More on Zimbra: profitable, exploding sales, and open source

Zimbra has done something that couldn't have been done with proprietary software. Period.

This time, I have the numbers from an unimpeachable source close to the company. Zimbra has been doing much better than we knew. Importantly, Zimbra has demonstrated the kind of success one can have in open source, success which would be expensive and difficult to achieve in proprietary software. Here's the real data:

  • ~$6 million in 2006 (bookings)
  • On track to hit $20 million in 2007 (bookings)
  • Most importantly, the company has been profitable on and off, and could be profitable today.

Net net? Maybe not everyone can build a sustainable, innovative business with open source, as Microsoft has slurred . But Zimbra can, and has.

Think about what these numbers mean....

  1. Zimbra is a clear and present danger to both Microsoft and Google in the enterprise. Microsoft can't afford to do anything innovative with its creaky, aging Exchange code. Zimbra has no such problems, and is innovating circles around it. What will it mean for Microsoft and Google when Yahoo! lends its weight to the Zimbra story?

  2. You can make a heck of a lot of money very quickly with a subscription model. I didn't ask my source what revenues are, but that's not the point. The point in Zimbra's phase of growth it bookings and profitability, and the company has been knocking the ball out of the park with both. Its subscription model works.

  3. The email market is begging for innovation. Much of Zimbra's revenue comes from ISPs, I believe, which I would put at the front-end of the email revolution because they're the ones who believe email is a differentiating technology. Enterprises are next because they need to keep their employees productive. Zimbra does email better than Outlook/Exchange. Period. Customers are paying for that.

    In both instances, Zimbra is making strong inroads. You can't do $6M in your first real year of selling subscriptions and more than triple that in your second without a market begging for the software. Zimbra will at least double that $20M in 2008. Suddenly, those numbers start to cut seriously into Microsoft's existing base and cut off Google's attempts to go enterprise.

  4. Open source is perhaps the best way to rapidly grow a business. Could Zimbra have done $20M in 2007 with door-to-door sales people? Maybe. But the cost of doing so would have made it very hard for the company to achieve profitability so soon. And it would have been very hard for Zimbra to anticipate from whence its customers would come. Open source offers huge sales efficiency gains.

Zimbra, in short, is a great example of a disruptive, open-source business. It has a wide range of things to teach all of us. I look forward to the day when the company is allowed to talk in more detail. Maybe OSBC 2008? Any of you Zimbra guys want a standalone speaking slot?

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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