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Last Updated: Friday, 11 March, 2005, 16:25 GMT
Software legend joins Microsoft
Ray Ozzie
The Lotus Notes creator is a legend in the software industry
Software giant Microsoft is to buy Groove Networks, the maker of computer programs for "virtual offices".

Collaborative software that allows employees to work together over the internet from various locations has been growing in complexity and usage.

And Microsoft has been focusing on the field ahead of new releases of its Windows and Office programs.

Groove founder Ray Ozzie - an industry legend - will join Microsoft as one of its chief technical officers.

Mr Ozzie, 49, created Lotus Notes in the 1980s, the first messaging application to achieve widespread sales. The company was later bought by IBM.

"Increasingly, the 'office' is defined as wherever you and your laptop happen to be - a customer's conference room, an airplane, a hotel room, a coffee shop or a home office," he said.

"This new era will be characterized by highly interdependent relationships and systems, and I and others at Groove look forward to joining with Microsoft to shaping the software that runs these systems."


Groove will become part of the Microsoft division that includes its Office suite of programs.

Financial terms of the purchase were not disclosed but Microsoft had previously invested $89m (46m) in Groove.

Microsoft scores a double-whammy with the acquisition of Groove Networks
Richard Edwards, Butler Group

In total, the privately-held firm has received $155m in financing from investors, including Intel's venture capital unit, since it was founded in 1997.

Its 200 employees will continue to work from their HQ at Beverly, Massachusetts.

Groove's Virtual Office utilises the same peer-to-peer technology seen in illegal mp3 file sharing networks.

The company has worked closely with Microsoft for nearly five years and analysts expected it would eventually be acquired.

Further consolidation?

Microsoft said Virtual Office will complement its existing collaborative offerings such as its Sharepoint group of products.

The purchase follows predictions by Forrester Research of consolidation among collaborative software developers as the likes of Microsoft, IBM and Oracle focus on the field, buying companies or licensing their products in the process.

Simon Reynolds, head of European Collaboration at software application provider Vignette, said the deal was further evidence that Microsoft and IBM were "slugging it out" in an area that was becoming "critical" to their businesses.

But he thought the purchase would present an "interesting challenge" for Microsoft as it integrated Groove's technology into future product lines.

Richard Edwards, IT analyst at Butler Group said Microsoft had acquired a ready-made platform and "one of the world's great software pioneers".

"Microsoft scores a double-whammy with the acquisition of Groove Networks," he added.

"The acquisition of Groove Networks will undoubtedly inject a new life into the flagging Microsoft Office System family."

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