• Illustration: A Groove Workspace

Document sharing and other forms of collaboration are the focus of Microsoft's latest acquisition, Groove Networks. Groove's primary product, the Virtual Office software, enables groups to work on shared documents and communicate in virtual "workspaces" hosted on their PCs. The acquisition delivers people and technology that could strengthen Microsoft's collaboration products, particularly in the SharePoint line, but it also eliminates an independent software vendor that was a showcase for key Microsoft developer technologies.

What Is Groove?

Groove Virtual Office creates workspaces that combine some features of file shares, discussion lists, Web sites, and instant messaging (IM) sessions. (See the illustration "A Groove Workspace".) Groove workspace users can post and update shared documents and data (such as schedules), see which other group members are online, and communicate by a variety of means including instant messaging and discussion lists. The goal is to bring together all of the resources for a project and give group members an online space to work on the project.

Groove workspace capabilities are similar to those of team sites hosted in Windows SharePoint Services, a free add-on for Windows Server 2003 that is also used by Microsoft’s SharePoint Portal Server portal product. However, compared to the SharePoint products, Groove has some unique capabilities:

Peer-to-peer. Unlike team sites or file shares, Groove workspaces do not reside on servers. Instead, copies of a workspace are maintained on the PCs of participating users, with changes to documents and new messages replicated to all workspace PCs. This architecture makes Groove simpler to install and enables installations to grow "from the grassroots" as individual users adopt the product.

Offline work. Because Groove workspaces are on local PCs, users can modify documents in workspaces and do other tasks while disconnected from their network. Changes a user makes while offline propagate automatically to other users of a workspace when the user reconnects. This capability is important for mobile users, home users working over dial-up, and others who don't have full-time network connections.

Ad hoc security. Groove workspaces don't require a central registry of users and permissions. Instead, the workspace initiator can invite other users and grant them appropriate permissions. The Groove Networks data center helps users securely exchange the encryption keys needed for these operations. Groove's ad hoc security model makes Virtual Office workspaces valuable for intercompany or cross-agency collaboration.

Groove Networks also sells several server products to centrally manage Groove clients, cache files for retrieval by clients that were previously offline, filter Groove traffic (to enforce corporate policy, for instance), integrate Groove with enterprise applications such as customer relationship management systems, and other tasks.

Acquisition for Technology, People

Groove Networks has long-term potential for Microsoft. First, Microsoft gets patented peer-to-peer technology that could bring Groove-like capabilities to Microsoft products such as Windows SharePoint Services. Second, it gains a capable technical team that includes Groove founder Ray Ozzie, creator of Lotus Notes, who will join the company as one of three chief technical officers reporting directly to Chief Software Architect Bill Gates. Microsoft also picks up the Massachusetts Groove headquarters, which will remain in place and could ultimately become a valuable research and development center. Ozzie will remain at that site, as will most of Groove's 200 employees.

In the short run, Microsoft will probably bring Groove Virtual Office into the fold as one of its Office System client products and will localize it into more languages, as it has done with other acquisitions (such as Visio).

Less likely, but possible: Microsoft could bundle Groove Virtual Office with low-end editions of the Office suite, creating a document sharing and instant messaging solution for smaller companies that don't have the technical savvy or servers for Windows SharePoint Services. Such companies could subscribe to Groove data center services rather than deploying their own servers.

Integration Challenges; New Models Needed

For Groove, the acquisition provides a much bigger sales force and Microsoft’s financial and technical resources, as well as the possibility of piggybacking on successful Microsoft products such as Office and Windows Server. The challenge will be to adapt Ozzie and the Groove engineers to the culture of a company that's many times larger.

Although positive overall, the acquisition also illustrates a challenge that Microsoft faces with desktop ISVs: gaining adoption of its latest developer technology for PC applications. While technologies such as Web services and the .NET Framework have been very successful for server applications and corporate development, Groove was one of the few desktop software vendors other than Microsoft to use those technologies. Groove's commitment to the latest Microsoft developer technologies probably influenced Microsoft's decision to provide over a third of the US$151 million that Groove raised in outside capital prior to its acquisition. With Groove now becoming part of Microsoft's Information Worker business unit, Microsoft will have to look elsewhere for a model that showcases the modern Windows desktop ISV.

Groove Network's Web site is www.groove.net.