Microsoft to Acquire Groove Networks

Microsoft Corp. announced that it will acquire Groove Networks Inc. (www.groove.net) a provider of collaboration software for the "virtual office." The deal unites two top innovators of technology that help geographically distributed workgroups be as productive as those that work in a single physical location. Financial terms of the acquisition were not disclosed.

The addition of Groove products to the lineup of Microsoft® Office System products, servers and services builds on the capabilities of Microsoft's current collaboration products.

"The acquisition of Groove complements Microsoft's collaboration offerings to include real-time, server-based and peer-to-peer solutions that address the ever-changing and more-complex work environment," said Jeff Raikes, group vice president of Microsoft's Information Worker Group.

The acquisition also brings to Microsoft the development talent and technology leadership of top Groove executives, including founder Ray Ozzie, a creator of IBM Corp.'s Lotus Notes.

Ozzie will assume the role of chief technical officer, reporting to Bill Gates, Microsoft founder, chairman and chief software architect, with responsibility for influencing corporatewide communication and collaboration offerings and associated platform infrastructure. Ozzie also will continue his work with the Groove team, which will be part of Microsoft's Information Worker Group.

"Ray and his team are true innovators. Microsoft and its customers will greatly benefit from their experience," Gates said. "After working with Ray for years as a close partner, it will be great to have him on our senior leadership team."

"We developed Groove's highly security-enhanced virtual office technology to help businesses and individuals -- wherever they are, whenever they work -- overcome the challenges presented by today's increasingly decentralized work environment," Ozzie said.

As a Windows® desktop-based collaboration offering, Groove's Virtual Office complements Microsoft's collaboration solution offerings
The acquisition is expected to be complete in the second quarter of 2005.

Microsoft and Groove plan to provide customers and third-party partners with uninterrupted product and service offerings. Groove will continue to operate as a separate company until regulatory requirements have been met and the acquisition is finalized.