Yahoo!'s (YHOO) Zimbra buy worth every penny

Yahoo! Inc.'s (NASDAQ: YHOO) purchase of corporate email provider Zimbra this week was one of the more exciting pieces of news I've seen from the Sunnyvale, Ca. company in a few years. Yahoo!'s recent spending spree also includes BlueLithium, a maker of online behavioral marketing services. So, with two large acquisitions, is Yahoo! on the way back to stardom as it tries to more fully complete with Google, Inc. (NASDAQ: GOOG)? Perhaps. in any case, the Zimbra buy was very wise for Yahoo!, and by all accounts, the price was a bargain compared to the business potential it could bring Yahoo!

The Zimbra buy will beef up Yahoo!'s email services, of course. One of the bright lights these days for Yahoo! is the immense success it has had with gaining and retaining web-based email customers. More people use Yahoo! email than any other email service on the planet, and it handily beats Microsoft Corp.'s (NASDAQ: MSFT) Hotmail as well as Google's Gmail. I still find Gmail to best web-based email out there, but it was not there first, having come more than seven years after Yahoo!'s mail arrived on the scene. As usual, first-movers get all the glory -- and users -- which explains why Yahoo! is still at the top (by far) and why online auctioneers have failed to catch up with global online auction leader eBay, Inc. (NASDAQ: EBAY).

Yahoo! has wisely spent $350 million here, as it will inherit a very robust base of business email clients that it can either fold into a new global email system that is used by customers and businesses, or it can get innovative in the business space and fight with Microsoft's Exchange email system for businesses as well as fight off Google's slow-but-sure entrance into the same market. After all, email has been Yahoo!'s greatest success, but whether it remains at the top or allows the competition to eat its lunch won't be known for a while.