The addition of Groove products to the lineup of Microsoft® Office System products, servers and services builds on the capabilities of Microsoft's current web collaboration products, allowing Microsoft to better meet the needs of organizations of all sizes that increasingly are creating borderless project teams comprising employees, customers, partners, suppliers, contractors and others.

"The acquisition of Groove complements Microsoft's web 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. "Together, Microsoft and Groove will make anytime, anywhere web collaboration a more natural and easy extension of how information workers coordinate their projects and document-centric work."

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 web 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. "By joining forces with Microsoft, we can more effectively address the needs of information workers for web collaboration solutions that 'just work' across organizational, geographic and network boundaries."

As a Windows® desktop-based collaboration offering, Groove's Virtual Office complements Microsoft's collaboration solution offerings, which include the following:

- Real-time web collaboration and firewall protected collaboration software such as Microsoft Office Live Meeting 2005 and Microsoft Office Live Communications Server that enable in-the-moment one-to-one and one-to-many web collaboration;

- Server-based collaboration solutions such as Microsoft Office SharePoint® Portal Server and Windows SharePoint Services that allow businesses to create and manage collaborative work spaces online or on a company's internal IT system;

- Peer-to-peer collaboration solutions through Groove's Virtual Office, which let any Windows-based PC user instantly create ad hoc, virtual work spaces that securely and easily span organizational, geographic and network boundaries, and allow information workers to be productive whether they're online or temporarily disconnected from the network.

Groove has worked closely with Microsoft for nearly five years. After the deal is completed, the nearly 200-person Groove organization will continue to operate from its Beverly, Mass., headquarters as part of Microsoft's Information Worker Group.

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.

Groove Networks Inc. delivers the "virtual office" through desktop and web collaboration software that allows teams of people to work together over a network as if they were in the same physical location. Groove software helps organizations, large and small, save money, time and eliminate travel. It permits joint work, and a set of customizable, open web collaboration capabilities that enhance the utility and value of existing solutions. For more information about Groove Networks, visit http://www.groove.net.