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Groove: Microsoft's Middleware Move

Microsoft's acquisition of Groove Networks will give it access to secure middleware and an advantage over rivals IBM and Oracle , analysts said.

The company will gain new technology to provide customers with an offline collaboration client and benefit from the expertise of Ray Ozzie, renowned creator of Lotus Notes.

Ozzie, for whom Microsoft Chief Software Architect Bill Gates has expressed his deep respect, will work closely with Gates as a CTO.

Groove's Virtual Office collaboration tools will be tucked into Microsoft Office System, where it will be used to complement and support Office Live Meeting 2005, Office Live Communications Server, Office SharePoint Portal Server and Windows SharePoint Services.

The deal comes after five years of collaboration, during which Microsoft infused $89 million in Groove and integrated its SharePoint technology with Groove's software.

While most experts praise Microsoft for targeting Ozzie and Groove's client and virtual office suite, Meta Group analyst Mike Gotta said Groove's middleware should benefit Microsoft's next-generation operating system, Longhorn, due in 2006.

"Groove has invested a lot of its intellectual property in its middleware," Gotta said. "Everyone tends to talk about the client and gets enamored with Virtual Office. But the crown jewel is not the desktop application. The crown jewel is all of the middleware and the security model around it and the fact that it is firewall friendly."

Gotta said Microsoft can take that middleware and jump-start its own internal development efforts for future product releases in Longhorn. For example, Gotta said he sees Groove technology integrating with Microsoft's InfoPath XML forms software, OneNote note-taking software or BizTalk integration server.

But in the near term, Gotta acknowledged that Groove's offline collaboration client is a salient component of the deal, enabling users to exchange work materials without being connected to the Internet. This includes a relay server that enables information replication from behind the company firewall.

Without a relay server, the SharePoint suite couldn't replicate information to users if they weren't online. Once Groove's peer-to-peer technology is fully integrated with SharePoint, workers can replicate information to the relay and other users can go online late and pick up the new information.

Eventually, Windows SharePoint users can grab documents, go on the road and work on them and dump them back into the virtual work space, Gotta said.

Because Groove works across firewalls, IT staffs don't need to get involved if an employee needs to set up a work space with a partner outside the company, Forrester Research senior analyst Erica Rugullies pointed out. This has been a weakness of Microsoft before, she said.

The benefit of Groove's technology to Microsoft is fairly transparent. But will it change the competitive landscape? Rugullies seems to think so.

"This is a direct hit at IBM and Oracle and anybody else who wants to become a major player in the collaboration platform arena," Rugullies said. "None of the other competitors have anything like it."

"This is also a direct stab at IBM because Ray Ozzie took center stage and a standing ovation at Lotusphere this year and Groove had a booth right next to IBM's WorkPlace demo booth, so Microsoft beat IBM to the punch," she continued.

Rugullies said IBM will update its WorkPlace collaboration software by mid-year with real-time collaboration utilities, but these will not likely match the functionality of Groove's technology.

Gotta agreed but sees the Microsoft-IBM competition springing more from what Microsoft will do with Groove's middleware than Virtual Office.

"The strategic stuff isn't going to come from what Groove is shipping in terms of applications," Gotta said. "It's going to come from the security, Web services and middleware and how Microsoft can leverage that versus IBM.

Despite the positives, the timing is curious. While Rugullies said Microsoft had previously pledged to build the technology themselves but probably realized it would take them too long to do it, Gotta sees the concern as being between a rock and hard place because of the impending Longhorn and Office 12 releases for 2006.

"You can't move the food around the plate too much right now so I'd expect some tactical integration," Gotta said. But I don't think it will be the Microsoft products changing to work with Groove that much. It'll be more Groove enhancements to fit better with existing Microsoft products."