Microsoft gets into the groove

When Microsoft announced its acquisition of collaboration software specialist Groove Networks on March 10, the main question on everyone’s lips was: ‘What took you so long?’

The two companies have been working together for some years. Microsoft ploughed $51m into Groove in 2001, followed by a second round of investment in 2003, and Groove’s products have been developed to work smoothly with Microsoft’s Office software. So why now?

Ray Ozzie, the founder of Groove Networks, is the likely answer. Ozzie is counted among a handful of software pioneers that have helped shape the technology landscape. Ozzie is credited with developing Lotus Notes – which at the time was a groundbreaking combination of e-mail and workplace-collaboration software that was a top-seller in the mid-1990s and was bought by IBM in 1995. He is also at the forefront of peer-to-peer computing.

What is more, Bill Gates is a self-confessed admirer of Ozzie. “Ray [Ozzie] has always assembled teams that do an amazing job of thinking through what workers need, and then building the technology that can help people be more productive,” Gates told journalists participating in a teleconference to announce the deal.

Gates added that he had often thought about trying to hire Ozzie, and was pleased that he had finally got his man. “It’s a big day for me that it’s finally happening,” he said.

As part of the deal, Ozzie will become one of Microsoft’s three chief technology officers – along with Craig Mundie and David Vaskevitch – and will report directly to Gates. Ozzie will spend time working with Microsoft Office’s group, which has been expanding its offerings into collaboration software, as well as continuing to develop Groove’s Virtual Office solutions.

The addition of Groove products to the Microsoft Office System portfolio builds on the capabilities of Microsoft’s current collaboration products, allowing it to better meet the needs of organisations that are increasingly creating dispersed project teams on an ad hoc basis. According to Gates, Groove’s expertise in peer-to-peer systems that authenticate who is accessing information on a computer network will find its way into the next version of Windows, code-named Longhorn.

“This deal, coupled with Microsoft’s real-time collaboration product launch, signifies a greater focus on collaboration than Microsoft has previously shown,” says Betsy Burton, analyst at research house Gartner. “Microsoft’s vision goes beyond any specific technology, to define how people do work. With this announcement, Microsoft is attacking collaboration and high-performance-workplace solution providers, notably IBM.”

However, the deal does have its challenges. According to Burton, they include: reconciling Groove’s peer-to-peer architecture with SharePoint Portal and Windows architecture; determining how or whether to continue supporting the current Windows SharePoint Services shared workspaces; and, bringing Microsoft’s disjointed collaboration products into a more cohesive workplace offering.

The acquisition, the terms of which were not disclosed, is expected to be completed in the second quarter of 2005.