VMware’s purchase of Yahoo’s Zimbra e-mail software shows how VMware, under a management team led by former Microsoft executives, continues to diversify in the face of competition from their former employer.
Zimbra, which has more than 55 million users, lets VMware sell Web-based e-mail and calendar software that’s used by companies including H&R Block, Bechtel, and General Electric’s India division for use by their own workers. Internet Service Providers including Comcast and NTT Communications also offer Zimbra e-mail to their subscribers.
The acquisition, VMware’s second in five months, continues its trajectory toward building a portfolio of software that’s broader than the virtualization software for servers that’s propelled the company to a projected $1.97 billion in 2009 sales, according to a Bloomberg News estimate. Last August, VMware paid $420 million to buy SpringSource, a maker of programming tools for Java developers.
VMware hopes to use its programming tools and the new Zimbra e-mail software to create additional demand for its core virtualization software, which improves the efficiency of computer servers, says Chief Operating Officer Tod Nielsen. “We view this as a first step toward moving up the stack” toward more software applications.
Nielsen, VMware Chief Executive Paul Maritz, and Executive Vice-President Richard McAniff are all former executives at Microsoft, whose Windows Server products compete with VMware’s software. VMware is employing a strategy similar to the one Microsoft used to dominate the desktop computing market, adding software applications that can create demand for an underlying system. “Paul and I learned the West Coast offense,” says Nielsen. “We’re now at a new team, and there are some plays that work well.”