By Melanie Turek, Senior Vice President, Nemertes Research Inc.
March 15, 2005

Microsoft’s (NASDAQ: MSFT) plan to acquire Groove Networks (privately held) and name Groove Chairman, CEO and Founder Ray Ozzie as chief technical officer of Microsoft emphasizes Microsoft’s desire to be the leader in the collaboration applications space.

We believe Microsoft is correct in its assessment of the importance of real-time collaboration: 92% of enterprises have told Nemertes they rely on real-time collaboration tools to manage remote workers (a population that’s been increasing dramatically over the past few years).

Terms of the deal weren’t disclosed, and it remains to be seen what role the Groove peer-to-peer software, Virtual Office, will play in Microsoft’s Office suite. Groove’s software lets workgroups collaborate seamlessly anytime, online or off, and complements Microsoft’s SharePoint Services and SharePoint Portal Server, which isn’t designed to support the virtual workplace. But Groove has a clear understanding of what it takes to make teams virtual: Its peer-to-peer architecture ensures that users can work offline, then get changes to relevant teammates as soon as everyone logs back onto the system. If Microsoft ties the technology into future versions of Windows and Office, it could make oft-maligned peer-to-peer architectures mainstream. And the Groove deal gives Microsoft the collaboration chops to compete effectively against archrival IBM.

The complete Impact Analysis is available to Nemertes clients. For more information, please contact Christine Zimmerman at christine@nemertes.com