Microsoft gets into the Groove

Microsoft yesterday said it would buy a key collaborator, Groove Networks, and named its founder as the new chief technical officer of the world's largest software maker.

Microsoft yesterday said it would buy a key collaborator, Groove Networks, and named its founder as the new chief technical officer of the world's largest software maker.

Ray Ozzie, who set up Groove in 1997, will report to Bill Gates, chairman of Microsoft, and will bring with him his team of almost 200. Groove has developed software which enables people in different locations to work together by letting them create "virtual offices" online.

The acquisition will bolster Microsoft's strategy of expanding its Office franchise beyond products such as Microsoft Word and Excel. With the market for those products growing more saturated, the company has been looking for ways to make money from business software, including introducing web conferencing software and getting into the market for corporate instant messaging.

Terms of the acquisition of Groove, which is privately held, were not disclosed. Microsoft already has a 20 per cent stake in the business, which it bought in October 2001 for $51m (£27m). It also participated in a $38m round of financing for the company, based in Beverly, Massachusetts, in March 2003.

"After working with Ray for years as a partner, it will be great to have him on our leadership team," Mr Gates said.