With Redoubled Consumer Focus and Microsoft Deal, Yahoo Seeks Zimbra Sale

As Yahoo gears up for a major brand-marketing blitz directed at its core consumer market, it is aggressively seeking to divest properties that don’t comfortably fit within that mandate.

One of those properties is Zimbra, an open-source, web-based collaboration company that Yahoo acquired in 2007 for $350 million. To the extent that Yahoo could be said to have been promoting Zimbra, it had been pushing it as a white-label email service.

Interestingly ,that’s not necessarily how Yahoo and the rest of the world saw Zimbra when the acquisition occurred. Back then, Zimbra was perceived as a nascent productivity suite that had the potential to evolve into competition for Google Web Apps and Microsoft’s Office, which is spinning off its own web-based sibling in Microsoft Office Web Apps.

There also were imaginings that Yahoo, returned to the control of then-CEO Jerry Yang, might entertain a revivified emphasis on technological innovation.

Now, though, Yahoo has its eyes firmly fixed on consumers. It has no need for white-label collaborative-messaging offerings directed at SMB and enterprise customers. That’s especially true in light of its chummy search-and-advertising relationship with Microsoft.

As is well known, Microsoft’s Office and its web-based complement represent a powerful entry in the web-based personal-productivity sweepstakes. Notwithstanding Yahoo’s sharpened strategic focus on consumers, Microsoft could not have been thrilled about the ongoing existence of Zimbra within Yahoo. As soon as the Yahoo-Microsoft deal was struck, Zimbra’s days as a Yahoo possession were numbered.

Commentators are wondering about Zimbra’s next destination. Among the potential buyers are Google, Comcast (an early Zimbra customer), and Zimbra’s original venture-capital investors. One of those investors is Redpoint Ventures, the current professional home of Satish Dharmaraj, Zimbra’s founder and CEO.

Whoever buys Zimbra, they are not likely to pay nearly enough to allow Yahoo to realize a financial return on its investment. Like so many of Yahoo’s acquisitions, Yahoo’s purchase of Zimbra was poorly conceived and ineptly executed.


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