Groove Gets $38 Million In Aid, Lays-off 20 Percent

By Paula Rooney, CRN
March 05, 2003 6:10 PM ET

Groove Networks is getting a little help from its friends--in high places.

The Beverly-based peer-to-peer (P2P) software concern announced Wednesday a corporate restructuring and layoff of 20 percent of its 278 employees. At the same time, the company revealed that it had captured a fifth round of financing--$38 million--from existing investors Microsoft, Intel Capital and Accel Partners.

Groove, which has raised a total of $155 million since being founded by Lotus Notes developer Ray Ozzie in fall 1997, is viewed as Microsoft's strategic partner for its ambitious P2P and collaboration software portfolio for .Net and Longhorn version of Windows in 2004, according to CRN sources.

Late last month, Groove unveiled a major upgrade of its intra- and cross-organization collaboration platform, Workspace 2.5. It also announced an add-in toolkit for Microsoft's Visual Studio.Net, which is due in April.

P2P technology, which promises to connect devices, users, servers and applications in realtime, remains one of the hot technologies originally cultivated by Napster and others for the consumer market but eyed for corporate use. While adoption has been slow, major software vendors Microsoft and Sun in recent days have touted products and protocols to make P2P plumbing more widely available in Windows and Java platforms.

Last week, for instance, Microsoft announced the release of its Windows XP Peer-to-Peer Software Development Kit (SDK) and its plans to release a Windows XP Peer-to-Peer Update next quarter.

The SDK will enable developers such as Groove, along with solution providers, to create applications that will allow end users to communicate and collaborate in rea-time. Users can download the P2P update for Windows XP to support these applications on the desktop.

Earlier this week, Microsoft competitor Sun announced the release of an enhanced version of the open-source JXTA protocol as it attempts to push its Java-based P2P platform for the Web services era.

Sun executives said the enhanced version of the XML-based P2P protocol, JXTA 2.0, provides increased scalability and performance. They also said that ISVs including InView Software, Newcastle, Wash., and Internet Access Methods, New York, will implement the JXTA protocols in new collaborative applications.

As Microsoft and Sun revealed their latest P2P plans, ISVs such as Groove and InView are building value-added applications that exploit the protocols and Windows XP P2P code and SDK plumbing.

"What Sun is doing with JXTA is similar to what Microsoft has done with its P2P SDK--create some lower-level plumbing standards that make it easier for developers and solution providers to focus on building applications, " said Jack Ozzie, vice president of platform and developer services at Groove Networks. "Whether you're a .Net shop or a J2EE shop, you now have a foundation for developing apps that take advantage of direct, device-to-device connections. But Groove is positioned one layer up the stack. We provide a platform of collaboration services that enable developers to create decentralized collaboration applications. These applications can reside within the Groove Workspace environment or exist outside of Groove."

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