Zimbra buy to raise VMware's cloud ante
Virtualization specialist is building out its cloud-computing infrastructure strategy by buying Zimbra from Yahoo, making applications the new stakes for cloud competition.
Most entrepreneurs are lucky to sell one start-up. A chosen few manage to repeat the feat, building and selling two or more businesses. The folks at Zimbra have outdone them all, selling the same company...twice.
As Kara Swisher of All Things Digital reports, VMware is expected to soon announce the acquisition of open-source messaging company Zimbra from Yahoo. My own sources at VMware confirm the deal.
While Swisher's report gets the Zimbra ownership change correct, its indication of a distressed asset sale misses the mark.
It's true that Yahoo has never known what to do with Zimbra, leading it toto various potential buyers, including Red Hat and Cisco Systems. But this is a reflection of Yahoo figuring out that it doesn't have a future in the enterprise, a place that Zimbra is increasingly calling home, after early success with Internet service providers such as Comcast.
Zimbra has delivered marquee enterprise customers such as Bechtel., along with roughly 100 percent sales growth, according to sources close to Zimbra, through the worst economic meltdown since the Great Depression, much of that growth driven by sales to
In other words, Zimbra is a growth asset, though the price paid by VMware is almost certainly lower than the $350 million paid by Yahoo in 2006. That's just the nature of valuing an asset carve-out versus a standalone company pre-recession.
Even so, Zimbra can be a highly strategic asset for VMware. It's not surprising that the virtualization specialist would be interested in Zimbra, especially as.
Last week, I wrote that an "application war is brewing in the cloud," a war that VMware, more than any other company, is set to launch with its acquisition of Zimbra. Infrastructure isn't enough of a competitive differentiator, especially since most applications aren't designed to run well in the cloud.
Customers, and particularly hosting and service providers, are therefore looking to their infrastructure vendors like VMware to sort out applications for them, or at least give them a head start.
This is where Zimbra comes in. The company's technology was designed from the start as a cloud application, and it should give VMwareto offer hosting and service providers, rather than having to peddle applications from cloud competitors like Microsoft and IBM.
With SpringSource, Hyperic, and its adoption of Linux, VMware was already increasingly the open alternative to the closed cloud offerings from Microsoft, IBM, and others. Now, with Zimbra, it is adding its ability to compete at the application level, while retaining its open-source approach.
It's a smart, bold approach. Ironically, it's also an indication that the first shot fired in cloud computing's infrastructure war looks an awful lot like an application.