Analysts Approve Microsoft-Groove Union

Groove fills Microsoft's collaboration holes and adds credibility, but fitting the P2P-based technology into Microsoft's products could prove difficult, analysts say.

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.

/zimages/4/28571.gifClick 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.