Microsoft Buys Groove Networks

Microsoft Corp. Thursday announced it will acquire collaboration software firm Groove Networks Inc.

Groove, which makes P2P (peer-to-peer) software that allows geographically dispersed workers to collaborate over the Internet, was founded by Ray Ozzie, creator of Lotus Notes.

Ozzie will join Microsoft as a chief technology officer and report to Bill Gates, Microsofts founder and chief software architect.

"Ive thought about whether we could hire Ray for a long, long time," Gates said on a conference call Thursday. "Its exciting to have Ray and his team join Microsoft. It will allow us to do a better job for all the information workers out there."

In addition to bringing in the Groove team, Microsoft plans to integrate the Groove Virtual Office application into the companys own collaboration offerings.

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Those include products such as Live Meeting, which allows for communications, but not in-depth collaboration, outside of corporate networks; and Office Communicator and SharePoint, which allow workers to collaborate remotely over the desktop while within a secure corporate environment.

Rob Helm, an analyst with Directions on Microsoft, an independent research firm in Kirkland, Wash., said the deal made sense on several levels.

"Bill Gates wants Ray Ozzies team in his architectural organization, and the Information Worker group wants some of the capabilities of Groove to round out their SharePoint story," Helm said.

"With SharePoint, our server-based products, you can collaborate across corporate boundaries, but it does require some administration and setup that is a little more than we would like," Steven Sinofsky, a senior vice president of Microsofts Office team, told eWEEK.com.

"Groove allows us to offer an ad hoc, peer-to-peer workspace within our offerings, without setting up additional infrastructure."

He called the Redmond, Wash.-based companys solution a "trifecta" of real-time, server-based and P2P collaboration tools.

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Groove Virtual Office uses P2P technology to extend that collaboration capability to workers located remotely and outside the corporate firewalls. Aimed at smaller, more disperse groups, teams can quickly set up secure workspaces from desktop to desktop, without relying on additional server or security technology.

"The collaboration challenges within corporations span both centralized and de-centralized communications," Ozzie said in the conference call. "On the desktop, Groove will be a tremendous addition to the Office System family of collaboration products and services."

This gives Microsoft an entry into smaller organizations without the IT infrastructure to support large-scale collaboration. It also continues to expand Microsofts Office line beyond traditional applications such as Word and Excel.

Click here to read eWEEK Labs review of Virtual Office 3.0.

"The Groove product really has some fantastic and very unique features that we want to fit into the entire Office offering," Gates said. Microsoft wouldnt give details on how Groove will be integrated into Longhorn and future Office products, only that P2P communications plays an important role in their development.

"The unique capabilities of Groove allow us to bring people together virtually wherever they are," said David Scult, president and chief operating officer of Groove. As an example, Scult said the Groove technology was used by various relief organizations to deliver aid to victims of the Asian tsunami.

"Organizations who had virtually no IT support could immediately start coordinating and collaborating together," Scult said.

Microsoft has partnered with Groove for several years and previously invested in the company as well. Ozzie was honored as a "Windows Pioneer" by Microsoft prior to founding Groove and Groove was architected to work particularly well with Microsoft Office products.

Financial details were not disclosed, but Grooves operations, and roughly 200 employees, will remain in its Beverly, Mass., headquarters.

"The lions share of our resources will become Microsoft employees," Scult said. "We plan to grow the team to best support the opportunity that Office Systems present us. Its only good news from our perspective."

Editors Note: This story was updated to include comments from an analyst from an independent research firm.

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