Microsoft to acquire Web conferencing provider

Microsoft has agreed to acquire PlaceWare, a privately held company that provides Web conferencing services for businesses.

Microsoft would use the acquisition to start a new business unit that would develop products and technologies that let workers collaborate in real time over the Internet, the company said. The unit would be part of Microsoft's Information Worker group, which made the Office applications suite.

The transaction is expected to close in the first quarter of 2003. Financial terms and other details were not disclosed.

PlaceWare offers services that let businesses conduct real-time, interactive presentations and meetings over the Internet. Its customers include American Express, Johnson & Johnson and Cisco Systems.

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. The goal is to boost the productivity of what Microsoft calls "information workers."

Giga Information Group analyst, Rob Enderle, said the technology behind PlaceWare's service was the big brother to NetMeeting (Microsoft's existing online collaboration software offered with Windows 2000). While NetMeeting only worked well for groups of five or six people, PlaceWare's software could scale up to support hundreds or even thousands of users.

Microsoft would probably include some of PlaceWare's technology in future versions of Office applications such as PowerPoint, allowing workers to collaborate over the Internet while they worked, Enderle said. Later, Microsoft would 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.

PlaceWare's competitors include publicly-traded WebEx Communications. That company grew to be larger than PlaceWare, Enderle said, in part because it managed to attract greater levels of investment. WebEx would now face "a much greater level of competition" in Microsoft.

WebEx issued a statement responding to the deal. It said that Microsoft wants to acquire PlaceWare primarily to help it compete with IBM and its Lotus Sametime server software.

PlaceWare offered a "carrier-class" platform that could 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 used 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 advisor to Microsoft chairman, Bill Gates.