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VMware relieves Yahoo! of its Zimbra

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VMware has agreed to purchase Yahoo!'s Zimbra unit - an outfit that offers enterprise email, collaboration, and calendering - after earlier reports indicated a pact was on the cards.

Terms of the deal were not disclosed. But sources speaking with All Things Digital say the price is "well below" the $350m Yahoo! paid for Zimbra in the fall of 2007.

VMware says it will purchase all Zimbra technology and intellectual property, but that Yahoo! will retain the right to use Zimbra tech in its consumer email and calendar services: Yahoo! Mail and Yahoo! Calendar.

Rumors have swirled since September that Yahoo! was looking to offload Zimbra, as Yahoo! chief executive Carol Bartz worked to streamline the company's operations and focus on stuff like media and ads. Speaking with The Reg around that time, Zimbra general manager Jim Morrisroe downplayed the rumors, speaking of "tight collaboration" between his engineering team and engineers at Yahoo! as they worked to add Zimbra tech to Yahoo! services. But he now acknowledges that the relationship changed when Bartz took over.

"Yahoo! was a fantastic host for us. It's not a secret that Yahoo! went through many challenges - not only macro-economic challenges but corporate challenges during the time we were there. To some extent, that created issues for us, but not really. They were very supportive for what we were doing, and we saw phenomenal growth during the two years we were there," Morrisroe told The Reg today, when asked if the company had problems integrating with Yahoo!

"But it became obvious to them and to me and to the Zimbra team when Carol took over that maybe we were a better fit with an enterprise software company, because of distribution leverage, because of strategic leverage. That's what this deal with VMware is all about."

Morrisroe indicates that although Yahoo! had begun to roll out Zimbra's suite as its internal email and calendaring service, those plans were put on hold when Bartz and company began shopping Zimbra to other outfits. He says a portion of Yahoo! still runs the Zimbra suite.

He also says that "a portion" of VMware is already running the suite. Brian Byun - who leads VMware's strategic alliances, corporate development, and ecosystem development teams - indicates the virtualization giant was a Zimbra customer before it entered talks to acquire the company.

"Unbeknownst to a bunch of us here at VMware, we were actually deploying for a certain segment of our employees many months ago, and now, with the acquisition, we expect that population to grow rapidly," Byun told The Reg.

With the acquisition, Byun says, VMware is continuing its effort to "build out" its virtualization base. Last fall, after working with hundreds of partners to offer its enterprise virtualization tools via hosted services, the company acquired open-source Java framework specialist SpringSource in an effort to help companies deploy applications atop its hypervisors. And now, it wants to offer pre-built applications as well.

This whole idea, Byun says, is to simplify the deployment of enterpriseware. "In pursuing this strategy, we're also realized - from our cloud service providers and our customers - that there are another pockets of IT complexity that are fairly universal and that require more cost than are needed. These are around core IT infrastructure applications, including email and collaboration."

VMware partners, he continues, will have another something to offer customers. "They've been looking to us to provide a whole portfolio. They can now offer infrastructure, application middleware, and core IT applications like email," he says. "It [the Zimbra acquisition] is just one building block of that IT strategy, but not necessarily the only thing we will do in this space."

VMware has acquired roughly a dozen companies to date, with SpringSource the largest at $326m.

Zimbra has long painted itself as an open source alternative to Microsoft Exchange. But it doesn't open source all its code. The free open-source version of the Zimbra Collaboration Suite is available under the Yahoo! Public License, once known as the Zimbra Public License. According to Zimbra's Morrisroe, about five per cent of the tools available with the paid version of the product are missing from the open source version.

The Zimbra suite installs as an in-house server but it's also available as a hosted service through third-parties. In both cases, it works in tandem with myriad clients, including an AJAX-based browser client, a downloadable Zimbra Desktop client, various mobile clients, and third-party clients such as Microsoft Outlook and Mozilla Thunderbird.

The company claims more than 55 million paid mailboxes for over 150 thousand organizations worldwide. ®

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