Yahoo will acquire Zimbra for US$350 million in a transaction expected to close in this year's fourth quarter, the companies said Monday.
Yahoo is buying Zimbra in part to boost the Yahoo Mail Webmail service and leverage Zimbra's client base in universities, small and medium-size businesses and ISPs, Yahoo said.
In addition to e-mail, Zimbra's suite also includes calendar and contact management components, as well as an open platform that allows third-party developers to create mini-applications called Zimlets for the suite.
Zimbra customer Peter Gilbert is ambivalent about the news. "Yahoo had their heyday and I've gotten the impression they're on their way out and they're just grasping for straws and buying left and right in the hopes that they can come back," he said.
For Gilbert, an independent IT consultant in New York whose one-man company is called PG Systems, the best case scenario would be that Zimbra gets more resources to continue to innovate and develop its technology, while Yahoo keeps its distance and doesn't interfere too much.
"Yahoo is too big and commercialized. Zimbra gave me that underdog, rebel kind of feeling," said Gilbert, who uses Zimbra for his work and has recommended it to clients.
Gilbert once used Yahoo Mail for work, but wasn't satisfied, particularly because, in his experience at the time, spam filters would often trap his messages simply because they came from a Yahoo.com address.
Prior to adopting Zimbra, he also used a shared hosted Exchange server, but he finds that the hosted Zimbra suite gives him more for his money, like a hosted document repository and a centralized contacts manager.
It remains to be seen how committed Yahoo is to continue investing in Zimbra's technology, although it sounds like Yahoo is serious about its commitment to Zimbra, said Rebecca Wettemann, an analyst with Nucleus Research.
"Yahoo is taking advantage of the innovation and nimbleness of a small company and what it needs to do is continue to drive that innovation in the Zimbra product while embracing it into the organization," Wettemann said.
In a question-and-answer Web page about the Yahoo deal, Zimbra said existing customers will not be affected.
Zimbra pricing varies by edition, size of deployment and optional components. The company has about 100 employees and a customer base of more than 9 million paid mailboxes in more than 50 countries.
After the deal closes, Zimbra will become a Yahoo subsidiary.