VMware Buys Zimbra Cloud Computing Suite from Yahoo!

On Tuesday, virtualization giant VMware announced that it would purchase the Zimbra cloud computing office productivity suite from ailing online giant Yahoo! for an undisclosed sum. Yahoo! had previously purchased privately held Zimbra for $350 million in late 2007, and expectations are that VMware paid less than that.

The purchase is an interesting one for VMware, which has focused almost exclusively on virtualization solutions since its inception in 1998. Today, VMware is the virtualization leader, with systems that are widely regarded as being the most sophisticated on the market.

So why the interest in Zimbra? The key, according to VMware, is that virtualization technologies are core to delivering cloud computing services. So the two markets are in fact synergistic.

"Over the coming years, we expect more organizations, especially small and medium-sized businesses, to increasingly buy core IT solutions that deliver cloud-like simplicity in end-user and operational experience," said VMware Vice President and General Manager of Cloud Services Brian Byun. "Zimbra is a great example of the type of scalable 'cloud era' solutions that can span smaller, on-premise implementations to the cloud. It will be a building block in an expanding portfolio of solutions that can be offered as a virtual appliance or by a cloud service provider. We are excited to welcome the Zimbra team and community to the VMware family."

For those unfamiliar with the product line, Zimbra provides open-source, cloud-based email and collaboration solutions that compete with similar offerings from Microsoft and Google. The company claims 55 million mailboxes in use and growth of 86 percent in 2009. The question here, of course, concerns VMware's relationship with Microsoft: Although the two companies are already competing in the hotly contested virtualization market, this move puts VMware firmly in the center of an important and growing market for the software giant.

Butting heads with Microsoft isn't always a wise proposition. But VMware's executive ranks contain some key ex-Microsofties, including CEO Paul Maritz and COO Tod Nielsen. I suspect these guys know what they're getting into.