Zimbra Users Vexed by Yahoo Deal

Zimbra Inc. customers appalled at the company's planned acquisition by Yahoo Inc. are speaking out, saying they are vexed by the deal and upset over its possible negative consequences.

Skeptical about Yahoo's capacity to serve enterprise customers and suspicious about Yahoo's plans for the Zimbra collaboration and messaging suite, these IT professionals express pessimism about the deal announced Monday and expected to close next month.

A collective feeling of alarm and dismay emanates from a discussion forum thread which Zimbra created to obtain feedback from its customers. Already 9 pages long, the thread contains mostly negative impressions.

Zimbra organized a conference call this week open to all customers so that the company's top executives could answer questions and address concerns.

Neither that call, held Tuesday, nor reassuring messages from Zimbra employees in the forum have calmed customers IDG News Service interviewed via e-mail on Thursday.

"There is a lot of fear, uncertainty and doubt regarding Zimbra at the moment and it's not unwarranted," said Matthew Day, IT Manager at Langs Building Supplies in Brisbane, Queensland, Australia.

Just over a year ago, Day began researching collaboration suites for Langs and chose Zimbra Collaboration Suite over Microsoft Corp.'s Exchange and Xandos Corp.'s Scalix. Currently, 400 Langs employees use Zimbra's suite.

However, his misgivings about the Yahoo deal prompted him to scratch plans to renew Langs' Zimbra contract for 3 years, opting instead for a 1-year agreement.

Day has too many questions that Zimbra and Yahoo haven't answered to his satisfaction. Chief among them: Does Yahoo, whose online services are heavily focused on consumers, understand the needs of business customers?

"As an IT Manager, I would not have expected to ever see a Yahoo product in one of my production environments," he said. "I am concerned about how the culture of Yahoo will deal with the requirements of commercial users and the support they expect."

Day also worries that Yahoo's influence may negatively affect future development of the Zimbra suite, a concern shared by Dan Phillips, IT Manager at Other World Computing, in Woodstock, Illinois.

"Before the acquisition, Zimbra had only one purpose: to make a better product. Zimbra now has a different purpose and that is to ensure Yahoo's agendas are fulfilled," Phillips said.

Among his first tasks after getting hired 6 months ago was picking a new messaging platform for Other World. The Zimbra rollout was completed barely three weeks ago. He picked the Open Source Edition of the suite, which also comes in a commercial option called Network Edition.

The news of the Yahoo deal left him aghast. "I am certain I was not the only IT decision maker that felt disgust and despair after reading about Yahoo's [planned] acquisition of Zimbra," Phillips said.

Also deeply pessimistic is Dominic Ijichi, a Belfast-based Unix supercomputer administrator for a large bank, who in his spare time manages the Zimbra suite for a small finance company whose chairman is a friend of his. He predicts Yahoo will disassemble the suite and plug its pieces into Yahoo Mail. "I believe [Zimbra's suite] will be killed off as a separate product," he said.

Jim Hutchinson, IT Manager at Richmond Systems Inc., in Olympia, Washington, is scratching his head over Yahoo's motivation.

"What are they going to get for their $350 million?," he said. "I can't see how Zimbra fits into the way Yahoo makes money."

In addition to downloadable, server-based versions of the suite meant to be installed in customers' premises, it is also available as software-as-a-service (SAAS) from third-party hosting providers. Keepnet Ltd., a U.K. provider of hosted IT services, recently developed a new Zimbra-based hosted service, but the company isn't feeling too hot about it now, said director Kevin Dontenville.

"We are disappointed that this acquisition throws many of the knowns out of the window. We need to decide whether to continue and risk losses which are significant to us or to change direction ... and find a new route forward for our new business," he said.

Andy Armagost, systems administrator at Brigham Oil & Gas, in Austin, Texas, is also conflicted about the deal, which he believes would have given his company pause for reflection when deciding for Zimbra, but the suite is partially rolled out already at Brigham.

While he shares many of his peers' concerns, he also sees a silver lining: that Zimbra will become more financially secure and able to access Yahoo resources. "I hope this deal works out well for all of us," he said.

Those interviewed generally believe that the best-case scenario would be for Yahoo to interfere as little as possible with the Zimbra team and technology while providing a strong backup.

Satish Dharmaraj, Zimbra's co-founder and CEO, understands that acquisitions often worry customers but said the concerns are unwarranted in this case.

"I already know my budget for the next 5 years, in which there is a continued commitment to growing this business," Dharmaraj said in an interview with IDG News Service.

For starters, Yahoo will not dismantle Zimbra to boost Yahoo Mail. "If Yahoo wanted the people and the technology to bolster the Yahoo consumer mail group, $350 million is a lot to pay," Dharmaraj said.

"We're going to be kept whole as a business unit and we'll execute on our current strategy," he added.

Likewise, it's illogical to think Yahoo will rip out its Yahoo Mail infrastructure, which supports about 250 million consumers, and swap in the Zimbra technology, designed mostly for businesses. "Those are paranoid fears," Dharmaraj said.

Zimbra's team will help refine and improve portions of Yahoo Mail, on a case-by-case basis. Currently, the only component slated for a Zimbra revamping is Yahoo Calendar, he said.

Meanwhile, the downloadable, server-based versions of Zimbra's suite aren't going away, so those customers can rest easy, including those who have signed 5-year agreements, he said.

Specifically, Zimbra will maintain the same commitment for the open-source version of this downloadable suite, keeping its development on par with the commercial "Network" version.

Zimbra, founded in 2003, has an installed base of about 9 million mailboxes in over 100,000 organizations, although it deals directly with about 1,300 customers and channel partners, he said. Customers include Comcast Corp. and New York University.

Its core strength is e-mail, and it has commonly been considered an alternative to Exchange, but the suite also includes a word processor and a spreadsheet application. These let users create, share and collaboratively edit documents.

With e-mail, calendar, contacts list and office applications, it also competes against PC-based suites such as Microsoft Office and Web-hosted suites such as Google Inc.'s Google Apps.

Dharmaraj said Zimbra will sell the suite directly as a hosted service, something for which it had previously relied on hosting partners. As with direct sales of the downloadable versions, Zimbra will sell the hosted suite at a premium over the prices it gives to hosting partners.

Also unfounded are fears that Yahoo will force Zimbra to limit its compatibility with Yahoo competitors, he said. Yahoo realizes that a big draw of the Zimbra suite is precisely its open platform, which lets external developers create application mashups called "zimlets."

The deal gives Zimbra a financial and resources boost, as well as heightened brand credibility with potential enterprise customers that as a 100-employee startup it didn't have, he said.

If anything, Zimbra will be able to step up its development efforts. Version 5.0 of the Zimbra Collaboration Suite is due in December, and version 5.5 and beyond will follow, he said.

Finally, he said he and the other members of the Zimbra executive team are committed for the long haul. "Zimbra is our baby," he said. "The reason we made this deal is to grow Zimbra."

Yahoo's Brad Garlinghouse, senior vice president of communications and communities, reiterated Dharmaraj's commitments and challenges the perception that Yahoo only knows how to support consumers.

For example, Yahoo provides Web hosting and domain registration-related services to hundreds of thousands of companies, while its advertising business includes a vast network of marketers and publishers, he said.

Moreover, it has long-standing partnerships with carriers such as AT&T and British Telecom, he added. "Those are very large commitments we have made in our systems that aren't consumer-facing," Garlinghouse said in an interview.

Regarding Yahoo's ability to support enterprise customers, he points towards the know-how involved in providing reliable performance at a massive scale for services such as Yahoo Mail. "This is a natural extension of what we're incredibly good at with a company, in Zimbra, that also is best-of-breed. We bring the best of both worlds together," Garlinghouse said.

Assurances and promises are all good, but concerned customers said the antidote to their misgivings will be concrete actions. "I have no interest in asking simple questions and listening to Yahoo's spin. Only time can answer any question I have," Other World's Phillips said.