Yahoo Sheds Zimbra, VMware Gains A Foundation For Web Apps

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It’s done. VMware has bought email and collaboration software developer Zimbra from Yahoo. Rumors of the sale have been floating around for some time now but the writing was on the wall when Scott Dietzen, former CTO of Zimbra, quit Yahoo last fall.

Dietzen joined Yahoo with the acquisition of the open source email startup in 2007 for $350 million. Dietzen went on to replace Brad Garlinghouse, Yahoo’s former SVP of Communications & Communities, when he left the company in June 2008.

This seems like Yahoo’s greater strategy of getting rid of non-core divisions, even if they are doing well. In place of these technologies, Yahoo outsources to other companies. As product, Zimbra achieved 2009 mailbox growth of 86% overall and 165% among small and medium business customers. Not too shabby, considering the competitive landscape.

But it looks like Zimbra’s technologies may be better supported under the VMware umbrella. Jim Morrisroe, VP and general manager of Zimbra, tells me that he expects VMware to invest more capital in the product at a faster pace than Yahoo, allowing quicker release schedules and the ability to add new functionality more often. Morrisroe also said that the support will help take Zimbra to the “next level,” which means adding real-time collaboration, more robust group sharing and more to Zimbra;s platform.

Just yesterday, Yahoo announced that it is shutting down its Shopping API and using PriceGrabber to power their shopping arena. Last month, they gave up on trying to figure out social networking, and handed it over to Facebook. And Yahoo’s core search product will soon just be a layer on top of Microsoft Bing. Though they’ve stated their not sure what to do with other products such as MyBlogLog, indications are that those could be on the chopping block soon as well.

According to the press release, VMware is buying all of Zimbra’s technology and intellectual property but Yahoo will retain the right to utilize the technology in its communication products including Yahoo Mail and Calendar. It appears that Zimbra will be used as the foundation layer for apps by VMware. Terms of the deal, which is expected to close in the first quarter of this year, were not disclosed.

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