Microsoft is attempting to bolster adoption of the .NET platform with an investment in a collaboration software ISV. The company has also dropped out of a joint venture to create wireless applications.

Groove Investment Bolsters .NET

Microsoft has invested US$51 million in Groove Networks, an ISV that specializes in peer-to-peer (i.e., no server required) collaborative software for businesses. Founded by ex-Lotus Notes head Ray Ozzie, Groove was an enthusiastic early supporter of many technologies that are core to .NET, including XML and Simple Object Access Protocol (SOAP), and it was one of the five companies that announced support for .NET My Services (HailStorm) when they were launched in Mar. 2001.

The investment is part of a formal strategic relationship between the two companies. Although the two companies did not announce any specific co-development projects, it is likely that Groove's applications will provide an early testing ground for various parts of the .NET platform, particularly the .NET Framework and .NET My Services.

Wireless Knowledge Stake Sold

Microsoft has sold its stake in Wireless Knowledge to the other partner in the joint venture, Qualcomm. Wireless Knowledge was founded by the two companies in 1998 to create applications for mobile phone users.

Microsoft and Wireless Knowledge co-developed Mobile Information Server (MIS), which allows mobile workers to connect to applications running on Windows 2000 and to interact with Exchange Server 2000. (See "Enterprise Software Anchors Wireless Plan" on page 12 of the Mar. 2001 Update.) However, Wireless Knowledge also markets a competing product, Workstyle Server, which runs on Windows NT and provides almost identical functionality (plus connectivity to Lotus Notes), and Microsoft felt that the two companies' interests had diverged. Microsoft also hoped Wireless Knowledge would use its relationships with large mobile carriers like Sprint and Verizon to sell MIS Carrier Edition, but no such deals have been announced.

Wireless Knowledge now plans to deepen its relationships with Microsoft competitors, such as IBM and Handspring. Meanwhile, Microsoft's own mobile strategy remains uncertain after the departure of Mobility Group Vice President Paul Gross in June 2001, and the shuffling of the teams in that group, first to Personal Services Group Vice President Muglia and now to CEO Steve Ballmer.

Other Investment News

In other recent investment news:

• Microsoft, IBM, and Pfizer have launched Amicore, which will provide workflow and communication solutions for office-based physicians. Amicore immediately announced the acquisition of PenChart, a healthcare application provider. Amicore’s first product, a workflow application called Practice Suite, is based on PenChart technology. Amicore has committed to building applications for the Tablet PC and is expected to take advantage of the .NET platform. Microsoft's exact stake and investment in the company were not disclosed.
• Microsoft has sold most of its stake in bankrupt speech-recognition software maker Lernout & Hauspie. Microsoft previously had owned 8% of the Belgium-based company, but sold 5.4 million shares for pennies a share to reduce its stake to 1.3% on Nov. 26. Microsoft's initial investment—1.45 million shares for US$45 million—was in 1997.