An M&A veteran offers Compaq and Digital some advice
The soft-spoken and gentlemanly Thompson, who runs IBM's $13 billion software business, is widely credited with Big Blue's successful acquisition of Lotus three years ago. Lotus Notes seats grew to 20 million last year, 1.5 million more than IBM executives forecast a year ago. Domino release 5.0 is getting good early reviews, and IBMers claim Notes wins two-thirds of the time in head-to-head battles with Microsoft Exchange, its chief rival.
Basking in the glow of Lotusphere here, a relaxed Thompson expounded upon the merger of Digital and Compaq in a roundabout way. "I'm happy to sell them software," he said.
As a former mainframer, Thompson won't comment on the hardware side of the deal.
"I really don't know. I haven't thought about it," he said with a twinkle in his eye. Clearly, Thompson has thought about it on this day, but there's no upside in talking about it.
Now that IBM's $3 billion acquisition of Lotus appears to have paid off, Thompson is willing to offer the two companies some free advice.
He also admits there were times he doubted whether the marriage of IBM and Lotus would succeed.
"I never had doubts about the strategic value," he said. "I had doubts about whether I could make the two managements work. You know when you do a hostile takeover, you are going to lose a lot of people. You have to overcome that. It takes a lot of energy."
The Digital-Compaq merger already has one advantage -- it's friendly so far.
In the end, the initial turnover in executive management may have removed obstacles that could have prevented IBM from assimilating Lotus to the extent it did. Today, Lotus' identity and modus operandi remain squarely intact. And the company seems to be thriving, happy that IBM came along.
"You have to find the right balance," Thompson said. "We kept all the positive things like Lotus' entrepreneurship, creative people and motivation. There were software people at IBM that I wanted to behave like the people at Lotus.
"Then you have to find the synergies like leveraging the [combined] sales forces, IBM research as well as the coming together of databases, transaction software and middleware. It's the same thing at [IBM subsidiary] Tivoli [Systems]."
A little bit of luck never hurts either. Clearly, the Internet reset the chessboard against tough rivals like Microsoft Corp.
"I wish I could tell that I saw the Internet to the degree it happened," Thompson said. "But I never had doubts about the strategic value of this deal."
Words of wisdom for Compaq Chairman Eckhard Pfeiffer and Digital Chairman Robert Palmer. Been there, done that.