Lotus was founded as Lotus Development Corp. in 1982 by Mitch Kapor and Jonathan Sachs, with venture capital backing from Ben Rosen of the Sevin Rosen venture capital firm.
Lotus' first product was presentation software for the Apple II known as Lotus Executive Briefing System.
Lotus released Lotus 1-2-3 Jan. 26, 1983. The name referred to the three ways the product could be used—as a spreadsheet, graphics package and database manager. It was the IBM PC's first "killer application," and its huge popularity in the mid-1980s contributed significantly to the success of the IBM PC in the corporate environment. Jonathan Sachs, who wrote 1-2-3, had written two spreadsheet programs previously while working at Concentric Data Systems.
In 1982, Jim Manzi came to Lotus as a management consultant and became an employee four months later. In October 1984, he was named president, and in April 1986, he was named as CEO, succeeding Kapor. In July 1986, he also became chairman of the board. Manzi would remain at the head of Lotus until 1995.
Lotus introduced other office products such as Ray Ozzie's Symphony in 1984 and the Jazz office suite for the Apple Macintosh computer in 1985.
Competing With Microsoft
In the 1990s, to compete with Microsoft's Windows applications, Lotus had to buy products such as Ami Pro (word processor), Approach (database) and Threadz, which became Lotus Organizer. Several of these (1-2-3, Freelance Graphics, Ami Pro, Approach and Lotus Organizer) were bundled together under the name Lotus SmartSuite. Although SmartSuite was bundled cheaply with many PCs and may initially have been more popular than Microsoft Office, Lotus quickly lost its dominance in the desktop applications market with the transition to 32-bit applications running on Windows 95.
The Hazards of OS/2
Due in large part to its focusing much of its development resources on a suite of applications for IBM's OS/2 operating system (which launched in 1987 and eventually turned out to be a failure), Lotus was late in delivering its suite of 32-bit products and failed to capitalize on the transition to the new version of Windows. It now has very little market share.
Diversification From the Desktop
Lotus began its diversification from the desktop software business with its 1984 strategic founding investment in Ray Ozzie's Iris Associates, the creator of its Lotus Notes groupware platform.
The Impact of Notes
Lotus initially brought Lotus Notes to market in 1989, and later reinforced its market presence with the acquisition of cc:Mail in 1991. In 1994, Lotus acquired Iris Associates. Lotus's dominant groupware position attracted IBM.
In the second quarter of 1995, IBM launched a hostile bid for Lotus with a $60-per-share tender offer, when Lotus' stock was only trading at $32. Manzi looked for potential white knights, and forced IBM to increase its bid to $64.50 per share, for a $3.5 billion buyout of Lotus in July 1995.
While IBM allowed Lotus to develop, market and sell its products under its own brand name, a restructuring in January 2001 brought it more in line with its parent company. Also, IBM moved key marketing and management functions from Cambridge, Mass., to IBM's New York office.
Dropping the Brand
In November 2012, IBM dropped the Lotus brand from Notes and Domino products.
IBM Connect 2013
In January, IBM is hosting the 20th anniversary of the Lotusphere user conference at the company's IBM Connect event in Orlando, Fla.
20 Years of Lotusphere
At IBM Connect 2013, IBM is celebrating 20 years of Lotusphere.