Open-source Exchange alternative could be hurt by acquisition

Microsoft’s $44.6bn bid to buy Yahoo is largely focused on capturing the attention of consumers on the internet but it could also have an effect on businesses, not least because of Yahoo’s ownership of the Zimbra messaging server.

Yahoo acquired Zimbra in September last year for about $350m, giving it an open-source alternative to Microsoft Exchange platform. Zimbra customers include Digg, MySQL, Raytheon, Mozilla.org and, in education, the University of Berne and UCLA. However, Microsoft is unlikely to want to pump money into Zimbra and might not even want to sell it off to a potential new rival.

For now at least, Zimbra is putting a brave face on things. In a blog post to users, Zimbra co-founder Satish Dharmaraj wrote:

“We just made an irrevocable contribution of Zimbra 5.0 to the open source. No one can take that away. We will remain true and faithful to our contractual obligations and will do everything possible to make sure that our biggest assets - you - remain confident that we are here to stay and execute.”

Colin Smith, managing director of Warrington-based email hosting firm and Zimbra partner Simply Mail Solutions, said, “Eighteen months ago, Zimbra had a few gaping holes but now it’s the only credible alternative to Exchange in the open-source community. They were always built on a big-company basis and they always had very good roadmaps that they stuck to fairly rigidly. [With Microsoft] it’s a question of whether they’d let it go on or stomp on it and kill it. There are arguments that Microsoft might keep it on to develop their web mail accounts [and not challenge Exchange directly].”

But other parts of the blogosphere doubt that Microsoft and Zimbra could coexist.

A blog from a datacentre hosting partner 01.com suggested that Microsoft and Zimbra could not live together:

“The chances of Zimbra remaining a part of Yahoo [if it is] purchased by Microsoft are minimal [but the news] creates opportunities for Zimbra to be spun-off/bought/sold prior to such a purchase given the interests of the prospective new company are not aligned.”

Raju Vegesna of web applications company Zoho was pessimistic about Zimbra’s prospects if Microsoft lands Yahoo.

“If you look at Zimbra, it really is an Exchange competitor,” he wrote in a blog. “Yahoo probably bought it to build a platform around email, gaining from Zimbra’s expertise on email. When Microsoft completes the acquisition, we can safely assume that the Exchange competition will no longer exist. Yahoo might integrate some goodies from Zimbra into its webmail client [but] all the server side stuff of Zimbra might die a quick death.”

The Microsoft bid has overshadowed a new release of Zimbra Desktop for consolidating multiple mailboxes.

A side-effect from any Microsoft-Yahoo deal could come in the form of web-based email, instant messaging, storage and other services that are used by business users with or without the blessing of their IT departments. A combined Microsoft-Yahoo would be tempted to consolidate popular properties such as Windows Live Hotmail, MSN Messenger, Windows Live Messenger, Windows Live SkyDrive, Yahoo Mail, Yahoo Messenger and Yahoo Briefcase.