1. ® IBM Software Group Workplace, Portal & Collaboration Market overview Christina Mavromatis

2. IBM Software Group 2 Agenda  The Portfolio  Market opportunity  Our positioning  Market trends  North Region priorities

3. IBM Software Group 3 The Portfolio

4. IBM Software Group 4 Product Families IBM Workplace products The new bridge between people and business processes with integrated collaborative products IBM Lotus Notes/Domino Time tested, market leading collaborative application environment for developing people-driven applications IBM WebSphere Portal Allows integrated access to the information, applications and business processes

5. IBM Software Group 5 Marketplace Assessment

6. IBM Software Group 6 Lotus Region North 2005 Market Opportunity Sector$K Communications29,252 Distribution59,073 Industrial56,045 Public Health15,418 Financial65,053 CSI26,703 Total251,544 Excludes Non-business and Small Companies (1-99 employees) Implications: Distribution, Industrial and Financial opportunity will be addressed through PP Programme and will be priority industry segments Plan to work with partners to develop campaigns into these industry segments

7. IBM Software Group 7 2005 EMEA Region North Market Opportunity for Lotus Total Lotus Oppty is $251M ( excluding 1 – 99 and Non Business) Implications of Market Opportunity 1.Continue to harvest profit from Notes/Domino segment, while targeting growth in Workplace and Portal. 2.Grow revenue in Workplace & Portal by up-selling to Notes/Domino base and via new customer acquisition. 3.Aggressively drive new license revenue in the SMB market, with “express” Workplace offerings. 2004 Mkt Opportunity $K 2005 Mkt Opportunity $K % Growth Large 1000+146.4152.74% 500 - 99935.337.25% 100 - 49957.761.76% 239.4251.65%

8. IBM Software Group 8 Our positioning

9. IBM Software Group 9 IBM Market Leadership 78 of the Fortune 100 use IBM collaboration IBM ProductsHighlights Competition IBM Lotus Position #1 in ICE @ 46% share (Gartner) Over 114 million seats Domino.Doc in 40 of Fortune 100 Team Workplace Leader(Gartner) IM & WC #1 in Business Instant Messaging – used by 60 out of Global Fortune 100 (Gartner) Microsoft: -Exchange -Live Communication Server #1 WebEx Microsoft -Live Meeting -SharePoint Service Documentum Open Text Microsoft Vignette Interwoven #1 IBM Workplace combined revenue (IDC) for portal, standalone email, team collaboration, conferencing, content mgmt & other collaboration is larger than any other vendor. IBM Lotus and DB2 Content Manager family of products combined are #1 in CM/DM WebSphere Portal listed as the "Leader" in Gartner MQ and IDC SAP Plumtree Microsoft #1 > 2000 engagements in 55 countries Global LMS deployments Visionary (Gartner MQ) SumTotal Intellinex (E&Y) Pathlore Source: IBM Analysis based on Industry Reports/Market Research Notes & Domino Team Collaboration Workplace Builder Web Conferencing Web Content Manager Workplace Documents Business Controls & Reporting Records Manager Commonstore Workflow, Discovery, Extended Search, Domino.Doc WebSphere Portal Workplace Messaging IBM Learning Services Learning Management Domino Base (ICE) Web Content Mgmt. Compliance Portal Standalone Messaging Team Collaboration Learning Management Sun Oracle LWM “makes sense for many companies” (Aberdeen) IM & WC Team Workplace Learningspace Saba IBM offers better WCM, BPM, and complementary services according to Gartner, among Smart Enterprise Suite vendors. Workplace

10. IBM Software Group 10 Lotus Region North SWOT Leveraging IBM & ValueNet to drive open standards based solutions against.NET (eg.Linux & J2EE) Combining with other IBM offerings into unique solutions Moving competitor customers to Lotus Establishing leadership in H2 fragmented market IT spending set to rise in 2005 Lotus workplace adoption Deferral of IT spending overall.NET battle against J2EE SAP portal strategy Large install base Established community of Domino partners Ability to offer complete solutions Established technology leader across all our market segments Growing IBM sales force to leverage Price pressure by "Good Enough" offerings Workplace maturity Customer confusion around the Lotus Workplace offerings Go to market execution with partners for portal Marketing programs to support channel community StrengthsWeakness Opportunities Threats

11. IBM Software Group 11 Market Trends

12. IBM Software Group 12 Market Trends – Collaboration & Portal Software Applications increasingly drive purchase of middleware. Developers are a strong influencer of platform choice & are looking to leverage existing skills (VB, Domino etc.) and move into enterprise app dev (.NET or J2EE). App dev on MS.Net is growing faster than JAVA/J2EE. Customers are seeking integrated collaborative, portal, and content mgmt solutions from a single vendor for lower integration costs & lower TCO than best-of- breed solutions. On-demand pricing models are still in infancy, but IDC expects these models will be driven by large customers. Web-based conf has been in forefront; portals & live virtual classroom may be emerging opportunities. Technology Trends Collab (e-mail, IM, Web conf) & Communications (phone, video conf, VoIP, etc) are converging into solutions that will change the way info workers interact & perform. In 2005, Web conf will explode as VoIP telephony reduces phone charges. “Future portals will demand support for a wide variety of client devices, rich client access and offline support… After 2006, the rich client may surpass the portal as the chief consumer of Web services.” (Gartner) Vendors are launching e-forms & other active documents that have business processes embedded and that interact with data. This market is growing to $1B by 2005. e-Forms, BPM, regulation and price pressure in the classic WCM space are bringing services and a vertical orientation to the forefront in doc mgmt market. Buyer Behavior Trends Source: Multiple analyst reports synthesized by the Lotus Market Intelligence team IT now commands 25-50% share of total business spending. After 2 sluggish years, analysts expect economic recovery to generate about 6% growth in SW spending in 2004. Compliance has surpassed ROI as the number one driver for IT investments. Compliance requirements will drive 50% of content management spending beginning in 2004. Less than half (46%) of large firms indicate their SOX compliance efforts are integrated with other compliance efforts. (HIPAA, Basel II, etc). Business Trends

13. IBM Software Group 13 Improve Operational Efficiency Improve Employee Productivity Improve Employee Access to Info Reduce Admin Costs Get Closer to Customer Improve Customer Retention Reduce Production Costs Protect Privacy Capture Customer Data Reduce Time to Market Reduce Sales/Marketing Costs Manage Risks Comply w/ Regulations Integrate Supply Chain Distribution Through Mult. Channels Promote Customer Self-Svc Other Customers: What do they buy? UK France Germany

14. IBM Software Group 14 Customer pain points  Top 2 customer pains which are driving collaboration purchases  Improving Operational efficiency  Improving employee productivity Single theme with several key messages Make better informed decisions faster through B2E, B2C and B2B portals that provide integrated access to information and business applications. It is a single, secure point of access personalized to users roles. Build better connected teams with team collaboration software that connects people together regardless of location or time zone to accelerate business processes. It’s how people communicate and collaborate with each other to work on projects or develop and share documents. Improve responsiveness to customer needs and changes in the marketplace by connecting people to business processes, information and expertise anywhere, anytime, from any device.

15. IBM Software Group 15 Customers : How do they buy? Reaching an SMB customer requires an ecosystems of partners, a communication targeting both IT and LOB and using different media SIMPLE PCs Peripherals Low end servers COMPLEX Solutions Middleware High end Unix servers Decision makerVendor selection criteria InfluencersChannelsResearching/ Evaluating IT Reliability TCO Compatibility with installed system Service & Support VARS Resellers Friends/ Colleagues MW: Teleweb, SIs, F2F Vendors sales rep Servers: VARS, Resellers Web as complement of telephone/ fax Web or teleweb Multiple IT LOB Industry knowledge Reputation Understanding of business problem Post implementation support Price Solutions reliability ROI IT consultants SIs ISVs SIs ISVs IT consultants Solutions ISVs and SIs preferred F2F interaction preferred, Solutions use of industry trade fairs and events Use of magazines and web

16. IBM Software Group 16 North Region Priorities

17. IBM Software Group 17 Lotus Region North – 2005 priorities  Increase awareness, interest and desire in the marketplace for IBM Workplace solutions  Target compliance opportunity with WPBCR Establish Workplace as a Platform Advance Lotus in SMB Grow Domino Portfolio business Maintain Portal market share and leadership  Take advantage of largest Market opportunity in SMB, particularly with WSE  Continue capturing the remaining Exchange 5.5. EOL opportunity  Version to Version opportunities  Continue competitive take out actions  Extend core Notes/Domino install base with add on collaborative offerings  Protect renewals business  Grow Partner adoption  Competitive take out against key vendors  Maintain leadership position in portal marketplace The Key Risks to plan Brand awareness, Brand Image and Purchase consideration and preference relative to Microsoft.

18. IBM Software Group 18 Brand Plan Key product priorities  Workplace  Portal  Domino Growth opportunities/focus areas  Crush Microsoft  Workplace  Workplace Services Express  SMB Key enablers of success  Awareness & Enablement ……..so what is Marketing doing?? Demand Gen is critical ….but so is enablement & creating awareness!

19. IBM Software Group 19 Thank you!