IBM plans Web-based desktop software

update NEW YORK--IBM on Monday announced new software intended to take on Microsoft in the market for desktop business applications.

The new software, part of IBM's Lotus Workplace strategy, is a bundle that includes e-mail, word processing, spreadsheet and database applications aimed at business users. The package also includes server-based management software, as well as software to run productivity applications on handheld devices.

While Microsoft's market-leading Office bundle works only on the Windows and Macintosh operating systems, IBM's new software is designed to be distributed and accessed through a Web server and to be accessible from systems running Windows and Macintosh, as well as Linux and Unix, and from handheld devices.

A big part of the announcement is IBM's plan to build and put its new applications on top of the server-based management software, said Steve Mills, the top executive at IBM's software unit. IBM's message to customers is that they can use the software to lower their management costs. "All of the cost (in desktop software) is labor, not software cost," Mills said.

IBM has also rounded up support from other software makers, including Adobe, PeopleSoft and Siebel Systems, which are considering making their Web-based business applications available through the new IBM client management software.

IBM hopes to sway customers to the Workplace software with a few key selling points, including ease of management, mobility and price. Since most of the work takes place on server-based software, Workplace software can be distributed and updated centrally. And unlike pure Web applications, the new software is designed to be used offline, so mobile users on laptops or handheld devices can connect, quickly access applications and disconnect to work offline. When they connect, the Workplace software synchronizes their work with server-based applications.

The company plans to charge customers US$2 per user per month for access to the software, plus US$1 per user, per month for each IBM application, such as messaging and document management.

The larger costs to customers will be in buying the server software, such as IBM's WebSphere and portal software, that's needed to make the system work. That software can cost thousands of dollars. Mills said IBM intends to make the bulk of its revenue from the new plan on sales of the server software. The company, along with partners, also plans to offer services and consulting assistance to customers for a fee.

Microsoft controls more than 90 percent of the desktop software market. In the past year, Sun Microsystems has made inroads with some business and government customers with its StarOffice and OpenOffice desktop software.

Microsoft said it is not threatened by IBM's push into desktop software. Microsoft's Office System 2003 suite already offers the server-based management features that IBM is touting with Lotus Workplace, said Dan Leach, group product manager for Microsoft Office System.

"We believe Office 2003 raises the bar that other competitors are shooting at," Leach said, calling IBM's portal-driven Workplace software "limited" compared to Microsoft Office. "It does show that IBM is seeing our point of view, which we've have for a long time, that it takes more than a server to make information workers productive."

Sun did not see IBM's latest announcement as much of a threat either. "It looks a lot like the same old Lotus Notes that they were using seven years ago, except there's a nicer user interface," said Peder Ulander, Sun's director of marketing for desktop solutions. He added that Lotus Workplace hasn't removed the cost of client administration, security headaches or the need for client software, whether Microsoft Office or Sun's competing StarOffice and OpenOffice. Sun can provide the same "end-to-end solution" through its Java System line-up, he said.

Although many of IBM's desktop software products, such as its Lotus Workplace, have been available for many months, IBM said that the bundle of products represents an alternative to Microsoft's desktop-computing model. The Web-based software combines server-based management with desktop productivity tools that run across several operating systems and devices, IBM said.

Mills downplayed the competitive angle with Microsoft. The announcement is "not about beating Microsoft. There is no business strategy of any merit predicated on beating competitors. It's about how customers can save money," he said.

But one analyst said the Workplace announcement sets the stage for future clashes with Microsoft over desktop software, since IBM has now put in place a desktop software infrastructure that it can use to deliver additional products. "IBM is trying to change the decision-making process regarding deployment and management of software. The desktop is certainly an area of opportunity, because there are a lot of questions around direction, strategy, economics, and vendor support," said Steve O'Grady, an analyst with RedMonk.

As part of Monday's announcement, IBM extended the document management and e-mail capabilities to its Lotus Workplace line. Lotus Workplace Messaging has been improved with "rich client" capabilities, or the ability to run programs partially on desktop PCs for richer graphical capabilities than is possible with an approach based purely on a Web browser.

CNET News.com's Martin LaMonica and Karen Southwick contributed to this report.