Microsoft snaps up Groove, Ozzie

Microsoft made a high-profile move last week acquiring Groove Networks for an undisclosed sum and adding Groove's virtual peer-to-peer software to its ever-growing portfolio of collaboration software.

Groove was founded in 1997 by Lotus Notes creator Ray Ozzie, who will become the CTO for collaboration at Microsoft. Groove's Virtual Office client-side technology lets users share files and work with data offline and, most notably, securely collaborate over corporate firewalls.

Microsoft has invested $88 million in Groove since 2001 and plans to make Virtual Office the third leg of its collaboration stool, which includes real-time collaboration with Live Communication Server 2005 and Live Meeting 2005, server-based collaboration with SharePoint portal and team workspaces, and now peer-to-peer with Virtual Office. The trio will be part of Office System, the focal point of Microsoft's collaboration strategy.

"The key feature is the Groove infrastructure that allows companies to collaborate without having to share network infrastructure or without having to go through setting up outside-the-firewall servers for customers and partners to collaborate on," says Stephen Sinofsky, senior vice president for Microsoft Office. Sinofsky says it is too early to discuss product plans and packaging.

Over the past few years, Groove slowly added a host of corporate-class features and servers to turn the Groove Virtual Office environment into a secure, managed universal front-end-to-back-end data repository and a bridge that ties together disparate client technologies used for collaboration such as Outlook and Lotus Notes.

Groove also has added auditing/logging controls, Web services APIs, and integration with Microsoft's Visual Studio .Net development platform for creating custom tools and agents for use within Virtual Office.

The platform has a host of back-end services, which includes its Management Server, which provides IT control over Groove usage and integrates with corporate authentication and authorization systems; Enterprise Data Bridge, which lets Groove check out and check in data from a host of data repositories; the agent-based Integration Server; and its set of Backup Services for protecting data.

Analysts say Microsoft is filling a gap it had in offline support that allowed use of data and applications in a disconnected mode, and in providing a link between collaboration teams that include members from different companies.

"There was this remaining part of the [collaboration] picture that Microsoft could not address, namely offline support and the virtual enterprise that says, 'just make it as easy as possible for people who are not part of my organization to securely participate in collaboration activities,'" says Peter O'Kelly, an analyst with Burton Group.

Analysts have been encouraging Microsoft to buy Groove for some time, but some sources say Microsoft pulled the trigger now because Groove's financial situation is weak.

While Groove is privately held, IDC reported the company's revenue as $8 million in 2002 and $12 million in 2003. IDC has not published 2004 numbers, but Groove has had two rounds of layoffs and no new customer announcements in the past 18 months. Groove reports that it has received more than $155 million in funding since its inception.

Learn more about this topic

Microsoft buys GrooveGroove looks to enhance real-time collaboration

IDG News Service, 03/10/05

Network World, 10/18/04

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