They all want to be on top, but is there room for them all up there? Information Unlimited Software Inc. (IUS) and Lotus Development Corporation are two software publishers aggressively vying for a piece of the crown.
Lotus just started shipping its product on Jan. 26. But the retail value of this first shipment was over $4 million. ''Lotus came out of nowhere,'' says Lynne Baron, a research consultant at Quantum Science Corporation.
IUS is a five-year-old company. Last year sales totaled around $8 million, more than triple the 1981 level. In a month, the Sausalito, Calif.-based company will have opened a Boston sales office. At least four more offices will dot the country by year-end. ''IUS is a leading company - but they're not the only one, '' says Dr. Harold Kinne, senior vice-president of Future Computing Inc., a research firm.
Of the independent software publishers - that is, those that aren't IBM, Tandy, Atari, Apple, etc. - Lotus believes it can be in the top five in terms of sales, and IUS is aiming to be No. 3. Both expect to get there within two years. But they've got a climb ahead - the reigning companies right now have sales in the $30 million to $40 million range, says Dr. Kinne, and include names like VisiCorp, Microsoft, and Micropro.
''Productivity software'' is the route both companies are taking to the top. This software, mostly used by business, gives computers instructions on how to do such tasks as word processing, data processing, and financial spreadsheets.
But their product similarity stops there. Lotus, in Cambridge, Mass., expects to ride into the No. 5 slot on the newest wave of software - integrated software. Instead of having a different software package for each program, a lot of programs are rolled into one package. Apple's newest computer, Lisa, uses this concept. And VisiCorp is supposed to offer integrated software this summer.
The Lotus package, called ''1-2-3,'' combines a spreadsheet, text editing, business graphics, and a kind of filing system all in one program. ''Executives do a lot in a given day,'' a Lotus spokeswoman said. ''They don't just sit at a word processor all day long cranking out memos and letters.''
William Lohse, vice-president of sales and marketing at IUS, says that ''someday, (integrated software) will be the way that software goes,'' but it's not what many people want now. Integrated software can't perform individual tasks well enough, he criticizes. For instance, ''none of these packages, even Lisa's, has a decent word processor.''
That is why IUS is sticking to high-performance individual packages that can be combined with one another. For instance, while using its word processing program, you can pull figures from its data-base programs.
''The tendency at the large corporations is to buy the integrated solution,'' says Quantum's Ms. Baron. ''Managers are willing to sacrifice something like word processing because they aren't primarily writers.''
But, Ms. Baron says, ''there is still a market for IUS. Not everyone wants to pay $600 to $1,000 for a lot of (features) they won't use.'' The 1-2-3 program retails for $475. IUS's EasyWriter word processor sells for $175.
If some computer experts criticize IUS for not falling in step with integrated software, they can't fault the firm's marketing strategy. IUS has two hefty contracts under its belt, one with IBM for its Personal Computer and, more recently, with Texas Intruments for its new business computer. IUS sells them products from its ''Easy family'' - EasyWriter, EasySpeller, EasyFiler, and EasyPlanner. IBM and TI put their own logos on the products. IUS also sells its products independently through computer stores.
Lotus has a three-prong strategy: relying on another software marketer to distribute and service 1-2-3; dealerships; and a national accounts program where large corporations would buy in bulk. Lotus also says some major computer manufacturers are interested.
But the ultimate characteristic that will make or break a software company, Lohse says, is service. ''We want to be No. 1 in support.'' Five of the company's 60 employees man phones to answer consumer questions. Unlimited phone help, a newsletter, software updates, and replacement of faulty disks can be bought by a user for 20 percent of the cost of the software.
Part of good service is software that's easy to use, Lohse adds. IUS will soon be coming out with lessons on cassette tape for its programs and shortly after that, the program itself will teach users about the software. ''These aren't innovative ideas,'' Lohse admits, but it's their quality that will make them winners.
Market researchers say it's too early to predict how the market-share pie will slice.
''The software field is growing so fast that when we look at a company, if it hasn't moved its physical location in 12 months, something's wrong,'' Kinne says.
Lotus and IUS must at least be on the right track. They both moved into more spacious offices last year.