Unlike Microsoft's programs, Groove's Virtual Office doesn't require computer servers. The software works on what's known as a peer-to-peer basis, either over the Internet or via direct network connections. The "virtual workspaces" let users work together on documents and share files, among other things.

Microsoft executives say the Groove product should complement their existing offerings. Steven Sinofsky, senior vice president for Microsoft Office, called it a trifecta -- with peer-to-peer, server-based, and real-time collaboration products.