VMware to buy Zimbra to bolster cloud computing push

Acquisition will help the virtualization giant expand into the platform-as-a-service market

VMware is poised Tuesday to further redefine its cloud strategy by buying Yahoo's Zimbra open source messaging business in order to expand its stake in the platform-as-a-service market.

Zimbra, bought by Yahoo in 2007 for $US350 million, is an open source messaging platform popular on the Linux and Mac OS platforms and with universities and service providers. Yahoo offers both an on-premises and hosted version.

Reporting on the Boom Town blog, Kara Swisher said that VMware will pay $100 million for Zimbra and that many of the current Zimbra employees will move to VMware as part of an employee-retention agreement in the deal.

Chris Wolf, an analyst with the Burton Group, says the deal makes sense for VMware, which realizes it needs to expand from its focus on virtualization as competitors like Microsoft threaten to eat heavily into that market.

In April 2009, VMware, now run by ex-Microsoft executive Paul Maritz, bought Java vendor SpringSource, which makes Web application development and management tools with a heavy emphasis on open source.

VMware said at the time the SpringSource acquisition would lead to new products making it easier to build, run and manage applications both internally and on external cloud platforms.

Maritz has emphasized that VMware will not only support cloud infrastructure with its virtualization wares but he has pushed the idea of new cloud applications and their merger into an entire cloud platform.

"The Zimbra acquisition is a very smart move on VMware's part," Wolf says. "It is part of an effort to redefine the traditional application stack and what enterprises expect out of it." VMware realizes that if it stays on its current path, as a service platform for Windows applications, that it will eventually see Microsoft become the No. 1 player in the virtualization space."[The Zimbra acquisition] certainly is not a sure bet, but it is a move that VWware is going to have to make long-term because guys like Paul Maritz and [COO] Todd Nielsen know how the current path is going to play out if they stay on it," Wolf says.

"It is not a secret that a lot of enterprises are looking at platform-as-a-service offerings, for e-mail in particular, so the acquisition by VMware is timely. Zimbra gives them a play in that space and it gives them a way to potentially start to break the dependency that typical enterprises have on Microsoft, which often times begins with Exchange," he says.

Wolf emphasizes, however, that Zimbra is far from the only move VMware must execute. The company is entering a market that not only features Microsoft, but the likes of IBM/Lotus, Cisco and Google.

"This move is not a move for 2010, this is a move for setting VMware up for 2015 to 2020," Wolf says.

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