Microsoft To Acquire Groove, Name Ozzie Microsoft CTO

Terms of the deal weren't disclosed. Groove will continue to be run out of its Beverly, Mass., headquarters and will become part of Microsoft's Information Worker Business. Ozzie will report directly to Microsoft Chairman and Chief Software Architect Bill Gates.

Founded in 1997, Groove develops peer-to-peer software called Virtual Office that enables ad hoc workgroups to collaborate seamlessly in realtime.

Groove's software complements Microsoft's SharePoint Services and SharePoint Portal Server. Groove has worked closely with Microsoft on its collaboration technologies since its founding. In October, Microsoft invested $51 million in Groove, acquiring a 20 percent stake in the ISV. Redmond, Wash.-based Microsoft later was part of $38 million investment in Groove after the company had layoffs and a restructuring. Overall, Groove has received $155 million in financing since its founding.

Ozzie is best known for his creation of Lotus Notes. He left Lotus after the company was acquired by IBM and launched Groove as a dedicated Microsoft ISV.

Lotus Notes competes directly with Microsoft Exchange. But in 1994, Microsoft named Ozzie a "Windows Pioneer," a rank given to only seven people, Microsoft said.