VMware To Buy Yahoo's Zimbra

Virtualization vendor looks to extend cloud portfolio with e-mail and collaboration services.

January 13, 2010

D.H. Kass

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VMware Inc. said it will purchase Zimbra, a provider of email and collaboration software, from Yahoo Inc., where it currently operates as an independent product division.

Terms of the agreement were not disclosed but published reports and blog entries pegged the sale price at about $100 million, which, if accurate, would represent a significant reduction from the $350 million Yahoo paid for Zimbra two years ago. The deal is expected to close within the next three months.

Zimbra’s Collaboration Suite is open source software for email, calendaring and collaboration that can be deployed by large companies, providers and resellers offering email as a service.

VMware said that it will purchase all of Zimbra’s technology and intellectual property. Yahoo will retain the rights to use Zimbra’s technology in its Yahoo! Mail and Yahoo! Calendar applications.

The deal propels VMware into the e-mail and calendar services business, seemingly in direct competition with Microsoft Corp.’s Outlook and Exchange e-mail products.

VMware said that Zimbra maintains about 55 million mailboxes, growing that count by 165 percent among small- and medium-sized customers and 86 percent overall in 2009.

A natural fit, officials say

VMware officials said that the acquisition is a natural addition to its overall virtualization portfolio and advances the company’s central business philosophy to simplify datacenter, desktop, application development and core IT services and improve efficiency.

“Over the coming years, we expect more organizations, especially small- and medium-sized businesses, to increasingly buy core IT solutions that deliver cloud-like simplicity in end-user and operational experience,” said Brian Byun, VMware vice president and general manager, cloud services.

“Zimbra is a great example of the type of scalable cloud-era solutions that can span smaller, on-premise implementations to the cloud,” he said. “It will be a building block in an expanding portfolio of solutions that can be offered as a virtual appliance or by a cloud service provider.”

Steve Herrod, VMware’s chief technology officer, said in a blog posting that the Zimbra acquisition is important because it allows the virtualization vendor to enliven its portfolio of cloud offerings and furthers its efforts to simplify IT.

“With this acquisition, we will extend our focus into email and collaboration, one of the core services--along with areas such as file and print services and identity management--that IT departments universally provide to their users,” Herrod said.

The Zimbra acquisition is VMware’s second foray with an open-source software maker. Last year, it bought SpringSource for $420 million for its Java framework aimed at simplifying application development.

TAGS: virtualization,Yahoo,VMware,e-Mail,Zimbra

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