Microsoft, Groove Networks to Combine Forces to Create Anytime, Anywhere Collaboration

BEVERLY, Mass., March 10, 2005 — Microsoft will make its growing business and technology bonds with Groove Networks permanent today as it announces plans to acquire the Beverly, Mass.-based provider of collaboration software for ad-hoc workgroups.

The acquisition will add Groove’s products to the lineup of Microsoft Office System products, servers and services, as well as bring the development talent and technology leadership of top Groove executives to Microsoft. Groove founder Ray Ozzie , the creator of IBM’s Lotus Notes, will become Chief Technical Officer of Microsoft, reporting to Microsoft Chairman and Chief Software Architect Bill Gates.

Ray Ozzie, Founder, Chairman and CEO, Groove Networks.

Once the deal is completed, Groove will become part of Microsoft’s Information Worker Business, and will continue to be based out of its Massachusetts headquarters. Financial terms of the deal haven’t been disclosed.

Years before Groove was founded, Microsoft named Ozzie a “Windows Pioneer” for his leadership and support for the Microsoft Windows platform. When Ozzie and his development team left IBM/Lotus and founded Groove in 1997, Microsoft invested in the company and its technology, which runs on the Windows platform and complements Microsoft Office System technologies, such as Windows SharePoint Services.

To learn more about the acquisition and how it’s likely to influence the future of Microsoft’s information worker programs, servers and services, PressPass spoke with Jeff Raikes , Microsoft group vice president of the Information Worker Business, and with Ozzie, who will continue to be involved with the Groove team.

PressPass: Why is Microsoft acquiring Groove Networks?

Jeff Raikes: The core mission of the Microsoft Office team is to improve the productivity of information workers around the world. One way we aim to do this is with software and services that allow people to share documents and work together on projects across companies and continents.

Adding Groove and its products to Microsoft brings together two companies with a shared vision for making collaboration natural and easy. Groove complements Microsoft’s collaboration products by helping us better serve businesses with mobile workers and remote offices. This acquisition will help us to offer businesses complete, highly integrated collaboration software and services that meet the needs of virtually any size business and virtually any kind of work situation.

We also realize that the challenges of collaboration will change as the workplace continues to evolve. Ray and his team at Groove have a long history of innovation and leadership in this area. By joining forces, we can bring new resources and focus to the development of products that help information workers overcome the collaboration challenges they face both today and in the future.

Jeff Raikes, Group Vice President, Microsoft Information Worker Business

PressPass: What collaboration products and services does Microsoft currently offer?

Raikes: Microsoft Office SharePoint Portal Server and Windows SharePoint Services allow businesses to create and manage shared workspaces for groups of information workers within a corporate IT network. Within these controlled spaces, they can share and work on documents, arrange schedules and perform other shared tasks.

On Tuesday [March 8], we introduced the new Microsoft Office Communicator 2005 and new versions of Microsoft Office Live Communications Server and Microsoft Office Live Meeting. Together, these products will provide a unified communications infrastructure for information workers. They will provide for e-mail, phone, instant messaging, short message service, video conferencing and Web conferencing, helping information workers to more easily track the availability of members of collaborative work groups and communicate in real time with these coworkers, partners and customers.

These workspaces and communications tools offer a centralized collaboration hub for information workers on a company’s IT network.

PressPass: How will Groove complement Microsoft’s current collaboration offerings?

Raikes: Groove’s products complement and broaden Microsoft’s collaboration capabilities by allowing information workers to securely collaborate on group tasks and projects in highly decentralized situations — when working outside of the corporate network and with limited or no access to a server. Groove’s novel approach to ad-hoc workspaces extends the scenarios in which people can use Microsoft’s collaboration solutions, thereby increasing the benefits to our customers.

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. Then they can invite other Groove users to work on a project together. A prime–though extreme — example of Groove’s value in decentralized situations: organizers of the Sri Lanka Tsunami aid effort have used Groove technology to create a central warehouse of information about the devastation, aid resources and the current status of coordination efforts. Aid workers access the information and update shared records within Groove workspaces.

Ray Ozzie: Microsoft’s current collaboration products and Groove build on each other’s strengths. Distributed teams can use Groove to create ad-hoc workspaces that reside on team members’ PCs and later have the documents, plans and other workspace content published to a managed SharePoint Web Portal. Or an individual can bring content from a SharePoint site into a Groove workspace on his or her laptop — in order to work on that content with others, to automatically and securely synchronize it between home and work computers, or just to stay productive when temporarily disconnected from the network.

These technologies already work together in very powerful ways. But we’ve only just begun to explore the opportunities we have to better address the needs of information workers at a time when the very nature of work itself is changing.

PressPass: Why is collaboration becoming so important in today’s business world?

Raikes: The challenges of previous decades — creating content and communicating more efficiently — have expanded to include connectivity between people, processes, businesses, customers and intellectual capital. People are trying to work together and stay on the same page more than ever before.

At the same time, today’s information workers also need to be self-sufficient and effective, not only within their organizations, but across organizational, geographical and technological boundaries. They need to be able to share files, projects and data with colleagues, customers and partners – regardless of whether their colleagues are inside or outside the IT infrastructure.

Once workers can collaborate anywhere and anytime, they will begin to recoup much of the time they lose every day finding information and gathering and sharing documents. This recouped time translates to increased productivity.

Ozzie: The nature of work is fundamentally changing for today’s information workers. We’ve moved from an era of personal productivity to one of joint productivity. From tightly coupled systems and organizations, to loosely-coupled interconnections between people, business processes and work groups.

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. And more often than not, the “team” now comprises partners, customers, contractors and others who don’t share a common network or IT infrastructure.

As a result, most of this cross-organization work currently occurs in e-mail because — next to the telephone — it’s the easiest way for these people to connect. The ad-hoc, decentralized and meshed design of e-mail is fundamental to its success. But information workers and IT alike want new ways for teams to work to work together dynamically on tasks without limitations on attachments, endless forwarded threads or the possibility of network snooping of confidential messages.

PressPass: You will be one of three Microsoft chief technology officers, along with Craig Mundie and David Vaskevitch, What do you think you bring to the role of CTO, Ray?

Ozzie: As a newcomer to the organization, I’d rather not make any bold predictions. But I look forward to working with Craig, David and the other top minds here at Microsoft to help shape the company’s corporate-wide communication and collaboration offerings and associated platform infrastructure.

I’ll draw upon more than 20 years of experience in computer-supported cooperative work, the last 15 with the core team at Groove. We’ve assisted thousands of customers and partners over the years. Along the way, we’ve learned quite a lot through our successes and even more through our mistakes.

We’ve discovered that collaboration technology is fairly tough to get right: It lives at the intersection of technology, social dynamics and organizational dynamics. We hope to apply that knowledge not only to Microsoft Office System productivity technologies but also, given the opportunity, across a range of Microsoft offerings.

PressPass: Jeff, what do you think Ray and his colleagues at Groove bring to Microsoft?

Raikes: Ray’s innovation and leadership in the area of collaboration will prove invaluable as we bring Groove into the Office System and look for ways to apply Ray’s thinking about the future of information work and collaboration to projects we are working on elsewhere at Microsoft.

We’re equally excited about the team of incredible talent Ray brings with him — including fellow Groove founders Eric Patey, Ken Moore and Ray’s brother, Jack Ozzie. Their experience will combine well with ours, and allow us to push each other to create Microsoft’s next generation of information worker products.

PressPass: Microsoft and Groove have been close partners for some time. Apart from the compatibility of your current products, why have Microsoft and the top execs at Groove stuck together?

Raikes: Ray has always been a strong advocate and promoter of Windows, beginning in 1984 when he headed up the organization that developed Lotus Notes, and later when he was working for IBM. That’s why in 1994 we named him a Windows Pioneer, a designation we’ve given to only seven people — including Alan Cooper, Lyle Griffin, Joe Guthridge, Ted Johnson, Ian Koenig and Charles Petzold.

When Ray and his team decided to form Groove, we knew they were looking to do innovative things that would complement what we were already doing. We believed and invested in their vision for collaboration technology to better accommodate less-centralized work models

PressPass: How do you think Microsoft’s acquisition of Groove will change the collaboration experience for Groove and Microsoft customers in the short term? In the long term?

Raikes: The experience won’t change much in the short term. Both companies will continue to operate independently until after the acquisition is completed. We look forward to adding Groove’s technology to the lineup of Microsoft Office System products, servers and services. We expect to not only to enhance the ability of our products to work together; we are also looking at other areas where we can learn from each other, such as security.

Ozzie: The opportunities are extremely exciting. When originally launched the product in late 2000, I believed that ultimately everyone who uses a PC to communicate over the Internet would use three primary tools for their information work — e-mail, a browser and technology like Groove. While the organization has worked incredibly hard and achieved some amazing milestones, we haven’t been able to fulfill that original vision as a small, independent company. Now, with the organization joining Microsoft and with Groove technology becoming part of the Microsoft Office System lineup of products, servers and services, I believe we have a very good chance of achieving our original vision.

On a more granular level, the addition of Groove products to the lineup of Microsoft Office System products, servers and services will provide much greater opportunities to achieve a more seamless user interface– particularly with regard to real-time communications — and help customers use the software more effectively while also reducing the time and cost required to train them on it. I’m also eager to learn from Microsoft’s experience at localizing products. I can’t wait to translate Groove products into many more languages, so we can bring the product to customers worldwide.

PressPass: Ray, you were ahead of many in the IT industry when you identified and helped solve the challenges of decentralized workplaces and remote and mobile work forces. What led to your conclusions?

Ozzie: My passion for using technology to augment relationships began in the mid-1970s when I worked on PLATO (Programmed Logic for Automated Teaching Operations) as an undergraduate at the University of Illinois. At the time, PLATO consisted of about 1,000 terminals connected to a central mainframe. Programmers started to use the system not only to build courseware, but also to create a variety of tools for human interaction, such as those we now think of as e-mail, instant messaging and chat rooms, online discussions and interactive gaming. In the course of my projects, I established relationships with people I never actually met face-to-face. Since then, in many ways, I’ve spent most of my life trying to build on those first experiences I had with PLATO.

When I was with IBM/Lotus back in the mid-1990s, companies sought to extend their business processes to partners and others by using Notes outside of the organizations and between organizations. In many cases, it took months or years to get each company’s IT organization to install and deploy the software, and then train users. I decided that the server-based, centralized architecture didn’t match the cross-domain requirements –such as security, deployment and management concerns — of a “meshed” business environment. For collaborative tasks with dynamic content and that span the IT boundaries of organizations, I concluded that the most appropriate technology would be one based on a fundamentally decentralized architecture. That’s why we set out to create Groove.

PressPass: Ray, what is your perspective on the debate over centralized versus decentralized computing models? Is there a place for both?

Ozzie: Centralized and decentralized approaches are equally necessary. We’ve learned over the past three decades, from trying out variations of both models, that some problems are best solved centrally while others are best addressed locally. Large organizations have needs at the center, while people and business units have needs at the edge.

The decentralized model is becoming increasingly necessary because — to put it simply –the days of deskbound office work are over for many of us. Millions of people now tote around Wi-Fi-enabled laptops and other mobile computing devices that allow us to work just about anywhere – from the home office, in meetings, on the airplane or in the airport lounge, in hotel rooms and the corner coffee shop. However, our highly mobile and occasionally disconnected work styles don’t always jibe with today’s extensively firewalled networks and intranet-based applications. Also, effective work groups in today’s business environments need tools that support the dynamics of how their teams take shape and evolve. Without them, most interaction gets pushed into Smart organizations must embrace both the centralized and decentralized models to some extent, rather than becoming polarized on the issue.

PressPass: Don’t less-centralized models inherently reduce security?

Ozzie: Not at all, and neither does a more-centralized model inherently assure tight security. Many information workers in centralized and supposedly secure environments are sending themselves “company confidential” documents via public Web accounts so they can work on them at night after their kids go to bed. An even more pervasive and subtle problem is that with Web-based content management, which lets people download files to local hard drives to work on them, unencrypted copies and random versions of potentially-sensitive documents are left lying around.

When files are contained within PC-based virtual workspaces, like in Groove products, they’re automatically encrypted on-disk and on-network. This creates what is in essence on-demand access to a kind of virtual private network between the participants. And when the workspace is deleted, the information can be automatically deleted from all participants’ PCs. Groove’s approach to security is to try to be “complacency-immune,” and to account for human nature and fallibility in the design of secure systems.

PressPass: What do you think will be the next big challenge that collaboration technology will need to address? Will new technologies be needed to cope with these new challenges or can today’s technologies be adapted to meet these challenges?

Ozzie: We’re only beginning to explore how collaborative technology can be used to enable joint work. We have more and more ways to connect, from ubiquitous cable modems and DSL to all kinds of wireless options. Soon, our laptops will have 200-gigabyte hard disks and our desktops will be able to store terabytes of data. Voice-over-Internet-protocol (VoIP) communication is moving toward the mainstream, and phones are becoming mobile media capture and playback devices. 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.

Raikes: There will certainly need to be new collaboration technologies to cope with some of these challenges and others we aren’t yet aware of. But it’s safe to say that people will need a combination of familiar technologies, such as Microsoft Office Word, Excel and other Office applications, to perform ongoing tasks. And they will need any new collaboration technologies to work well with these programs. Individuals that are able to work easily with others in the context of the programs and processes that they are already working on receive the most benefit from their collaboration.

Also, who knows what untapped potential we and information workers will find within Groove and our existing collaboration products to help address business challenges of tomorrow’s workplace? But I’m pleased that Ray and his team at Groove will be joining Microsoft as we work to deliver the solutions for those future challenges.