VMware Buys Zimbra from Yahoo!

January 13, 2010

VMware has entered into a definitive agreement to acquire Zimbra, a vendor of email and collaboration software, from Yahoo!.

Financial details of the transaction were not disclosed. But, VMware most likely paid much less than the $350 million Yahoo paid for the company in September 2007.

This acquisition will further VMware's mission of taking complexity out of the datacenter, desktop, application development and core IT services, and delivering a fundamentally more efficient and new approach to IT.

Zimbra is an open source email and collaboration solution with over 55 million mailboxes. As an independent Yahoo! product division, Zimbra achieved 2009 mailbox growth of 86% overall and 165% among small and medium business customers.

Based on a modern, flexible architecture designed for virtualization and cloud-scale infrastructure, the Zimbra technology provides substantially lower total cost of ownership than traditional solutions. Zimbra products offer a full enterprise feature set, excellent interoperability with legacy email environments and have been deployed across small and large environments; as on-premise software at thousands of small and medium businesses, distributed enterprises, and as a hosted service at major 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," said Brian Byun, Vice President and General Manager, Cloud Services, VMware. "Zimbra is a great example of the type of scalable 'cloud era' solutions that can span smaller, on-premise 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 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 have the right to continue to utilize the Zimbra technology in its communications services, including Yahoo! Mail and Yahoo! Calendar.

"The Zimbra technology has played and will continue to play an important role in our communications services products. The technology is core to Yahoo! Mail and Yahoo! Calendar and a key differentiator for these leading products," said Bryan Lamkin, senior vice president, Yahoo! "The customers and partners of Zimbra's industry-leading product and successful enterprise business will be well served with VMware."

The acquisition is expected to close in the first calendar quarter of 2010.