A privately held firm that uses a peer-to-peer (P2P) networking technology similar to that of Napster got a boost when Microsoft said it would invest $51m in the startup.
Groove Networks, founded by Lotus Notes creator Ray Ozzie, uses P2P software to extend critical business processes, projects and meetings across time, space and organisational boundaries. The data is stored on each user's hard drive.
The firm plans to target its software at business processes such as purchasing, distribution and customer service to help streamline cross-company processes.
Microsoft's investment gives it a minority stake in Groove. Previous investors include Accel Partners and Intel.
Both Microsoft and Groove said they believe that using an appropriate mix of centralised and decentralised infrastructure is important to companies. In the past year, the pair have worked together on a shared vision of XML-based web and P2P services for businesses.
Dana Gardner, an analyst at the Aberdeen Group, said: "This is a natural fit as both companies' products complement each other."
Ozzie confirmed that the company has been working with Microsoft on several initiatives for about a year. "Our early customers have been asking for better integration with Office applications and an understanding of how we will employ .Net technologies and services," he said in a statement.
"We have made significant progress on these initiatives and think this closer relationship with Microsoft ensures that we can capitalise on each other's strengths," he added.
In the same statement, Microsoft chief executive Steve Ballmer said: "When Groove was first introduced about a year ago, we indicated how excited we were about the technology, not only because of its advanced use of our .Net tools and infrastructure, but also because it represented a new breed of innovative software that takes full advantage of the PC and the rich communication aspects of the internet."
Since its launch, Groove has attracted customers such as GlaxoSmithKline, Andersen and the Defence Advanced Research Projects Agency.
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