Lost in the news of Zimbra's release of version 6.0 of its collaboration suite is the importance of one very big number: 50 million. That's how many paid mailboxes Zimbra claims now, a number that puts it within spitting distance of IBM Lotus Notes (approximately 145 million paid mailboxes) and Microsoft Exchange (approximately 175 million paid mailboxes). Whatever the truth to rumors that Zimbra is up for sale, Zimbra is an appreciating asset for Yahoo, not a depreciating one.
For one thing, it's important to consider just how explosive this growth has been. In January 2009, Zimbra was at 20 million paid mailboxes. By March, that number had jumped to 40 million paid mailboxes, perhaps a consequence of Comcast mailboxes coming online. (Comcast chose Zimbra to power its Web mail service in 2007.)
That's a lot of growth in a very short period of time. Zimbra appears to have more than doubled its business in the past year.
In fact, if you track the paid-user data for Zimbra, it's very apparent that Zimbra's momentum has been increasing since its Yahoo acquisition, not decreasing.
Such momentum is built on a vibrant, growing community. Zimbra has roughly 10,000 active members on its forums, growing from 5,000 total forum registrations in 2006 to more than 20,000 in December 2008, the last date for which I have accurate data.
At the time of its acquisition in 2007, Zimbra was generating approximately 30,000 downloads per month, a number that has held constant even as a greater proportion of its community elects to pay for Zimbra's Professional Edition.
Yahoo may not know whether it wants to be an enterprise software company (Hint: it doesn't), but Zimbra definitely stands out as an enterprise software product. While the company used to mainly find traction with universities and SMBs, its customer list now includes companies like Bechtel, Century21, H&R Block, Raytheon, and more.
Perhaps as a sign of this growing enterprise clout, Zimbra has caught the eye of Red Hat, which works closely with Zimbra, most recently jointly selling to the Peruvian government.
ZDNet's Larry Dignan may be right in suggesting that Zimbra's news appears to package the company for a sale but, again, even if so, it's clearly because Yahoo doesn't know the way to sell enterprise software, and not because Zimbra can't. If Zimbra continues to grow as it has, within a year it will be taking significant market share from industry leaders IBM and Microsoft.
Zimbra has already caught Microsoft's attention. With Zimbra's 50 million paid users, apparently Redmond is not the only one to notice the company.
Update @ 3:29 Pacific on September 30, 2009:
It's true, as reflected in the comments, that at least some of this growth is due to more and more Comcast subscribers coming online. Surely such users are, on average, not as active as IBM or Microsoft email customers, which tend to be corporate users. Point taken.
But I think this is also a complaint that makes less and less difference as a greater share of Zimbra's customers are enterprises, as reflected in its recent Bechtel deal. There are only so many Comcasts (though I doubt Zimbra would be disinclined from signing up more), but that's not the future for Zimbra, anyway. Enterprises are.
Hence, it may be momentarily inaccurate to compare apples (Zimbra) with oranges (IBM/Microsoft), Microsoft's own internal positioning against Zimbra, as linked to above, suggests that Zimbra's competitors recognize the threat and don't pooh-pooh its numbers as "just Comcast."
The platform wars are over, and open source has won. It's not that open source has displaced Windows or the iPhone or anything else, but that every platform will necessarily include open source. It's simply too expensive and too difficult to go it alone anymore, whether you're an aspiring start-up or Microsoft.
IDC captures this thought in a recent Asia Pacific survey, which highlights open-source software as a foundation for flexible platforms, rather than as point solutions:
Vendors position [open source] as a solution, rather than a point product, by customizing to the needs of specific verticals....Other perceived benefits of adopting open source, apart from the traditional cost savings, include no vendor lock-in, access to the source code, and the flexibility to further customize the software to match individual needs. All these in turn increase the ease of integration with the existing infrastructure of an organization, as well as the compatibility with different platforms. This gives the organization an opportunity to use and test open source without changing their whole IT infrastructure.
It's this flexibility that is arguably open source's biggest benefit, and why companies like Yahoo are actively contributing to open-source projects. Yahoo's senior vice president of cloud computing, Shelton Shugar, argues,
We believe that the developer community is a key component in making Yahoo! a success. The challenges the industry is facing today in terms of large-scale, global cloud solutions are bigger than any one company (big or small) is able to solve on its own. As we contribute to the [open-source] community, we also learn from the community, and third party developers are a valuable resource helping to speed innovation.
Companies that care about developers must care about open source. Like Amazon with its Kindle. Or Microsoft, whose CEO famously sang the praises of developers. So long as Google and its crowd compete using open source, Microsoft will, of necessity, follow suit.
It's not about peace and love. It's about capitalism and competition. That's the new face of open source.
This isn't to suggest that the world will go 100 percent open source tomorrow. But we'll see a lot more open source as vendors strive to meet CIO's need to cut costs while boosting productivity, and as they seek to become flexible platforms to meet the demands of increasingly complex enterprise IT requirements.
Has Yahoo's acquisition of Zimbra failed? All Things Digital reports that Zimbra, an open-source collaboration server company acquired by Yahoo in 2007 for $350 million, is being actively shopped around to potential buyers. If so, it's a failure of Yahoo to go enterprise, and not a failure of Zimbra's technology.
Zimbra was always a bit of a stretch for consumer-focused Yahoo. Zimbra, after all, has always been about the enterprise. While the company flirted with building out its enterprise focus, that distraction become unbearable with Microsoft's advances and its own crumbling fortunes.
Despite Yahoo's poor stewardship of the Zimbra business, it's impressive that Zimbra continues to grow. From my own conversations with various Zimbra executives, sales continue to be brisk and community enthusiasm goes from strength to strength.
Given these facts, Zimbra could be a jewel in the crown of a variety of companies, including Google and Comcast, as All Things Digital suggests, but also IBM, to invigorate its Lotus technology; Adobe, to provide additional SKUs to sell to its broad, SMB customer base; Oracle, to give it a compelling alternative to Microsoft Outlook/Exchange; or a variety of others.
Former Zimbra investor and board member Peter Fenton once told me that he regretted selling Zimbra, as he felt like it had tremendous potential that was only beginning to be realized. Yahoo, with its focus on consumers, was never the right home for Zimbra to realize that potential.
Selling Zimbra may give the open-source collaboration and messaging leader an even stronger position from which to expand.
As cloud computing edges its way into the enterprise, the open-source Apache Hadoop project may well prove to be the poster child of the movement. Hadoop effectively gives enterprises the power of Google or Yahoo Web indexing for free, or for the cost of a CloudEra subscription if you want to involve Hadoop's core developers in your rollout. Credit card giant Visa is an early corporate adopter of Hadoop, and points to a bright future for the open-source project.
I caught up with Visa's Joe Cunningham, head of the technology strategy and innovation group, to talk about the company's adoption of Hadoop.
Q: What got you interested in Hadoop initially and how long have you been using Hadoop?
Joe Cunningham: It's early days for us here at VISA for Hadoop. It's still very much classified as a research and development activity.
My role is the head of technology strategy and research and development for the company. Our task is to look outside the company for interesting technologies on the landscape and identify potential opportunities for those technologies to add value to either the VISA business of VISA technology and then bring them in and play with them in our lab research environment until they are ready for mainstream or commercial activity.
Hadoop is one of those technologies we've been looking at for about a year and we think it offers certain value as an augmentation to existing systems and capabilities VISA has.
Q: How do you use Hadoop at VISA? What made you think it could be the best solution for what you're trying to accomplish?
Cunningham: The most important thing to remember is VISA obviously has a heritage of offerings--very large, very scalable, very reliable, and very secure services to the payments industry. And we're continuously trying to innovate and make those services more valuable to our clients and ultimately to cardholders.
We have a data challenge we attempt to meet every day in terms of the number of transactions we handle and therefore we think there's an opportunity to look at the skills VISA already has in the data analytics space with the power of Hadoop to handle very, very, very large volumes of data.
To put that in context, we handle approximately 200 million transactions a day at VISA. That works out to be about 8,000 transactions a second, and with that comes huge volumes of data and Hadoop offers the potential to harness some of that along with some of our existing capabilities to extract more value from those transactions.
Q: Are there particular directions in which you'd like to see Hadoop evolve?
Cunningham: I think we're interested in looking at Hadoop and looking at its evolution over time. We're certainly interested in how the Hadoop community continues to operate in this open-source environment.
My specific interest is how can Hadoop evolve from the alpha beta environment in which it is today to the mainstream and how can we continue to integrate it as a mainstream technology with all the existing platforms we have here at VISA.
I'll give you two examples. The operations management space is very important to us: how we guarantee the reliability and security of our systems and how Hadoop can be merged or integrated into that environment. And secondly, and I guess this is a common question, but how can we enable SQL-like access to some of the data via the Hadoop file system or via the Hadoop engine?
Q: Given that it's still early days for Hadoop at Visa, it's interesting that you're speaking at the upcoming Hadoop World conference, along with JP Morgan Chase, China Mobile, and other Hadoop users that may be further along the adoption curve. What are you going to be talking about?
Cunningham: I plan to talk about the application stream, so I'll be taking a business-focused view of how we see Hadoop offering value to Visa. If there are tech junkies in the room, they are probably not going to be as interested in what I talk about.
I plan to spend a little bit of time showcasing Visa's technology today to set the scene. I will talk a little bit about our research and development function and how it works with the rest of Visa. Then I'll spend some time expanding on what I call our information products business.
The information products business for Visa offers services to our clients that are, obviously, information-based. So, some of the use cases where we see Hadoop potentially offering value in the future are in the areas of transaction analysis (particularly for risk products and the modeling of risk scenarios), fraud analysis (assisting our clients in potentially managing fraud more carefully), and in the loyalty space where Visa offers services on behalf of our clients to cardholders.
There's an opportunity for us to combine the power of Hadoop with data analytics capabilities that Visa has to augment those services and products on behalf of our clients.
In fact, that's an area that I'm hoping to learn a lot at the event. In some industries, Hadoop is very much mainstream but for some others, it's still emerging and I'm trying to understand whereabouts on that hockey stick or [Gartner] Hype Cycle Hadoop is, or whether Hadoop is already mainstream and it's just a matter of us catching up.
It's always good to gauge and plot that evolution. I think you need to get to these events and talk to other companies and key leaders in the community to really understand where we fit and what we should be doing next at Visa.
For those interested in attending Hadoop World in New York, the organizers are giving Open Road readers a 25 percent discount if you register by September 24.
E-mail is no longer about channeling conversations between people, as Alistair Croll suggests. Instead, it has become a record of what we do online and, as such, our in-box must fundamentally change or face extinction.
It's a provocative argument. I suspect that it's also true.
Croll writes:
Today, I have to visit dozens of other sites and services to make sense of my online life. This is a waste: I already have a record of all these transactions in my in-box. I just need a better way to look at them.
Gmail offered a tantalizing glimpse of what in-boxes could be, but it stopped short of recognizing this shift from conversations to a digital record of our online lives. The in-box of the future looks more like log file analysis and aggregation, and less like an e-mail platform.
Amen. I've actually been wondering for years why an e-commerce company hasn't arisen from analysis of the in-box: to know where I'm going, what I want to buy (and what I have bought), and more, all a company would need is a glimpse into my in-box. For real value, I'd give that access in a heartbeat.
Appetizingly, Microsoft is unlikely to be able to transform e-mail with Outlook and the Exchange Server: it is already too deep into its Innovator's Dilemma investment in the old world of e-mail. Plus, its Outlook/Exchange architecture is too calcified to dramatically shift e-mail's focus.
Google could do it with Gmail, or Yahoo could with Zimbra and Yahoo Mail. Done right, I'd put my money on Yahoo or some other open-source e-mail offering because this sort of thing is tailor-made for the community efforts of open source. Let one company or community create the core, and then invite an add-on community to build around it.
Maybe Mozilla should be doing this with Thunderbird? Certainly, someone should.
Follow me on Twitter @mjasay.
Satish Dharmaraj, founder and former CEO of Zimbra, one of the industry's top open-source start-ups, has joined Redpoint Ventures, a Silicon Valley venture capital firm, as a partner, Dharmaraj confirmed to me by phone on Tuesday.
Dharmaraj sold Zimbra, an open-source e-mail and collaboration company he founded in 2003, to Yahoo for $350 million in 2007. Earlier this year, Dharmaraj left Yahoo to focus on "other things." It's now apparent that the "other things" Dharmaraj had in mind included joining Redpoint, one of the industry's top venture firms.
I asked Dharmaraj about the move and the motivations behind it:
I've started and sold two companies now (Onebox and Zimbra), and was thinking about doing another. I came to the conclusion that a) I love working with entrepreneurs, and b) I can't bear working for a big company.
So I spent the last year doing angel investing, but I didn't like working alone. I've known the Redpoint partners for the past 10 years, and started talking with them last fall about me joining as a partner. Their focus fits really well with mine: cloud computing, software as a service (SaaS), and open source.
Given the shambles that the industry is in, Dharmaraj's timing seems inopportune. But he insists that now is actually an exceptional time to be investing, provided that the focus is right:
Some people think it's a crazy time to invest, but I think it's a great time to invest. Companies born this year will emerge from the recession in 2010/2011 with great momentum and discipline. Even in this bad economic environment, the types of companies I'm interested in dramatically reduce the cost of buying and running software, plus significantly increase productivity through open standards and open source.
For those looking for an experienced investor that seems to have done just about everything right with Zimbra, Dharmaraj should be top of mind. He's a warm but driven executive, someone you'd want to hang out with and report to. And given his track record, he should prove to be an informative adviser to any start-up that is looking to make money while simultaneously enhancing customer freedom.
Follow me on Twitter at mjasay.
Updated at bottom with some clarifications.
It's impressive to be able to give away 31.2 million free Gmail accounts, as Google has. It's even more impressive to get customers to pay for 40 million mailboxes, as Zimbra reported today, representing a sharp spike from the 20 million paid mailboxes reported in early 2009.
The secret to Zimbra's success? Innovation and integration, in part. While Google Maps has found its way into a range of different applications, Zimbra leads Gmail in mash-ups (called "Zimlets" in Zimbra parlance). My company is a Zimbra customer, and one of our sales engineers wrote a Zimlet to integrate Alfresco with Zimbra...in his spare time...over a weekend.
Yes, Zimbra is that easy to extend.
As for innovation, as just one example Zimbra beat Gmail to offline application access by two years. Not bad for a company with a fraction of Google's employees (or PhDs).
As VentureBeat points out, Zimbra is now ahead of Gmail in unique mailboxes and only slightly behind Microsoft's Hotmail service. That's pretty impressive: one little open-source company takes on the two titans of software and wins (against Gmail), or shortly could win (against Hotmail).
Yes, the jump from 20 million to 40 million is likely due to Comcast's decision to use Zimbra for its user e-mail accounts. But it's still impressive.
Frankly, it's a shame that Zimbra ended up with Yahoo, which has 92.5 million mailboxes. Though Zimbra is a standout in the industry, Yahoo's own strength in consumer e-mail likely keeps Zimbra in second place for resources internally, especially since Zimbra's enterprise-grade e-mail may not be a tight strategic fit. Zimbra would have been an exceptional match for Apple or Adobe with their design-savvy customer bases.
What's done is done, however, and Zimbra will just have to settle for getting 40 million paid mailboxes while others can hardly give that many away for free. It's a tough job, but someone has got to do it.
UPDATE: I should have pointed out that the Gmail numbers relate to U.S. totals. It wasn't my intent to mislead on that; I simply failed to call it out, and apologize. Also, as pointed out in the VentureBeat story, to which I linked, none of the numbers - Google's or Zimbra's - are absolutely to be relied upon, as ComScore numbers can be inaccurate and Zimbra's are self-reported. Even so, Zimbra's progress is impressive.
A commentator below rightly points out the difference between active users of a service and the raw number of mailboxes sold (in Zimbra's case). This is a useful, but not dispositive, point. If anything, it probably affects Gmail's reported numbers more negatively than Zimbra's.
At any rate, which problem would you rather have: paid but inactive users or freebie inactive users? I'm guessing that Zimbra will happily take the former, and work to innovate more to turn passive accounts into active users; otherwise, Comcast and other customers simply won't renew their subscriptions.
As for the source of the 20-million user jump for Zimbra, some of this comes from bring the Comcast users online with Zimbra. Zimbra announced the deal in 2007 but that there's a big time gap between closing a deal and deployment.
Follow me on Twitter at mjasay.
In 2006, I took Google and Yahoo to task for not open-sourcing more of the code that makes them tick, given that much of it derives from open-source software that these Web companies modify.
Jeremy Zawodny, then at Yahoo and now at Craigslist, riposted that there are all sorts of legitimate reasons for not contributing back code, but the arguments largely centered on two primary themes: it would be hard, and it might not actually help anyone outside Yahoo to contribute code back.
This was a valid response, but as I said then, those same arguments apply to any company interested in getting involved with open source, and they are the same arguments used by enterprise IT not to contribute to open-source projects.
But there's hope for enterprise IT because, guess what? Two years after Zawodny described why open source may not be the obvious route for Google and its ilk, Google is open-sourcing things like its Open Google Servlet Engine (OpenGSE), announced this week.
OpenGSE fits Zawodny's description: it was hard for Google to open-source for legal and other reasons, and it normally would be considered code that is both strategic to Google and potentially not very useful to companies outside of Google. Google, however, describes how it might be useful to outsiders:
The "toy" servlet engine supplied with the test suites would have the same core HTTP processing code (as far as possible) as the servlet engine which powers Gmail, etc.
For folks outside of Google, there's really no compelling argument to drop Apache Tomcat/Jetty, etc., in favor of OpenGSE's reference servlet engine, but anyone interested in servlet engine and servlet spec compliance would have a fantastic learning resource available to them.
With OpenGSE, in other words, Google is not giving me the ability to be Google, per se. But it is giving me the opportunity to learn how Google manages HTTP processing, and thereby to improve how my own product manages this.
It's not that Zawodny was wrong. It's just that over time, the big (and small) Web companies have discovered that there are significant strategic benefits to participating more fully in open-source projects.
Google is a leader in this area, and I suspect that it will become a real differentiator in encouraging outside developers to write code for Google's platforms, including the enterprise developers that it is now targeting with its Google I/O conference.
As with Microsoft, developers are the key to Google's future: not the developers it employs, but rather the developers that congregate around Google's code. Open source is critical to making that happen.
Google is pretty fast-moving, as company cultures go, rolling out new products on a regular basis. And yet its popular Gmail service is only just now getting around to providing offline e-mail access, a feature that open-source Zimbra has had for nearly two years.
Excuse me, therefore, if I stifle a yawn at Google's announcement. While Google may claim nearly 70 percent of the search market, its rival, Yahoo, which acquired Zimbra in September 2007, is outpacing it in e-mail innovation.
It has ever been thus. Google's heart appears to be in search, not in alternative services like e-mail: it's rarely first to market with cutting-edge features for Gmail.
Will it matter? Perhaps not. But as Google and Yahoo look beyond the consumer search market to enterprise IT, I believe that things like enterprise-class e-mail, which Yahoo has in Zimbra, will come to matter more and more. Google won't forever have the luxury of playing catch-up with Yahoo's Zimbra on a two-year time delay.
Follow me on Twitter at mjasay.
In a hugely interesting Piper Jaffray research note reported in Barron's, analyst Gene Munster suggests a few strategies for Yahoo's incoming CEO Carol Bartz, among them that Yahoo should acquire a major media company like The New York Times (good idea), but also that it should outsource search to Microsoft.
Search has never been a core competency for Yahoo, and outsourcing will both generate short-term cash and allow Yahoo to focus on content.
Not core? If search hasn't been core for Yahoo, for whom is it core? Google, yes, with nearly 70 percent of the search market, but is Google the only one that has search in its DNA?
Munster's research note suggests that Microsoft can claim search DNA, but its track record doesn't necessarily confirm this. Lucene and the new company around it, Lucid Imagination, has search in its blood, but enterprise search, not Web search.
I would have thought that Yahoo, with its second-place market share in search, should be credited with having interest and competency in search too, but Munster apparently disagrees. Does this leave us with Google versus everyone else, with "everyone else" roughly translating to "Microsoft"? This doesn't seem like a very healthy market dynamic, and certainly not one that will generate real innovation in search.
Perhaps it's true that the recession will spur Google on to innovation, but perhaps there are other factors that will encourage competition, as fellow CNET Blog Network writer Don Reisinger suggests.
Regardless, it's as worrisome to see Google owning nearly 70 percent of the search market as it was for Microsoft to own more than 90 percent of the desktop operating system and productivity suite markets. Google needs competition.
