Microsoft Acquires Groove Networks, Hires Founder Ray Ozzie as CTO

Strategic Insights -

Microsoft has made a major move in its ambitions to expand its Office franchise beyond the core products of Word and Excel. The software giant has announced a deal to buy Groove Networks, a privately held firm founded by Ray Ozzie, the creator of IBM's Lotus Notes. Ozzie will join Microsoft as chief technical officer, reporting directly to chairman and chief software architect Bill Gates. This deal is part of Microsoft's strategy to enhance its collaboration tools and services, including its online conferencing software and corporate instant messaging offerings.

Key Takeaways:

  • Microsoft is acquiring Groove Networks, a privately held firm founded by Ray Ozzie, for an undisclosed sum.
  • Ozzie will join Microsoft as chief technical officer, reporting directly to Bill Gates, and will work with Gates to develop the firm's strategy.
  • Groove Networks makes office collaboration software that allows people to work on computer files simultaneously, aiming to make the virtual office a reality.
  • The company's 200 workers will join Microsoft's information worker division, which is behind its Office suit of desktop products.
  • Microsoft owned a minority stake in Groove following a $50m investment in 2001 and has raised over $155m in start-up financing.
  • Ozzie has a track record of developing successful software products, including Lotus Notes for IBM and PlaceWare for Microsoft.
  • The acquisition is part of Microsoft's strategy to expand its Office franchise beyond Word and Excel and to enhance its collaboration tools and services.
  • Microsoft plans to launch its long-awaited Longhorn operating system next year, with Groove technology potentially playing a part.

Statistics:

  • Microsoft paid $200m in 2003 for PlaceWare, a provider of web conferencing services which allows businesses to conduct real-time presentations and meetings online.
  • Groove has raised over $155m in start-up financing.
  • IBM bought Lotus in 1995 and produces IBM Lotus Notes in competition with Microsoft's Outlook.
  • Ozzie founded Iris Associates in 1984, where he developed Lotus Notes for Lotus Development Corporation.
  • Groove was founded in 1997.

Sources:

  • David Teather, "Microsoft buys Groove Networks and appoints founder as chief technical officer", The Guardian.
  • Microsoft press release, "Microsoft to Acquire Groove Networks".