Microsoft to buy Groove Networks

Plans include adding Groove's "virtual office" software to Office lineup. Groove founder Ray Ozzie to become Microsoft CTO.

Microsoft on Thursday said it will acquire Groove Networks and make Groove's founder, Ray Ozzie, a chief technical officer at the software giant.

Ray Ozzie
Ray Ozzie
Founder, Groove

Microsoft said it will incorporate Groove's "virtual office" collaboration software into its Office line of productivity applications. Ozzie, the inventor of Lotus Notes and a collaboration guru, will report to Bill Gates, Microsoft's chairman and chief software architect.

Ozzie will be one of three chief technology officers for Microsoft. He'll be in charge of information worker software and collaboration tools, and he'll work both at Microsoft's Redmond, Wash., headquarters and at Groove's current home base in Beverly, Mass., which is north of Boston.

Gates lauded the advances Groove has accomplished in collaboration for Microsoft Office and said that Ozzie's expertise in other areas, notably security, authentication and peer-to-peer computing, will be brought to bear in other Microsoft products, including the forthcoming Longhorn edition of Windows.

"I thought about 'Could we ever hire Ray and his team?' for a long, long time. So it's a big, big day for me that this is finally taking place," Gates said during a conference call Thursday. "The Groove product really has some fantastic and very unique features."

Microsoft was an investor in Groove, which has closely tied its collaboration software to Windows and other Microsoft products.

Microsoft said the Groove group will become part of its Information Worker division. The acquisition is expected to close in the second quarter. Terms of the deal were not disclosed.

Groove was founded in 1997 to create productivity software for groups of information workers. The organization, which now has nearly 200 employees, will continue to work out of its existing location in Massachusetts.

"To some extent, Microsoft has had a shotgun approach to collaboration. It's not clear to me which of Microsoft's approaches...will be a winner."
-- Paul DeGroot
Analyst, Directions on Microsoft

Microsoft intends to keep the Groove facility and may expand its operations in the area, said Jeff Raikes, group vice president of Microsoft's Information Worker group. Ozzie, Raikes and other Microsoft executives announced the acquisition to Groove employees at their office Thursday morning. No layoffs at Groove are planned.

Called Groove Virtual Office, the company's software lets people from different companies collaborate by working over secure Internet connections. The product uses a peer-to-peer design in which individual PCs can communicate directly with one another to share documents or communicate via instant messaging.

The software has been sold as an add-on to Microsoft's SharePoint Web portal software because it lets mobile workers get updates on ongoing projects without having to use a virtual private network.

Groove has customers in government agencies and large corporations looking for better information-sharing tools. In the past several months, the company has shifted its sales strategy from making large,

Featured Video