Microsoft to acquire Web conferencing provider

James Niccolai, IDG News Service   Today’s Top Stories    or  Other Desktop Applications Stories  

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January 22, 2003 (IDG News Service) -- Microsoft Corp. has agreed to acquire PlaceWare Inc., a privately held company that provides Web conferencing services for businesses, the software maker announced yesterday.
Microsoft will use the acquisition to start a new business unit that will develop products and technologies that let workers collaborate in real time over the Internet, the company said. The unit will be part of Microsoft's Information Worker group, which makes the Office applications suite.
The transaction is expected to close in the first quarter of 2003. Financial terms and other details weren't disclosed.
Based in Mountain View, Calif., PlaceWare offers services that let businesses conduct real-time, interactive presentations and meetings over the Internet. Its customers include American Express Co., Johnson & Johnson and Cisco Systems Inc., according to information on its Web site.
Microsoft will combine PlaceWare's assets with some of its own to develop new online conferencing technologies. It will share some of them with industry partners, allowing them to build custom business offerings that use real-time collaboration capabilities, Microsoft said. The goal is to boost the productivity of what Microsoft calls "information workers."
Giga Information Group Inc. analyst Rob Enderle characterized the technology behind PlaceWare's service as "the big brother to NetMeeting," Microsoft's existing online collaboration software offered with Windows 2000. While NetMeeting works well only for groups of five or six people, PlaceWare's software can scale up to support hundreds or even thousands of users, according to Enderle.
Microsoft will likely include some of PlaceWare's technology in future versions of Office applications such as PowerPoint, allowing workers to collaborate over the Internet while they work, Enderle said. Further out, he said, Microsoft will likely combine some of PlaceWare's collaborative capabilities with server products such as Microsoft Exchange.
"It's something Microsoft didn't have and that they felt they needed to fill out their portfolio," he said.
Microsoft representatives weren't immediately available to discuss the company's plans in any detail.
PlaceWare's competitors include publicly traded WebEx Communications Inc. That company grew to be larger than PlaceWare, Enderle said, in part because it managed to attract greater levels of investment. WebEx will now face "a much greater level of competition" in the form of Microsoft, he said.
WebEx was quick to issue a statement responding to the deal. It argued that Microsoft wants to acquire PlaceWare primarily to help it compete with IBM and its Lotus Sametime server software.
In the after-hours markets, shares in WebEx were down by almost 18% at the time of this report.
PlaceWare offers a "carrier-class" platform that can be used to host collaborative sessions for groups of all sizes, from a few participants up to a few thousand, both inside and outside a corporate firewall, Microsoft said. People who use the service need only a Web browser and a telephone.
The new Microsoft business unit will be called the Real Time Collaboration Group. It will be headed by Anoop Gupta, a five-year veteran of Microsoft Research who was recently a technical adviser to Bill Gates, Microsoft's chairman and chief software architect, Microsoft said.
Gupta will report to Jeff Raikes, Microsoft's group vice president of productivity and business services.

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