VMware to Acquire Zimbra

Company Expands vCloud Portfolio with Next Generation Email and Collaboration Software

PALO ALTO, Calif., January 12, 2010 —VMware, Inc. (NYSE: VMW), the global leader in virtualization solutions from the desktop through the datacenter and to the cloud, today announced that it has entered into a definitive agreement to acquire Zimbra, a leading vendor of email and collaboration software, from Yahoo! Inc.

This acquisition will further VMware’s mission of taking complexity out of the datacenter, desktop, application development and core IT services, and delivering a fundamentally more efficient and new  approach to IT.

Zimbra is a leading open source email and collaboration solution with over 55 million mailboxes. As an independent Yahoo! product division, Zimbra achieved 2009 mailbox growth of 86% overall and 165% among small and medium business customers.

Based on a modern, flexible architecture designed for virtualization and cloud-scale infrastructure, the Zimbra technology provides substantially lower total cost of ownership than traditional solutions.   Zimbra products offer a full enterprise feature set, excellent interoperability with legacy email environments and have been deployed across small and large environments; as on-premise software at thousands of small and medium businesses, distributed enterprises, and as a hosted service at major service providers such as Comcast and NTT Communications.

“Over the coming years, we expect more organizations, especially small and medium size businesses, to increasingly buy core IT solutions that deliver cloud-like simplicity in end-user and operational experience,” said Brian Byun, Vice President and General Manager, Cloud Services, VMware.  “Zimbra is a great example of the type of scalable ‘cloud era’ solutions that can span smaller, on-premise implementations to the cloud. It will be a building block in an expanding portfolio of solutions that can be offered as a virtual appliance or by a cloud service provider.  We are excited to welcome the Zimbra team and community to the VMware family.”

VMware plans to support existing Zimbra products and open source efforts while further optimizing Zimbra products for vSphere-based cloud infrastructure, alongside Microsoft, IBM and other messaging and collaboration solutions.

Under the terms of the agreement, VMware will purchase all Zimbra technology and intellectual property. Yahoo! will have the right to continue to utilize the Zimbra technology in its communications services, including Yahoo! Mail and Yahoo! Calendar.

 “The Zimbra technology has played and will continue to play an important role in our communications services products. The technology is core to Yahoo! Mail and Yahoo! Calendar and a key differentiator for these leading products,” said Bryan Lamkin, senior vice president, Yahoo!  “The customers and partners of Zimbra’s industry-leading product and successful enterprise business will be well served with VMware.”

The acquisition is expected to close in the first calendar quarter of 2010.  Financial details of the transaction were not disclosed.

About VMware

VMware delivers solutions for business infrastructure virtualization that enable IT organizations to energize businesses of all sizes.  With the industry leading virtualization platform – VMware vSphere™ – customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2008 revenues of $1.9 billion, more than 150,000 customers and 22,000 partners, VMware is the leader in virtualization which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

VMware, VMware vSphere and VMware vCenter are registered trademarks and/or trademarks of VMware, Inc. in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies.

# # #
 
Forward-Looking Statements

Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to, expectations for the consummation of our acquisition of Zimbra and development of its products, future demand for Zimbra and other cloud-era IT solutions, expansion of our cloud services portfolio and expectations of benefits that customers may achieve from the adoption of virtualization and management products.  Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) the impact of macroeconomic conditions on demand for new and innovative IT solutions, (ii) our customers' ability to transition to and implement new technologies, (iii) the uncertainty of customer acceptance of emerging technology initiatives; (iv) rapid technological and market changes in virtualization software and cloud-based IT solutions; and (v) satisfaction of closing conditions for the transaction.  These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-Q and Form 10-K and current reports on Form 8-K that we may file from time to time.  VMware disclaims any obligation, except as required by law, to update any such forward-looking statements after the date of this release.