Microsoft Acquires Groove Networks, Taps Ray Ozzie As CTO

After an extended courtship, Microsoft finally made its move Thursday, acquiring Groove Networks and naming Groove chairman, CEO and founder Ray Ozzie as chief technology officer at Microsoft.

The software giant says it plans to integrate Groove's collaboration software into the Microsoft Office suite and create a "virtual office" platform. Financial terms of the acquisition were not disclosed. Ozzie will be reporting directly to Bill Gates, Microsoft founder, chairman and chief software architect, and will focus on developing collaboration offerings and associated platform infrastructure. Ozzie also will continue his work with the Groove team, Microsoft says, 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 in a prepared statement. "After working with Ray for years as a close partner, it will be great to have him on our senior leadership team."

The acquisition finally brings Ozzie, creator of IBM's Lotus Notes and competitor to Microsoft's Exchange, to Redmond, Wash. After leaving Lotus following its sale to IBM, Ozzie founded Groove in 1997. The company has worked closely with Microsoft for almost five years and has invested tens of millions of dollars in Groove. Once the deal is completed, Groove, which has nearly 200 employees, will continue to operate from its Beverly, Mass., headquarters as part of Microsoft's Information Worker Group.

Microsoft says Groove will continue to operate as a separate company until regulatory requirements have been met and the acquisition is finalized, which should happen sometime next quarter.