Analysts Approve Microsoft-Groove Union

By Matthew Hicks  |  Posted 2005-03-11

Analysts Approve Microsoft-Groove Union

By acquiring Groove Networks, Microsoft will gain the ability to move beyond its server-centric collaboration offerings and earn more credibility in the remote collaboration space, market analysts said this week.

But the Redmond, Wash., software maker also will face challenges in integrating Groove Networks Inc.s technology.

Grooves focus on using peer-to-peer communications for workgroup collaboration, for example, could clash with Microsoft Corp.s Office products and culture, analysts said.

"This is happening about a year too late," said Nate Root, a vice president at market researcher Forrester Research Inc.

"They should have done this a year ago so they could really plug Groove well into the Windows Longhorn and Office 12 development roadmaps. Now is not the time when these product teams want to hear, Hey, can we throw this in there too?" Root said.

Longhorn is the code name for Microsofts next major Windows release, while Office 12 is the next major update to its widely used productivity suite.

In announcing its plans to buy Groove for an undisclosed amount, Microsoft said it will continue to offer Grooves Virtual Office product while also integrating Grooves technology into Microsofts Office collaboration products.

Those products include the Office SharePoint collaboration server, the Office Live Meeting Web conferencing service and the recently announced Office Communicator integrated instant-messaging and communications client.

What is clear to market watchers is that Groove has been an attractive takeover target for the major enterprise messaging and collaboration vendors, including Microsoft, IBM, Oracle Corp. and Novell Inc. Microsofts decision to buy Groove didnt surprise analysts, given Microsofts past partnerships with Groove and investment of $51 million in the company.

Click here to read more about Microsofts Groove purchase.

Groove itself is known for helping to reinvent the way distributed workgroups can communicate and collaborate. It was founded at the height of buzz around peer-to-peer technology.

While Groove has found success in converting individuals to users and making inroads into enterprise workgroups, it has struggled to gain a broad foothold in enterprises, said Betsy Burton, an analyst and vice president at Gartner Inc.

The Microsoft acquisition could help Grooves technology gain credibility and acceptance at higher levels in IT and the enterprise, she said.

Next Page: Microsoft plans to move Groove upstream.

Moving Groove Upstream

"Primarily their buyers have been individuals in teams to do collaboration work, and they bought it as a tactical solution for those teams," Burton said. "[But] theyre still fairly small in terms of numbers of customers… They had not moved upstream, and we saw that as major problem for them."

Microsofts decision to buy Groove is as much about gaining technology as it is about beating out its top competitors, Burton said.

Microsoft also is gaining a luminary in the collaboration market, Ray Ozzie. Ozzie is best known as the creator of Lotus Note, which is now a product owned by IBM. In 1997, he founded Groove, based in Beverly, Mass. Ozzie will become a Microsoft chief technology officer and will report to Chairman Bill Gates.

"The addition of Ray Ozzie is a point of credibility and in many respects is Microsoft thumbing their nose at IBM," Burton said. "Once [Microsoft] got its heads around the fact that collaboration is important to them, they had to make sure that IBM didnt grab Groove."

Over time, Groove has gradually honed what it now calls the Groove Virtual Office product to be a way for groups to share files and workspaces even when they are distributed across different companies and various messaging and collaboration systems, said Peter OKelly, a senior analyst at the Burton Group.

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

With the Groove acquisition, Microsoft is filling a missing piece in its collaboration offerings and recognizing that workgroups often include users on non-Microsoft platforms, even within the same enterprise, OKelly said.

Groove, for example, offers users the ability to access collaborative workspaces when they are offline, something thats missing in Microsofts SharePoint product, OKelly said.

"Until recently, people would have argued that Microsoft does not have a comprehensive strategy and vision for communications and collaboration," OKelly said. "This will galvanize things and bring together [a strategy] more rapidly."

Check out eWEEK.coms for more on IM and other collaboration technologies.

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