Microsoft Gets Groove, Guru

Microsoft (Nasdaq: MSFT) has acquired another small software company, the latest in a series of buys that have added to its portfolio in security, services and, in the case of its most recent deal , collaboration. With the acquisition of Groove Networks, Microsoft gets not only a company but also a big name in technology -- Groove's Ray Ozzie, who will now be working for Microsoft.

The companies, which did not disclose financial terms of the deal, said the acquisition will fold together Groove's collaboration products and Microsoft's Office suite to allow better productivity from dispersed workgroups. In keeping with the nature of the technology, the companies said Groove's work force and home base will remain in Beverly, Massachusetts, as will Ozzie, who will now report to Microsoft chairman and chief software architect Bill Gates and collaborate with Microsoft's Information Worker Group.

Feeling Groovey

Analysts said Ozzie is one of the most important aspects of the deal. Ozzie was the chief architect of IBM's (NYSE: IBM) Lotus Notes.

"Ray Ozzie brings a lot of credibility to the table," Gartner (NYSE: IT) analyst Betsy Burton told TechNewsWorld. "He's seen as a visionary in the larger sense. To bring him in, even if he's not driving decisions, adds a lot of credibility."

Microsoft said the Groove acquisition will allow it to offer collaboration software that includes real-time, server-based and peer-to-peer (P2P) solutions for the requirements and complexity of distributed work groups.

"Together, Microsoft and Groove will make anytime, anywhere collaboration a more natural and easy extension of how information workers coordinate their projects and document-centric work," said a statement from Jeff Raikes, vice president of Microsoft's information worker group.

For his part, Gates praised the innovation of Groove and Ozzie.

Yankee Group senior analyst Laura DiDio told TechNewsWorld that given the companies' history of working together, the move is not a surprise. But it does join two of tech's biggest names.

"Hey, Ray Ozzie is the man," she said, highlighting the rarity of an industry figure who can rival Bill Gates. "Ray Ozzie is an industry giant. He goes back to Lotus 123. They're buying intellectual property, credibility and cachet with one of the most stellar names in the business, and he's been around as long as Gates."

Change and Challenge

Gartner's Burton said the Groove acquisition has more to do with the broader Microsoft vision than it does with Groove.

"What we're seeing is a level of focus and a level of commitment to user work that we haven't seen before," she said. Burton said Microsoft appears to be "putting the driving decisions in users' hands, as opposed to IT," representing a big change from Microsoft's somewhat scattered message on collaborative technology.

However, the analyst added Microsoft faces tremendous challenges integrating Groove and its SharePoint technologies, which have "completely different" infrastructures.

And it will take time to see how the companies, and their talent, are integrated. "This is a multi-year effort," Burton said.

DiDio, who indicated the move may represent a more aggressive tack by Microsoft to counter IBM's collaborative technology moves, also said it will be some time before the success of the Groove acquisition can be judged.

"Clearly, they're going to want Ozzie to work his magic in somehow folding Groove Virtual Office into the cake mix that is the .NET collaboration stuff," DiDio said. "Customers will have to wait until the dust settles to see, in maybe six months to a year, how these things will be folded in and to see the first product."