The titans of software -- Microsoft's (NASDAQ:MSFT) Bill Gates and Oracle's (NASDAQ:ORCL) Larry Ellison -- have been busy buying companies lately. Oracle made a hostile bid for Retek (NASDAQ:RETK) so as to thwart a deal with SAP (NYSE:SAP). And, yesterday, Microsoft announced its deal to purchase Groove Networks.
But don't expect Ellison to make a hostile bid for this one, since Groove is privately held, although its $155 million in venture capital financing (Microsoft is an investor) gives it public-company weight.
Groove is a leader in software that helps organizations share information, engage in meetings, and work on projects. It flagship product is called Virtual Office. By being a part of Microsoft, the features will become a part of the MS Office. Basically, as companies get bigger -- and workforces more mobile -- collaborative features become much more critical.
Another attraction of the deal is Groove's founder, Ray Ozzie. He is a veritable programming guru, having created Lotus Notes, a product now owned by IBM (NYSE:IBM) that has more than 100 million users worldwide.
Gates adores Ozzie, having once remarked that he considers him one of the top five programmers in the universe.
Accordingly, Ozzie will not be a division head but one of Microsoft's chief technology officers (there are three), reporting to none other than Bill Gates.
Megacompanies such as Microsoft and Oracle can have difficulty innovating. But with lots of cash and market cap, a company like Microsoft can wait for innovations to flourish and buy them. And as Microsoft plans to introduce its new operating system, as well as solidify and preserve its MS Office franchise, I'd say we're likely to see more deals in the near future.
Fool contributor Tom Taulli does not own shares mentioned in this article.
