Rumor: VMware to Purchase Zimbra

By Amy Newman (Send Email)
Posted Jan 6, 2010

New year, new rumors. On Monday, Kara Swisher revealed on her blog, All Things Digital, "VMware Likely to Buy Zimbra From Yahoo."

Virtually Speaking: The rumor mill is in hyperdrive over speculation that VMware is buying Zimbra. What would the virtualization company want with a collaboration server vendor?

She reports that according to several sources close to the situation, Yahoo is close to selling its Zimbra subsidiary to VMware, and the deal could be announced "soon." While the price for it is unclear, it is much lower than the $350 million Yahoo paid for Zimbra back in September 2007. Yahoo has been trying to sell Zimbra for some months now. Among the companies it approached were Red Hat and Cisco Systems as well as Comcast and Google. VMware was the only one willing to bite.

In retrospect, the fact that Yahoo is looking to offload Zimbra isn't all that surprising. From the start it was unclear what the company intended to do with the open source collaboration company or how it intended to integrate it. The answer turned out to be, nothing, although at one point Zimbra was being positioned as Yahoo's email option for businesses. It never seemed to pick the momentum Yahoo hoped. More than two years post-acquisition, the waters are a bit less murky but still unclear, and the beleaguered search engine/portal/email company is shedding nonessential assets to drum up additional cash.

Hence, Zimbra's placement on the auction block is logical and unsurprising. "Why VMware?" is the more interesting question. Is Zimbra going from one company that had no idea what to do with it to another?

Perhaps, but not likely. Consider that Zimbra's collaboration tool is currently available as both a traditional mail server and a hosted email solution. When Zimbra burst on the scene with its collaboration suite in October 2005, many heads turned. At the time I noted, "What Zimbra has done is scrap the Exchange model for what it believes a mail server should be, and it has bypassed Windows." It had many things going for it, including being one of the most user friendly open source Exchange alternatives. Through the years, Zimbra has received many accolades from analysts and the trade press, and though it has yet to surpass Exchange, it is recognized as a very viable option for organizations running Linux or Mac OS X.

Since then, hosted services have gained steam, thanks to the faltering economy, Google and the rise of the cloud. Zimbra is one of those companies lucky enough to have the right product at the right time.

I believe ultimately it is the cloud that will make the difference. Zimbra Collaboration Suite is built around Web collaboration, making it a a cozy fit for the cloud. VMware, meanwhile, spent much of 2009 branching out beyond just virtualization, and its energies have increasingly centered around the cloud. The technology itself will get the company only so far. Now that Microsoft is full steam on scene, VMware needs something that delivers additional value. For most users, where their apps come from is mattering less than what their apps can do. And if an app on a cloud offers better functionality than an app on the ground, so be it.

Zimbra presents a way for VMware to easily build its own stack in the cloud, and thus put its value stamp in the cloud itself. It also steals some of Microsoft's thunder. Remember, Zimbra started out as an Exchange alternative. Where better to battle Microsoft than where it has more cred?

Of course, all of this is pure speculation at this point. Neither Yahoo nor VMware has admitted to being in negotiations, and even if it does turn out to be true, VMware's intentions aren't known.

Amy Newman is the managing editor of ServerWatch and Enterprise IT Planet. She has been covering virtualization since 2001, and is the coauthor of Practical Virtualization Solutions, published by Pearson in October 2009.

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