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It's Official: Yahoo Deals Zimbra to VMware

By Sean Michael Kerner (Send Email)
Posted Jan 12, 2010


Yahoo has reached an agreement to sell its open source Zimbra e-mail collaboration unit to VMware. Financial terms of the deal were not disclosed, but VMware said it expects the deal to close in the first quarter of calendar 2010. After some speculation, the deal is now public, continuing VMware's flight to the cloud.

As part of the deal, Yahoo (NASDAQ: YHOO) will continue to use Zimbra technology in its e-mail and calendar services, while VMware (NYSE: VMW) will acquire all of the intellectual property and technology rights.

VMware plans to continue to support Zimbra's current open source and commercial efforts, while also integrating Zimbra with the VMware vSphere cloud-based infrastructure.

"Zimbra is a great example of the type of scalable 'cloud era' solutions that can span smaller, on-premise implementations to the cloud," VMware Vice President Brian Byun said in a statement. "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."

Yahoo acquired Zimbra for $350 million in September of 2007. The most recent update to the Zimbra Collaboration Suite (ZCS) came at the end of September 2009 with the ZC6 update. Zimbra is a widely used technology, powering more than 55 million paid mailboxes, including a major deal with Comcast.

With the acquisition of Zimbra, VMware will be expanding is application services platform beyond just virtualization technology itself.

"We believe that the shift toward cloud computing and virtualization will continue to change the industry landscape and revolutionize how the IT industry builds, deploys and uses software," Zimbra General Manager Jim Morrisroe wrote in a blog post. "Zimbra is excited to be joining our open source friends at SpringSource, and becoming another cornerstone in an impressive suite of VMware products. The VMware platform now integrates virtualization, middleware and applications -- and enables the decoupling of applications from traditional concepts of linear hardware scaling."

VMware acquired SpringSource, a Java tools vendor, in a $362 million deal in 2009 .

The move by VMware is seen as a positive one by at least one open source CEO.

"VMware is clearly moving aggressively up the stack and is not content to be limited to virtualization or even infrastructure," Larry Augustin, CEO of SugarCRM, wrote in an email to InternetNews.com. "With the Zimbra acquisition, VMWare is squarely positioning itself in the applications and collaboration space."

Augustin noted that both SpringSource and Zimbra are based on open source technology, putting VMware solidly into the open source camp.

"I would expect them to continue to make acquisitions in open source and at all tiers of the software stack: infrastructure and applications," Augustin said.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the internet.com network.

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