Update: Microsoft to buy Groove Networks

Microsoft is buying Groove Networks of Beverly, Mass., for an undisclosed sum, it said Thursday. Groove makes collaboration software that can be used by people who are geographically dispersed and is the brainchild of Lotus Notes creator Ray Ozzie.

Microsoft is buying privately held Groove Networks of Beverly, Mass., for an undisclosed sum, it said Thursday. Groove makes collaboration software that can be used by people who are geographically dispersed and is the brainchild of Lotus Notes creator Ray Ozzie.

Microsoft plans to add Groove's products to its Microsoft Office product line. Ozzie, a recognized visionary who helped found Lotus Software, will become Microsoft's third chief technology officer, according to Jeff Raikes, group vice president of Microsoft's Information Worker Business, during a conference call about the acquisition. Groove, which has about 200 employees, will join that business unit of Microsoft, with Ozzie reporting directly to Bill Gates, Microsoft chairman and chief software architect.

Groove makes a wide range of software and development tools that allow geographically dispersed workers to collaborate over the Internet. The company's Virtual Office product allows workers to communicate and securely share information such as files, calendars, sketch pads, task lists, Web links and photos over the Internet.

Virtual Office maximizes Internet bandwidth and is tightly integrated with Microsoft's Outlook e-mail application and Office suite of products, according to Groove.

"It's very exciting to have Ray and his team joining Microsoft," Gates said during the conference call. "I think it's going to help us do even a better job for all of the information workers out there."

Microsoft has twice invested in Groove, Gates said, and he has long thought about whether Microsoft could hire Ozzie, who has "made a huge contribution in terms of giving us feedback about (Microsoft's) platform," and whose ideas have "influenced" the Word user interface.

Ozzie is particularly skilled at thinking about the problems and needs of workers and "building the technology in a simple way that can help people become more productive," Gates said.

Likewise, Ozzie said that he is "very excited" to be joining Microsoft and working with Gates. Ozzie expects to "certainly be spending a lot of time in Redmond," Wash., but will split his time between there and Massachusetts, where Groove will continue to operate.

Groove's technology will complement Microsoft's collaboration products, such as Microsoft Office SharePoint Portal Server and Windows SharePoint Services, as well as the newly announced Microsoft Office Communicator 2005, Microsoft Office Live Communications Server and Microsoft Office Live Meeting, Microsoft said.

Acquiring Groove will give Microsoft a way to reach out to the growing number of companies with mobile workers and remote offices. In particular, the Groove's technology for creating ad-hoc workspaces will extend the reach of Microsoft's collaboration technology, allowing workers to communicate securely over the Internet and work in decentralized environments outside of the corporate network, Raikes said.

Microsoft expects to use Groove's technology "very broadly" in future software releases, Raikes said, adding that the company isn't yet going into specifics about those plans.

Groove's technology also will be used in Longhorn, the code-name for Microsoft's next operating system release. The client version of Longhorn is due out next year, with the server version expected in 2007. Longhorn already was to have peer-to-peer capabilities, Gates said, and so it will benefit from incorporating Groove's application, which has P2P and authentication built in.

"We want to take the equivalent things we were incubating at Microsoft and strengthen the platform," Raikes said.

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Copyright © 2005 IDG Communications, Inc.

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