Yahoo Buying Zimbra, an E-Mail Service for Businesses

[knightkrm]

Yahoo said yesterday that it was buying Zimbra, a start-up that provides Web-based e-mail to businesses and institutions, as it seeks to extend the reach of its popular e-mail service and better compete with Google.
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ERIN LUBIN/BLOOMBERG NEWS

Satish Dharmaraj, the chief and founder of Zimbra.

The deal, for $350 million in cash and stock, is the second sizable acquisition Yahoo has announced this month. A Yahoo executive said the latest deal underscored Yahoo’s decision to continue investing in areas where it is already strong.

“This to me this is a further investment in parts of the Yahoo business that we are most committed to,” said the executive, Brad Garlinghouse, senior vice president for communications and communities at Yahoo. Mr. Garlinghouse said Yahoo Mail’s appeal with consumers and Zimbra’s appeal with businesses were complementary.

Google is expected to unveil today software that, like Microsoft’s PowerPoint, can create slide presentations and will be added to the company’s growing package of Web-based applications aimed at businesses.

Zimbra, a 100-person start-up founded in 2003, specializes in providing e-mail and calendar software to small and medium-size businesses, universities and Internet service providers. The company said it had nine million users.

Businesses typically pay Zimbra $28 a user, though universities pay only $1 for each student and $8 for each faculty member.

“It’s pretty clear that Yahoo is spreading out,” said Jordan Rohan, an analyst with RBC Capital Markets. “The business that they were in before, that of being a portal, is changing rapidly.” In response, Yahoo is trying to become a provider of third-party services not only to advertisers, but also to other Web-based businesses, Mr. Rohan said.

The deal comes just days after Google completed its purchase of the e-mail management company Postini for $625 million, one of a series of moves by the Internet search giant to strengthen its software offerings to businesses.

Google, whose Gmail service has been popular with consumers, has sought to make inroads into the small and medium-size business market, as well as with universities, with a suite of Web-based applications that include e-mail, calendar, word processing and spreadsheets and now slide presentation software.

Microsoft overwhelmingly dominates the market for these products, but its software is typically installed on PCs, rather than delivered as a service across the Web. Some businesses are choosing Web services as a lower-cost alternative to Microsoft’s products.

While Google offers all its business applications free, it has also created a package that includes technical support and additional storage, which businesses can purchase for $50 a user.

By becoming part of Yahoo, Zimbra will be able to offer its products, which will continue to be sold separately, to a greater number of potential customers around the world, said Satish Dharmaraj, Zimbra’s co-founder and chief executive.

Yahoo is the dominant e-mail provider on the Web, and had 181 million visitors in August, according to comScore. By comparison, Google’s Gmail sites had 18 million visitors in August.

The exact terms of the deal were not disclosed, but a Yahoo spokeswoman said the bulk of the purchase would be made with cash, with Yahoo stock making up the difference.

Source : http://www.nytimes.com/2007/09/18/te...105&ei=5087%0A

[Adulu]

Gmail is enough

[Nomar]

Yes, I heard this.. Yahoo is buying up more and more !

They are really back in action and want to compete with the big G