Gates Hires Ozzie the Wiz

Microsoft yesterday announced a deal to buy a company run by the creator of IBM's Lotus Notes, Ray Ozzie, at the same time hiring him to be one of the software firm's most senior technical executives.

Mr Ozzie will join Microsoft in the role of chief technical officer and will report directly to chairman and chief software architect Bill Gates. He will be one of three chief technical officers at Microsoft, with Craig Mundie and David Vaskevitch, and work with Mr Gates to develop the firm's strategy.

Microsoft is buying his privately held firm, Groove Networks, for an undisclosed sum. The company makes office collaboration software which allows people to work on computer files simultaneously.

Mr Gates said: "Ray and his team are true innovators. Microsoft and its customers will greatly benefit from their experience." Groove was founded in 1997, and has worked closely with Microsoft over the past five years.

The acquisition is part of Microsoft's ambition to expand its Office franchise beyond Word and Excel. It has introduced online conferencing software and is entering the market for corporate instant messaging. Groove's software aims to make the virtual office a reality, with users at different locations anywhere in the world.

The company's 200 workers will join Microsoft's information worker division, which is behind its Office suit of desktop products.

Microsoft paid $200m (£100m) in 2003 for PlaceWare, a provider of web conferencing services which allows businesses to conduct real-time presentations and meetings online. It renamed it Office Live Meeting.

Microsoft owned a minority stake in Groove following a $50m investment in 2001. Groove has raised more than $155m in start-up financing.

Mr Ozzie founded Iris Associates in 1984, where he developed Lotus Notes for Lotus Development Corporation. IBM bought Lotus in 1995 and produces it in competition with Microsoft's Outlook.

Microsoft wants to launch its long-awaited Longhorn operating system next year. Mr Gates said he hoped Groove technology would play a part in that system.

Mr Ozzie said businesses were becoming a "mesh environment" with teams working together from far flung offices or home. "We created a decentralised profit for that changing nature of business."