January 15, 2010 – VMware entered into a definitive agreement to acquire open-source email and collaboration software vendor Zimbra Tuesday from Web platform provider Yahoo.

With the intent to simplify data center, desktop and application development, Zimbra will expand VMware’s vCloud Portfolio. VMware will own all Zimbra technology and intellectual property. Yahoo!, however, will maintain the rights to utilize the technology in its communications services.

With over 55 million mailboxes, Zimbra’s core product is an email and calendar server that provides document storage and editing, instant messaging and simplified administrative controls based on architecture designed for virtualization and cloud-scale infrastructure, according the company release.

 “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, cloud services at VMware was quoted to say.  “Zimbra is a great example of the type of scalable ‘cloud era’ solutions that can span smaller, on-premise implementations to the cloud.”

Until now, Zimbra has been the “sleeper” enterprise cloud-based email provider, said Ted Schadler, vice president and principal analyst for Forrester Research.

Schadler spoke with Ramesh May, marketing and product strategy at Yahoo!, several months ago about Zimbra and, based on that conversation highlighted a number of reasons VMware’s purchase brings the cloud email market a major competitor.

The first reason might be the number of seats Zimbra already serves, despite having no direct sales force. And since the Yahoo! acquisition of Zimbra in 2007, the company has been working with the community to add instant messaging, widget expansion and offline email capabilities – in line with the functionalities of market providers, such as Google, LotusLive, Exchange Online and Cisco WebEx Mail, according to May.

Zimbra will expand VMware’s stack to include software as service, which is likely to help service providers and channel partners win business, particularly as cloud computing become more integral in their business models, Schadler said.

It is too early to determine if this acquisition will affect the enterprise email business, but it will certainly affect the service provider market, said the analyst. “Think Vodafone, Comcast, Time Warner Cable, potentially AT&T and Verizon Wireless. These commercial customers need more services to attract and retain consumers. Email is yet another service that VMware can deliver to that customer.”

An emerging Chocolatier used VMware in combination with Zimbra in 2008 to provide its staff with the flexibility to move between native Macintosh applications and virtualized Windows-based applications. To read more click here.

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