VMware Adds Zimbra E-Mail to Its Growing Cloud Portfolio

Virtualization software market leader VMware Jan. 12 announced that it is in the process of acquiring open-source e-mail and collaboration software maker Zimbra from Yahoo.

Financial details of the transaction were not disclosed. Yahoo had acquired Zimbra for $350 million in cash in September 2007.

Zimbra brings a highly respected, secure e-mail platform to VMware, similar to what Postini brought Google in another 2007 acquisition (for $625 million).

To date, Zimbra is administering more than 55 million enterprise mailboxes, either as an on-site application or as a cloud service. Zimbra, which operated as an independent Yahoo product division, reported mailbox growth of 86 percent overall and 165 percent among small and medium-size business customers in 2009, VMware said.

Zimbra's products include a full enterprise feature set and good interoperability with legacy e-mail environments, VMware said. They have been deployed across small and large environments-primarily as on-premises software at thousands of small and medium-size businesses. As a hosted service, Zimbra is served up through Tier 1-type service providers such as Comcast and NTT Communications.

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

"Zimbra is a great example of the type of scalable 'cloud era' solutions that can span smaller, on-premises implementations to the cloud. 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."

VMware plans to support existing Zimbra products and open-source development while further optimizing its products for vSphere-based cloud infrastructure, alongside Microsoft, IBM, and other messaging and collaboration products, Byun said.

Under the terms of the agreement, VMware will own all Zimbra technology and intellectual property. But Yahoo will continue to utilize the Zimbra technology in its communications services, including Yahoo Mail and Yahoo Calendar.

VMware has been active in cloud-related acquisitions. In August 2009, the company spent $362 million for SpringSource, a Java-based development platform with a surrounding set of Eclipse-based tools that serves as the development environment for the emerging VMware vCloud private cloud initiative.

Yahoo has been facing financial issues for the last few years. New CEO Carol Bartz has said that she is re-evaluating the company's overall business lineup.

The acquisition is expected to close by March 2010.