Yahoo Joins Online Office Suite Race with Zimbra Buy

Yahoo confirmed late today its pending $350 million cash acquisition of Zimbra, an online/offline open source office applications suite. While exact details of the deal are not yet available, Yahoo's move will put it in direct competition with Google, which is also offering online office applications to both consumers and business.

Zimbra is based in San Mateo, Calif. and has secured about $30 million in funding from its investors. In August, it announced it had grown its customer base by 55 percent over the previous quarter, and boasts a community of about 10,000 contributing to the project.

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6:15 pm ET September 17, 2007 - While Google Apps and Microsoft's Office Live suite are designed for online use, Zimbra may have an interesting edge: an offline component which the user doesn't need to be online to take advantage of.

Zimbra's open-source suite focuses more around AJAX-based e-mail, calendaring, and contact features. A feature called "Zimlets" allow users to tie e-mails directly to Web services. For example, flight information within a message is automatically detected and highlighted.

"You'll really notice the wow-factor when you hover over content in email messages and get pop-up previews," reads a posting on Yahoo's company blog today. "The phrase 'tomorrow at 10:00 AM' will display any appointments you have at that time, '701 First Avenue, Sunnyvale CA' will launch a Yahoo! Map, a tracking number gives you package delivery status, a phone number lets you make a VoIP call, a flight number provides status details, and so on."

Google's Gmail service already offers similar features ??" for instance, enabling users to retrieve package tracking data, and to add events automatically to their calendars through a series of on-screen options. Zoho is another competitor in this space that includes many of the applications currently provided in Google's suite of products.

Yahoo said today it would integrate Zimbra's features into its own existing e-mail client, and that its broad clientele of nearly 200 companies, universities and organizations would give it a strong foothold in the Internet services market.

"Zimbra's successful relationships with large ISPs are key as we expand our worldwide partner network and continue to focus on our commitment to being the partner of choice," Yahoo CEO Jerry Yang said in a prepared statement.

"This was a very, very smart acquisition. In one quick move Yahoo is now in the race with Google for the next generation online/offline office suite," Michael Arrington wrote for TechCrunch today. "I would not be surprised to see them pick up Zoho next."

The San Mateo, Calif., based company will become a wholly owned subsidiary of Yahoo following the close of the transaction in the fourth quarter of this year.

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