Yahoo scoops up Zimbra for $350 million

Yahoo scoops up Zimbra for $350 million

Summary: Yahoo has been on an acquisition binge late, but mostly to expand its advertising business. Now Yahoo is buying its way deeper into the applications business with the acquisition of Zimbra for a reported $350 million, mostly in cash.

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Yahoo has been on an acquisition binge late, but mostly to expand its advertising business. Now Yahoo is buying its way deeper into the applications business with the acquisition of Zimbra for a reported $350 million, mostly in cash. Zimbra developed a leading edge, Web 2.0 open source messaging and collaboration software suite, with email, calendar, document processing and a spreadsheet.

As I was writing this news, Satish Darmaraj, CEO and co-founder of Zimbra, and Brad Garlinghouse, senior vice president of communications and community at Yahoo, stopped by to give some details. I asked how Zimbra's offering would differ from Yahoo Mail, which has about 250 million users according to comScore.

satishbrad.jpg Zimbra co-founder and CEO Satish Dharmaraj and his new boss, Brad Garlinghouse of Yahoo

"It's a way to take Yahoo mail to new markets. Together wtih Yahoo content network our zimlets [the mechanism for integrating Zimbra with third-party systems and content as well as for creating mashups] come alive," Dharmaraj said. "The Yahoo consumer email will continue as is. We may augment Yahoo Mail with our calendaring and with Zimlets, but right now the goal is to reach new markets."

"Version 5.0 is coming out as planned and our roadmap is unchanged. Our unit will just be focused on delivering those platforms to those markets," he added.

The new markets are the businesses, service providers, schools, and government agencies that Zimbra serves. Currently, Zimbra has 9 million mailboxes across different segments. Pricing is $1 for students, $8 for faculty, $3 for ISPs and $28 per user per year for businesses, Dharmaraj said.

"There are great synergies and opportunities from the backend. We have invested heavily in anti-spam. We are impressed with the storage and scalability Zimbra has achieved, but we have it on a much larger scale. For example, we do mailbox search in sub-milliseconds," Garlinghouse said. "We get an awesome team and set of technology that extend something we are already world class at doing to new segments. Every week I get calls from colleges, for example. With Zimbra we can answer those calls.

I asked Garlinghouse if Yahoo intended to compete with Google Apps and Zoho via Zimbra's spreadsheet and document creation applications that are part of the suite. "We are focused on extending our core strength with email. The document and spreadsheet applications are not a priority at this point. We are focusing on what Zimbra has gone head-to-head with and is winning at," Garlinghouse said.

The transaction is expected to close by the end of this year.

Zimbra has a browser-based client and supports Windows, Apple, and Linux desktops, as well as Microsoft Outlook a variety of mobile devices. On the server side, Zimbra supports Red Hat, Mac, Ubuntu, SUSE and Fedora. Version 5.0 is due later this year, and adds numerous features, such as multiple mail identities, personal distribution lists, advanced search in the administration console, instant messaging, external directory support and delegated mailbox and mail folders. Check out Zimbra 4.5 screen shots here.

zimya.jpg\ Selecting an address in a Zimbra email can pop up a Yahoo map of the location

zimcalc.jpg Zimbra allows spreadsheet data to be included in documents and messages 

zimpay.jpg Zimbra supports a variety of business mashups, such as popping up a purchase order within an email

See also Kara Swisher and TechCrunch)

Topic: Social Enterprise

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