Yahoo! Acquires Zimbra for $350 Million

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ZimbraYahoo! announced today that it has bought Zimbra, an open-source enterprise/web office suite, for $350 million. And yes, if you’re counting, this is day 62 of Jerry Yang’s 100 day revival strategy.

Kara Swisher broke the story this morning and TechCrunch confirmed the price. And before you go looking for it, the official press release can be found here, here’s the blog post by Zimbra, and the blog post by Yahoo!.

Yahoo! plans to keep Zimbra’s partners, customers, sales, support, and products unaffected, which is a great sign for the community they’ve built — which Zimbra wouldn’t exist without. So far, the company has raised a little over $30 million in venture capital from a bunch of partners, notably including Valley biggies Accel Capital and Benchmark Partners.

It seems like only yesterday that Zimbra was ‘one of them’ demoing their product at the 2005 Web 2.0 Conference. Michael Arrington called it ‘damn cool‘ and they’ve since managed to cause millions of similar reactions out of the various schools and businesses that have been privileged to use it as their primary system.

While the valuation of the product does seem absurd for the niche-ish market it serves, I can imagine Yahoo!’s reasoning for the acquisition — most probably sparked by someone high up in the board (Jerry Yang?). As Google is extending their reach with their Apps’ suite and the future points toward a web-based office (especially in the enterprise sector), Yahoo!’s bread in this acquisition has everything to do with being ahead in this market before it’s too late and not make the same mistakes they’ve made in the past.

Congrats truly to the Zimbra team. Being a purely technology company, I can imagine how hard it can become to stay focused and keep building great stuff, which is even harder when you don’t know where you’re going to end up and if it’s all going to work. They’ve done it, and they’ve been paid off. This in itself should be great inspiration to all others to stick around.


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