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Microsoft buys PlaceWare, bids to shake up conferencing market

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Microsoft said Tuesday it has agreed to acquire PlaceWare, an online Web conferencing service, in a move that signals that the software giant plans to lead a major shakeup in the conferencing market.

Microsoft, which did not reveal what it paid for the privately held PlaceWare, said the conferencing company would become the foundation of a new business unit called the Real Time Collaboration Group, which will operate within Microsoft’s Information Worker business. The group will be headed by Anoop Gupta, who now serves as the technical advisor to chief software architect Bill Gates.

“Clearly Microsoft sees conferencing and collaboration as an important part of its future,” says Andrew Davis, an analyst with Wainhouse Research. “This is a major step into the conferencing and real-time collaboration market.” PlaceWare is the No. 2 player in the Web conferencing service provider market but has been losing ground to leader Web Ex over the past year.

Davis warned that Microsoft the product company has a poor track record as a services company. “My concern as a PlaceWare customer would be that I continue to still get the same level of service now that the service company is run by a software company.”

Microsoft said its plans to turn conferencing into another ubiquitous technology.

“Success for us is that we make Web conferencing as easy to use as e-mail,” says Charlie Zaragoza, lead product manager at Microsoft. “PlaceWare brings talent and intellectual property to help us do that.” Part of that technology includes a patent acquired in 2001 for PlaceWare’s bi-directional byte stream protocol, which allows conferencing traffic to traverse a corporate firewall without compromising the security it provides.

Zaragoza says Microsoft plans to continue to run PlaceWare as an online service and that it will be incorporated into its real-time collaboration plans.

But clearly, changes in the market are underfoot. Corporate customers are no longer looking at Web conferencing as an al a carte service and are making strategic decisions about its use to improve collaboration and cut costs.

PlaceWare’s big rivals Web Ex and Raindance are trying to promote Web conferencing as a standalone application that has real-time collaboration benefits. That view is contrasted by vendors such as Microsoft and IBM, with its Lotus Sametime server, which see conferencing as merely a component in a suite of collaboration offerings that run on their platforms.

“Microsoft’s move to acquire PlaceWare does signal a first step that consolidation is now taking place,” says Leon Navickas, CEO of Centra, which develops real-time e-learning software for corporations. “My guess is that WebEx and Raindance have a lot of work ahead of them. They thought the opportunity was to create Web conferencing services but the competition just got a lot stiffer and it’s competition that will bring price pressures.” From his point of view, Navickas says Web conferencing is just an enabling technology and that Microsoft is turning that technology into a commodity that Centra and others can build applications on top of for corporate customers. “We’ll use instant messaging, databases, Web conferencing and all the other tools to build our new applications,” he says.

Microsoft’s current collaboration tools include Exchange Server and Exchange Conferencing Server as part of its real-time collaboration offerings. It also has Messenger in Windows XP that offers instant messaging and options to add voice and video for use with other XP desktops.

Microsoft plans to release later this year a set of real-time technologies code-named Greenwich that will become part of Windows Server 2003 and include instant messaging, conferencing, voice and video.

Those offerings overlap with PlaceWare, which just last fall introduced its first software for deployment on corporate networks called On-Site Solution. Zaragoza said the details are still being worked out as to the future of that product and how PlaceWare will fit in with Microsoft’s .Net Web services initiative.

He did say the company would offer a set of application programming interfaces (APIs) that will allow software developers to extend the conferencing platform Microsoft is trying to build.

“Today we have XML-based APIs and we will look to further that through the use of Web services standards,” says Jennifer Callison, senior director of product marketing for PlaceWare.

Microsoft said it expects the acquisition to close sometime in the middle of this year.

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