VMware to Acquire Zimbra

VMware (NYSE:VMW) has announced it will acquire open-source e-mail and collaboration software company Zimbra from Yahoo (NASDAQ:YHOO), paving the way for a potential rival to Microsoft’s Exchange e-mail and collaboration empire.
The deal follows a week of rumors that VMware was targeting the open-source company amid speculation that if the deal went through it could potentially threaten Microsoft Exchange’s stronghold in business environments.

VMware’s buy of Zimbra may enable the creation of an e-mail platform that could be packaged as a software appliance, hosted by MSPs and SAAS providers, and added onto by third-party developers writing to APIs.

VMware seemed to acknowledge the possibility in its announcement of the deal. VMware calls Zimbra “modern, flexible architecture designed for virtualization and cloud-scale infrastructure … [but] provides substantially lower total cost of ownership than traditional solutions.”

VMware says Zimbra offers full enterprise features, interoperability with legacy e-mail environments and is currently in use by thousands in on-premises installations at small and medium-size businesses and distributed enterprises.

"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," says Brian Byun, vice president and general manager for cloud services at VMware, in a prepared statement.

"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. We are excited to welcome the Zimbra team and community to the VMware family."

VMware says it plans to support existing Zimbra products and open-source efforts while further optimizing Zimbra products for vSphere-based cloud infrastructure, alongside Microsoft, IBM and other messaging and collaboration solutions.

Under the terms of the agreement, VMware will purchase all Zimbra technology and intellectual property. Yahoo will retain the right to continue using Zimbra technology in its communications services, including Yahoo Mail and Yahoo Calendar.

The acquisition is expected to close by the end of March. Financial details were not disclosed.

SugarCRM CEO Larry Augustin notes that Zimbra marks VMware's second acquisition since Paul Maritz took the helm of the company, and the second open-source software company. He believes that future VMware acquisitions may follow a similar pattern—open-source software higher up in the application stack that can be packaged to be offered as a service by IT service providers.

"For example, why not a Web content management system like Drupal or DotNetNuke?" he asks. "Both are very popular, as service provider applications run on cloud services infrastructure. How about a Wiki platform like MindTouch? Basically, I would look for anything that runs at a service provider, on virtualized infrastructure and is a SAAS service that a service provider can offer."