Yahoo Acquires Zimbra

The bad news is that another promising Web 2.0-style startup has been gobbled up by a larger, more established player. The good news, I suppose, is that at least Microsoft wasn't the one doing the gobbling this time.

Yahoo has acquired Zimbra, maker of a Web-based e-mail and collaboration software that was off to a jackrabbit start, for $350 million in cash and stock.

Zimbra -- which started in 2003 but didn't deliver its Web-based suite until 2006 -- sold some 4 million mailboxes at an average price of between $18 and $35 per mailbox, per year, in just its first three quarters of operation. This was significantly less than what Microsoft was offering with its Exchange/Outlook combination, something that small and medium-sized companies and universities were eagerly awaiting. It looked like Zimbra was about to put a scare into Microsoft.

This isn't to say that Yahoo can still accomplish that. As part of the deal, Zimbra will continue to sell its products separately and, according to Satish Dharmaraj, Zimbra's co-founder and CEO, will be able to sell them to a significantly greater number of people around the world.

According to market researcher comScore, Yahoo remains the top Web-based e-mail provider, attracting 181 million visitors just last month.

Posted by Ed Scannell on 09/20/2007 at 1:23 PM


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