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Software // Enterprise Applications

Microsoft's Groove Move

Its products don't do enough to let global businesses stretch across networks and companies. Can Groove bridge the gap?

Bill Gates worked the West Coast last week to plug Microsoft's latest watchword: collaboration. After stops in San Francisco to launch new Office software and San Diego to prognosticate on back-office apps, Microsoft's chairman landed back in Redmond, Wash., to uncork the week's biggest surprise: Microsoft's acquisition of Groove Networks Inc. for an undisclosed sum.

Meanwhile, group VP Jeff Raikes joined Groove founder Ray Ozzie in a town outside Boston to address Groove's 200-some employees. It's that kind of city-hopping, plane-to-hotel-to-office work style that's driving Microsoft's latest investments. Gates and Ozzie--who becomes Microsoft's newest chief technical officer as part of the deal--are betting your workweeks are every bit as hectic.

During negotiations for last week's deal, scheduled to close by June, executives from both companies logged on to Groove's software to hash out some of the details, Raikes says, talking from his cell phone on his way from Groove's Beverly, Mass., headquarters to Boston's Logan Airport. "We spun up some Groove work spaces," says Raikes, who's in charge of Microsoft's $10.8 billion-a-year information-worker business fronted by Office, the cash cow that includes Word and Excel and is in need of some new life. "It's that peer-to-peer technology that makes it possible for information workers to rapidly spin up projects that go across organizational and network boundaries. That's where Groove is so strong."

Groove's founder Ozzie will become a chief technical officer at Microsoft. --

Groove's founder Ozzie will become a chief technical officer at Microsoft.

Photo by Eddie Milla
And where Microsoft isn't. Its software isn't built for a world where people form and dissolve complex project teams of contractors, customers, and suppliers, and where Internet connections in airports and Starbucks shops substitute for corporate networks. From Office to project tools such as SharePoint server, its products are too closely tied to an IT architecture that relies on a central directory to manage files and grant users permission to make changes. That makes it hard to work offline, across network boundaries, or over a spotty connection outside the office.

With the addition of Ozzie as CTO, and ambitious plans for weaving Groove's technical know-how into future versions of Windows and Office, Microsoft is betting electronic collaboration will guide the way all its software is used. But the company will have to navigate some tricky shoals to pull it off, including competition from IBM and the Lotus Notes platform Ozzie helped invent, fighting the perception that the peer-to-peer technology Groove lives on is risky or even illegal and holding onto Ozzie, an industry legend, when other No. 3s at the company have stumbled in the shadow of Gates and CEO Steve Ballmer.

Microsoft has been struggling for a while to get collaboration right. An attempt a few years back to make Office more team-friendly got canceled, says Peter Pawlak, an analyst at research firm Directions on Microsoft. And Microsoft booted its Windows File System, which was supposed to bring smart searching and seamless updates among PCs and servers to the operating system's next release, out of its Windows Longhorn version, scheduled for 2006. "Now it looks like when, if ever, are they going to get there?" Pawlak says.

That's where Groove's technology comes in. Groove's Virtual Office software lets people create online work spaces for marking up documents, scheduling meetings, and passing comments back and forth without clogging up servers. Groove works PC to PC, and that peer-to-peer architecture also lets users work offline, then later on send their changes to everyone who cares. "There's nothing in the Microsoft world that works that way today," Pawlak says. Gates himself admits as much. "The way that people are working across locations and across different organizations requires new technology," he said during last week's conference call to discuss the deal.

Communications and collaboration are starting to define Microsoft's products, Ozzie says, but their designs don't always support those goals. "Most IT systems, Windows included, have been built with the IT administrator in mind," he says. Firewalls and central employee directories are needed to prevent attacks. "But that really doesn't reflect the way we work with one another."

For IT managers, Groove could change their role in enabling collaboration. As demand grows for ad hoc collaboration among people who don't share the same employer--or network--PC users are setting up more electronic work spaces themselves, and they don't want to call in IT staff to do it. Ozzie won't talk specifically about future plans, but he says his thinking could influence more users after he starts work in Redmond. "The design of a decentralized system is fundamentally different than one that was designed for an enterprise," he says. "Could those things be applied to an operating system? They could be."

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