Yahoo Buys Zimbra For $350 Million

Today, it was announced that Yahoo! has decided to purchase Zimbra for $350 million in cash.

Zimbra's product line includes AJAX-based e-mail, a calendar, contact management features, as well as additional mashups available through add-ons called Zimlets. With the acquisition of the open source office suite, Yahoo! has now stated that it can "leverage the strengths of Yahoo!'s advertising platform and Yahoo!'s content network and tightly integrate it into Zimbra using Zimlets."

With this one move, Yahoo has now entered into the competition against Google Apps and Zoho, both of which are alternatives to the Microsoft's costly Office suite. Although it is unsure whether Yahoo will keep the current name, Zimbra has announced that current pricing of its offerings will not be changing.

"We are excited to combine ourselves with one of the world's most successful Web mail services and extend Yahoo!'s credible brand and leadership in the e-mail business to universities, businesses and ISPs globally," said Satish Dharmaraj, Zimbra co-founder and CEO. "With Yahoo!'s ad and content network, the possibilities for Zimlets and other applications are endless."

According to the press release, Zimbra will now become a wholly-owned subsidiary of Yahoo, with Satish Dharmaraj continuing to lead the company. It will also now be based at Yahoo!'s Sunnyvale headquarters and Dharmaraj will report to Brad Garlinghouse, senior VP of communications and communities at Yahoo.

"As an industry leader, we are constantly approached for different e-mail solutions," said Brad Garlinghouse, senior vice president, communications and communities, Yahoo! Inc. "With Zimbra, we will bring the security, reliability and anywhere access of Yahoo! Mail to people at school, work and home, further enhancing our leadership position in Web mail."

Zimbra offers the same online and offline accessibility that Google does, but Zimbra must be run on a user's own server and is not remotely hosted. It first gained attention from the public back at the 2005 Web 2.0 Conference.

Since then, Zimbra has managed to sucessfully raise $30.5 million in venture funding from Benchmark Partners, Redpoint Ventures, Accel Capital, and other firms.

Finally, Yahoo has made a purchase that makes business sense and has the potential to be very successful. Flickr is the last Yahoo service that I can say I actually use. Does Yahoo now actually stand a chance against Google? At least in one category?