January 21, 2003 4:29 PM PST

Microsoft to buy Net collaboration firm

Microsoft on Tuesday announced the pending acquisition of PlaceWare, a provider of Web-based collaboration services.

The companies expect to close the transaction during the first quarter of 2003, after which time Mountain View, Calif.-based PlaceWare will become part of Microsoft's Information Worker division. One of Microsoft's most profitable divisions, Information Worker brought in $2.29 billion during the December quarter. The group includes Microsoft Office software.

In conjunction with the announcement, Microsoft also created a new business unit, Real Time Collaboration, as part of the Information Worker division. Anoop Gupta will head the new division and report to Jeff Raikes, Microsoft's group vice president of productivity and business services.

Gupta worked in Microsoft Research for five years and more recently served as a technical adviser to company Chairman Bill Gates.

The acquisition comes as Microsoft beefs up support for online collaboration services. For example, the Redmond, Wash.-based company is testing a new version of SharePoint Team Services as part of the Office 11 beta. SharePoint Team Services provides Office users a common work space for sharing information and documents.

But SharePoint Team Services only provides users with a place to share information, whereas PlaceWare's technology offers real-time Web conferencing. "This is a real complementary technology and with a lot of other pieces Microsoft has," Gupta said.

Gupta would not detail in what products PlaceWare's technology may appear, but he gave some examples of how it may be used.

"While you're carrying out an instant-messaging conversation with someone, you can enter into a Web conference where you're sharing data, sharing applications, things like that," he said.

Gupta predicted real-time collaboration would have "as transformational impact going forward in the future" as that already created by the PC. Microsoft's more immediate goal is to "make Web conferencing as easy as e-mail and instant messaging," he added.

Microsoft also is closely aligned with Groove Networks, which provides peer-to-peer networking collaboration software. In July, Groove announced that its software would support SharePoint Team Services.

Gupta downplayed the impact on Groove. "The deal is complementary to what we're doing with Groove Networks," he said. "One of the key areas we are partnering with Groove is around the SharePoint Team Services initiative."

Microsoft and PlaceWare did not discuss terms of the acquisition.

"We are not announcing the details of the acquisition, as PlaceWare is not a publicly traded company," Gupta said. Making the acquisition and buying PlaceWare is "a big investment from our side," he said.

PlaceWare posted revenue of $51 million last year, up from $20 million in 2000. The company has 3,100 customers and employs about 300 people.

The engineering and core development teams will work out of Redmond, but main operations will remain in Mountain View. "We want to keep the vast majority of people," Gupta emphasized.

George Garrick, PlaceWare's CEO, will not be joining Microsoft. "I will be staying on through about a three-month transition period after closing," he said. "Then, I will be moving on."

PlaceWare competitor WebEx issued a statement Tuesday afternoon in response to the acquisition.

"Microsoft has been focused on responding to IBM and its Lotus Sametime server software, and PlaceWare's server software allows Microsoft to better compete against Lotus Sametime," Praful Shah, WebEx vice president of strategic communications, said in a statement.

 

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