Users of Microsoft's Sharepoint Team Services, an intranet-building client-server tool that's part of the company's Office suite, will soon be able to engage in real-time collaboration with other users thanks to a deal under which Microsoft will bundle Sharepoint with Groove Networks Inc.'s Workspace product. Groove, which received $51 million in financing from Microsoft last year and was founded by Lotus Notes inventor Ray Ozzie, plans to make the package available to customers this fall.

Sharepoint is Microsoft's Web-based collaboration tool, but it lacks some functions that the Groove deal is designed to address. For instance, Groove users can access information offline, and the software features autosynchronization. It's also designed to let workers within a company collaborate not only with each other but also securely with workers at partner organizations. That's because Groove users communicate via a peer-to-peer link that sits outside company firewalls.

Analysts say the deal should help Microsoft compete more effectively in the market for collaboration applications, where Office falls short of the richer tools found in Lotus Notes. Pricing for the package hasn't been disclosed.

Business users say the combination should make it easier to collaborate with co-workers and external partners in a secure environment. Others note that it could help speed the integration of recently merged companies. Hewlett-Packard and Compaq are using a prerelease version of the package to do just that.

"It's making a substantial contribution to the way we collaborate," says Craig Samuel, chief knowledge officer at HP. At Compaq, Samuel used both Sharepoint and Workplace, and managed to glue the two applications together using Simple Object Access Protocol and XML. "I pushed the Microsoft side and the Groove side, and eventually they came together," he says.

Groove plans to extend its product to the handheld market; Microsoft is still mulling that idea for Sharepoint.