Internet portal scales up hosted email offerings

Yahoo has agreed to acquire Zimbra for $350m.

Zimbra markets an email platform that combines an open source client with proprietary server components.

The client is essentially an advanced version of Outlook that runs inside a browser. It automatically turns street addresses into a link to the appropriate Yahoo Maps page, and can dial phone numbers inside a message with a single click.

Developers can easily add functionalities because the majority of the platform is available under an open source licence.

Online retailer Backcountry.com, for instance, has written an application that allows employees to track inventory levels for products that clients mention in emails, linking the application to enterprise resource planning software.

Companies and institutions looking to run a customised version of Zimbra are charged for support as well as advanced features in the server software.

Zimbra boasted nine million paid mailboxes in August 2007 at clients including Comcast, Digg and Mozilla.

Yahoo touted the acquisition as a way to expand its presence in the professional email outsourcing market.

Google has been aggressively targeting the same market with its Google Apps For Your Domain service, which allows organisations to host email and other services on Google's platform.

Yahoo Mail is the largest provider of online email services with about 250 million subscribers. The portal also offers premium email services targeted at small businesses but previously lacked an offering for large organisations.