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January 21, 2003

Microsoft (Quote, Company Info) Tuesday said it has signed an agreement to acquire hosted Web conferencing software firm PlaceWare for an undisclosed amount.

The Redmond, Wash.-based software giant said the purchase is part of the company’s long-term strategy to make Web conferencing as easy to use as e-mail or Instant Messaging.

“We look at this as a long-term thing,” Microsoft Information Worker Group lead program manager Dan Leach told internetnews.com. “We make big bets and long term bets… and this is one of them. I wouldn’t be surprised if Web conferencing becomes even more commonplace in the next five years.”

Mountain View, Calif.-based PlaceWare’s software lets companies create virtual “meetings” with up to 2,500 attendees. Its flagship Conference Center service includes a Web-based platform for uploading and delivering business presentations. The company also offers services such as project management, event coordination, and presenter training. PlaceWare competes with the likes of IBM (Quote, Company Info) and its Lotus Sametime server software as well as online conferencing software from Oracle (Quote, Company Info), Centra Software, Raindance Communications and WebEx.

But PlaceWare has been in the Web conferencing business for a little longer. Founded by researchers from Xerox Palo Alto Research Center in 1996, PlaceWare is the same company that embarked on a very original awareness campaign in October 2002 by having its chief executive conduct a live press conference from a billboard in New York’s Times Square, using the firm’s technology.

“Online conferencing and collaboration is one of the hottest and fastest-growing areas of Web services today, because it represents a natural evolution and convergence of collaboration technologies and at the same time produces immediate and significant savings and ROI to companies of all sizes through reduced travel and higher productivity,” said PlaceWare president and CEO George Garrick. “We believe that our deep expertise and existing conferencing technologies, combined with Microsoft’s innovation and capabilities and our common vision, will enable us to bring to market many exciting solutions and opportunities for our joint customer base.”

Currently, PlaceWare supports customers like American Express, Cisco Systems, Prudential, Hewlett-Packard and Johnson & Johnson and uses technology from British Telecom (BT), Saba, Premiere Conferencing and MCI WorldCom to produce its conferencing packages. Microsoft and PlaceWare said they would continue to support competitors’ platforms and services, at least until the acquisition closes and the PlaceWare group can map out its strategy

The transaction is expected to be completed in the first quarter of 2003 and will result in PlaceWare being incorporated into Microsoft’s Information Worker Business, the same one which oversees Microsoft Office software.

Microsoft also today announced the creation of a new business unit — the Real Time Collaboration Group — within the information worker business. PlaceWare also will become part of this group. Anoop Gupta, who has been part of Microsoft Research for five years and has recently been serving as Bill Gates’ technical advisor, will lead the newly formed group.

With the new Real Time Collaboration Group, Microsoft said it wants to expand its current Web conferencing base and “bring together Microsoft’s various software tools” to help workers become more productive in and out of the office.

Leach said PlaceWare would be one of the founding technology contributors to the group along with its instant messaging “Greenwich” server technologies and possibly its SharePoint Team Services, which is being tested as part of the Microsoft Office 11 beta.

Microsoft said the Real Time Collaboration Group would be comprised of about 500 people (same as the Xbox team) with the majority of PlaceWare’s 300 employees to moving north to Redmond.

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