Microsoft to Acquire Groove Networks, Combining Talents to Create Anytime, Anywhere Collaboration Products and Services

EDITORS’ UPDATE, March 10, 2005
— Playback information below for the news teleconference has been updated to add the playback ID number.

BEVERLY, Mass., March 10, 2005 — Microsoft Corp. announced today that it will acquire Groove Networks Inc., a leading provider of collaboration software for the “virtual office.” The deal unites two top innovators of technology that help geographically distributed workgroups be as productive as those that work in a single physical location. Financial terms of the acquisition were not disclosed.

The addition of Groove products to the lineup of Microsoft®
Office System products, servers and services builds on the capabilities of Microsoft’s current collaboration products, allowing Microsoft to better meet the needs of organizations of all sizes that increasingly are creating borderless project teams comprising employees, customers, partners, suppliers, contractors and others.

“The acquisition of Groove complements Microsoft’s collaboration offerings to include real-time, server-based and peer-to-peer solutions that address the ever-changing and more-complex work environment,” said Jeff Raikes, group vice president of Microsoft’s Information Worker Group. “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.”

The acquisition also brings to Microsoft the development talent and technology leadership of top Groove executives, including founder Ray Ozzie, a creator of IBM Corp.’s Lotus Notes. Ozzie will assume the role of chief technical officer, reporting to Bill Gates, Microsoft founder, chairman and chief software architect, with responsibility for influencing corporatewide communication and collaboration offerings and associated platform infrastructure. Ozzie also will continue his work with the Groove team, which will be part of Microsoft’s Information Worker Group.

“Ray and his team are true innovators. Microsoft and its customers will greatly benefit from their experience,” Gates said. “After working with Ray for years as a close partner, it will be great to have him on our senior leadership team.”

“We developed Groove’s highly security-enhanced virtual office technology to help businesses and individuals — wherever they are, whenever they work — overcome the challenges presented by today’s increasingly decentralized work environment,” Ozzie said. “By joining forces with Microsoft, we can more effectively address the needs of information workers for collaboration solutions that ‘just work’ across organizational, geographic and network boundaries.”

As a Windows®
desktop-based collaboration offering, Groove’s Virtual Office complements Microsoft’s collaboration solution offerings, which include the following:

  • Real-time collaboration solutions such as Microsoft Office Live Meeting 2005 and Microsoft Office Live Communications Server that enable in-the-moment one-to-one and one-to-many collaboration

  • Server-based collaboration solutions such as Microsoft Office SharePoint®
    Portal Server and Windows SharePoint Services that allow businesses to create and manage collaborative work spaces online or on a company’s internal IT system

  • Peer-to-peer collaboration solutions through Groove’s Virtual Office, which let any Windows-based PC user instantly create ad hoc, virtual work spaces that securely and easily span organizational, geographic and network boundaries, and allow information workers to be productive whether they’re online or temporarily disconnected from the network.

Founded in 1997, Groove has worked closely with Microsoft for nearly five years. After the deal is completed, the nearly 200-person Groove organization will continue to operate from its Beverly, Mass., headquarters as part of Microsoft’s Information Worker Group.

The acquisition is expected to be complete in the second quarter of 2005. Microsoft and Groove plan to provide customers and third-party partners with uninterrupted product and service offerings. Groove will continue to operate as a separate company until the acquisition is finalized.

News Teleconference and Playback

At 11:30 a.m. EST today, Microsoft and Groove will hold a teleconference to discuss the acquisition. To participate, U.S. residents can dial (888) 368-4276, and those outside the United States can dial +1 (706) 679-5613. The call will be available for playback through March 19 at 11:59 p.m. EST. To access the playback beginning at 1:30 p.m. EST today, U.S. residents can dial (800) 642-1687, and those outside the United States can dial +1 (706) 645-9291, and enter the playback ID number 4668126.

About Groove Networks

Founded in October 1997 and headquartered in Beverly, Mass., Groove Networks Inc. delivers the “virtual office” through software that allows teams of people to work together over a network as if they were in the same physical location. Groove software helps organizations, large and small, save money, time and eliminate travel by offering both a desktop application for instant joint work, and a set of customizable, open collaboration capabilities that enhance the utility and value of existing solutions. For more information about Groove Networks, visit http://www.groove.net . A free trial edition of Groove Virtual Office is available at http://www.groove.net/download .

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft, Windows and SharePoint are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Groove Networks and Groove are registered trademarks of Groove Networks Inc.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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