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Finding a new Groove

Microsoft, struggling to find ways to shore up flagging MS Office sales and to fill gaps in its SharePoint Portal Server product, has announced its acquisition of Groove Networks. The transaction was completed April 8. Microsoft had previously made major investments in Groove, a leading provider of collaboration software (groupware) for ad hoc workgroups. Now that the deal is finalized, Groove will become part of Microsoft's Information Worker Business, and will continue to be based out of its Beverly, Mass., headquarters. Financial terms of the deal have not been disclosed.

Groove was founded by Lotus Notes creator Ray Ozzie, who becomes a CTO of Microsoft. In tapping Ozzie for a top spot at Microsoft, Bill Gates called him "one of the top five programmers in the universe." Ozzie will report directly to Gates.

Jeff Raikes, Microsoft's VP for the $11 billion Information Worker business fronted by Office, has said, "Groove's peer-to-peer technology makes it possible for information workers to rapidly spin up projects that go across organizational and network boundaries. That's where Groove is so strong."

The acquisition of Groove gives Microsoft access to Groove's "edge-oriented" client-based architecture in its Virtual Office product, and gives Groove the resources to pursue its goal of ubiquity.

"The combined collaboration products of Groove and Microsoft will give Microsoft a new ‘center-edge' dynamic, one that's great for small, dynamic groups, particularly with mobile users," said Matt Pope, senior director of product and interactive marketing at Groove. In sizing up the new competitive landscape, Pope said, "What we compete against most is default behavior--users getting by with e-mail, instant messaging and voice mail. But certainly we're going to be competing head-to-head with Oracle and IBM more in enterprise deals."

In March, Microsoft released Office Communicator 2005 and new versions of MS Office Live Communications Server and Microsoft Office Live Meeting. Together, those products will provide for e-mail, phone, instant messaging, short message service, video conferencing and Web conferencing to more easily track the availability of members of collaborative work groups and communicate in real time with coworkers, partners and customers.

Groove's products will allow users to collaborate on group tasks and projects in highly decentralized situations--when working outside of the corporate network and with limited access to a server. Virtual Office application logic resides on laptops or client PCs, not at the server level. Groove's approach extends the application space where Microsoft's collaboration solutions can be utilized and complements, rather than supplants, Microsoft's approach.

Groove allows information workers to rapidly create ad hoc workspaces on their desktop when working from a home office, a small regional office or at a hotel during a business trip. Any security weaknesses inherent in Groove's peer-to-peer approach will be addressed with Microsoft's server-based technologies.


Robert Smallwood is a partner with IMERGE Consulting, e-mail robert.smallwood@imergeconsult.com.

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