Since coming on board Yahoo! (NASDAQ: YHOO) early this year, Carol Bartz has wasted little time in making changes. Part of the strategy is to get the company more focused.

So, it looks like Yahoo! is in the process of selling its small business unit. All in all, it's a good asset, with web hosting, domain name services, and merchant accounts. The deal may also include the HotJobs division.

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.

Several years ago, I had a chance to talk to Satish Dharmaraj, the CEO and cofounder of Zimbra. He told me that the company spent two years building a sophisticated email system (in stealth mode) – and was using some cool Web 2.0 capabilities.

Since then, the company has continued to innovate. More importantly, Zimbra has been picking up a lot of customers (the current count is over 1,300). Some include Comcast Corporation (Nasdaq: CMCSA), Embarq Corporation (NYSE: EQ), Raytheon Company (NYSE: RTN), H&R Block, Inc. (NYSE: HRB), and Century 21.

Well, the hard work has paid off; that is, Zimbra has fetched $350 million in a buyout from Yahoo! Inc. (Nasdaq: YHOO).

No doubt, Zimbra's messaging platform has some slick features. But it's also sturdy enough for intense enterprise environments. For example, Zimbra allows for archiving and on-site deployment – which are essential capabilities in the Sarbanes-Oxley world.

Yahoo is a dominant player in email, with about 250 million registered users. Now, with the power of Zimbra, Yahoo can expand into corporate environments. In other words, there will be even more pressure on Microsoft Corporation (Nasdaq: MSFT)'s Office franchise.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Word from the TechCrunch conference in California is that Yahoo! (NASDAQ: YHOO) bought open source e-mail and calendar company Zimbra for $350 million. Zimbra has more than nine million paid mailboxes across 50+ countries making it "one of the fastest growing solutions in the business, education and service provider markets for messaging and collaboration."

The deal will allow Yahoo! to enter the business of onlne/offline desktop operations which has recently been attractive to Google (NASDAQ: GOOG). Microsoft's (NASDAQ: MSFT) Office and Windows OS have dominated this market for years, but they are not open source, so the code cannot be used by outside developers to make related applications. The Microsoft products also tend to be expensive.

As the news becomes official, it leaves open the question of why Yahoo! is expanding into more businesses that do not have a proved business model when its core display ad model is in such great trouble.

Maybe new toys are more important than new revenue.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Lately, Comcast (NASDAQ: CMCSA) has been pushing its dot-com agenda. For example, the company is putting together a major video portal and even purchased Fandago to help make this happen. It's part of a strategy to become like Google (NASDAQ: GOOG) or Yahoo! (NASDAQ: YHOO).

Today, Comcast generated some more buzz. That is, the company is developing SmartZone, a web-based system for customers to manage email, voice mail, address books, video clips, instant messages, and so on. It will certainly be a big point of leverage for Comcast's 12 million broadband users and three million digital phone users.
A critical part of the system is Zimbra's platform. "We spent a year working on this deal," said Zimbra's CEO, Satish Dharmaraj, to me in an interview last week.

Zimbra is no ordinary email/messaging provider. Rather, it is a highly versatile Web 2.0 system that allows for drag-and-drop and easy integration with many web services (such as Wikipedia, Salesforce.com and so on).

The Comcast service will be free. It should also be a nice value-add to get new customers -- and retain existing customers. It's also a big validation for the Web 2.0 community.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

While it seems that many Web 2.0 companies are going nowhere, this is certainly not the case with Zimbra. Basically, the company uses whiz bang technologies -- such as AJAX -- to push the boundaries of email.

According to an announcement this week, Zimbra now has more than 6 million paid mailboxes. In fact, the company added 2 million in the fourth quarter alone.

I had a chance to talk to the company's CEO and cofounder, Satish Dharmaraj. According to him: "I think it was critical that our software is open source. If not, we would have gone nowhere."

Basically, open source means that anyone can download the software and make improvements (there are more than 6,300 members of Zimbra community). For Zimbra, which is a young company, it has been a smart way to leverage its resources.

That's certainly the case with the company's next version of its software: the Zimbra Collaboration Suite (ZCS) 4.5.

Some of the new features include: POP account aggregation (which allows a user to manage multiple email addresses); multiple identities (you can have different versions – such as for business and personal); and more support for mobile devices.

Of course, expect more this year, such as IM, chat and other cool features.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Many tech CEOs like to use a phrase from Andy Grove, the former CEO of Intel Corporation (Public, NASDAQ:INTC): "Only the paranoid survive."

As for Antoine Leblond, who co-heads the Office division at Microsoft Corporation (NASDAQ:MSFT), he is not paranoid about Google Inc. (NASDAQ:GOOG). He believes that major businesses will not use the company's Web-based applications. Businesses want mission-critical solutions, and that's not what Google offers.

Nevertheless, some businesses such as Salesforce.com are starting to use Web-based applications. It is the fastest growing software company of its size and has big-time customers like Cisco.

Also, major companies like H&R Block are using Office alternatives such as Zimbra. Or look at Caspio, which has an on-demand database that has attracted clients like GE.

Why not? These applications are much cheaper -- and get the job done.

Something else: A chunk of Office's revenues come from the consumer market. No doubt, this is where Google is very strong. With its huge market cap, it has been buying best-of-breed companies.

So in light of the fact that about half of Microsoft's profits come from its Office suite, it might be wise for Microsoft to get paranoid about what's happening.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

At his PC, about 15 years ago, one person sparked a revolution: Linus Torvalds. He developed a new operating system – Linux -- with a unique approach: open source software. That is, great programmers around the world would contribute to the code base.

Now, Linux is a staple of organizations around the world. And, it even has its own conference, LinuxWorld, which took place this week. Held in San Francisco, Ca., the event attracted more than 10,000 attendees.

Prominent Stanford Law School Professor, Lawrence Lessig, gave the keynote. The theme was powerful: sharing has meant much better software. Why not the same for other things, like music and videos?

Ok, this is not exactly something that resonates with companies like Apple, Microsoft, and thousands of others – except for some upstarts, like YouTube.

However, for enterprise software, "free" is certainly a scary word. For example, one of the companies at LinuxWorld, Ingres, is gunning for Oracle's database business. Dave Dargo, the company's Chief Technology Officer and a former senior officer at Oracle, said that the goal is not to kill mega companies like Microsoft, Oracle and so on. "To be wildly profitable," he said, "all we need is a small piece of the database market."

Another company at the show was Zimbra, which develops a collaboration product that goes beyond Microsoft's Exchange. "It's great to see Linux moving off of a traditional server model," said John Robb, VP of Product Management of Zimbra. "New developments around challenges such as virtualization and mobility are really showing off the power of the open source community."

Jitterbit's CTO, Ilan Sehayek, weighed in (his company develops open source integration software): "Red Hat's absence was interesting, but clearly the open source community's focus is expanding from systems and OS to business applications. The real value to businesses is in the applications, and all the major horizontal categories were represented including: SugarCRM and CentricCRM, Zimbra (collaboration and messaging), Pentaho (Business Intelligence) and Greenplum (Data Warehousing). I learned of a new company with HQ in Spain called Openbravo in the ERP category. The proprietary world of software went through a similar evolution, but with Web Services and lightweight open source integration tools this time around we should be closer to realizing the dream of best of bread applications."

One of his fellow employee's at Jitterbit, Daniel Oxenburgh, said: "Sharam, Ilan, and I spent the day roaming around the crowded exhibit hall at LinuxWorld. The floor has an interesting - and very telling - layout, I think. Most of the big guys (Motorola, HP, etc.) are trying to make a splash with huge flashy booths in the center of the hall, while smaller companies are set up around the perimeter of the show floor. Well, guess where all the foot traffic was? People grabbed their chotchskies from the middle of the room and headed to the busy edges."

Tom Taulli is the author of various books, such as the Complete M&A Handbook and operates InvestorOffering.com.

When the co-founders started-up Google, their main source of funding was their credit cards. Any way they could find to leverage resources was critical. One approach was to use open source software. Basically, this is software that is freely available – so long as all additions to the software is also made free.

In light of this, it makes sense that Google is launching a portal for open source, called Project Hosting.

The leading portal is SourceForge.net, which has built an extensive community over the years. Google said it is not competing against it.

I think, Google does have an interesting view of what "competition" really is. Google is leveraging its powerful search technology. In the programming world – in which projects have endless amounts of lines of code – strong search is a must-have.

According to a recent article in News.com by Ingrid Marson ("Microsoft: Open source 'not reliable or dependable"), Microsoft is not so hip on open source.

Basically, open source is a New Age way of developing software.  That is, instead of a big company developing it, a community of developers across the world contribute to the development of a software product. 

In an upcoming BBC documentary, a Microsoft vice president says that open source software is not ready for the prime time of  "reliability and dependability that comes from a commercial model."

Actually, open source providers are starting to get some serious traction.  Look at Zimbra, which develops a Web-based alternative to Microsoft Exchange. Only two  years old, the company already has several 100k seat enterprise deployments (such as H&R Block). What's more, the company is working on a 1 million telco deployment.

I had a chance to talk to the company's CTO, Scott Dietzen, who said: "You can argue that open source has taken a play right out of the Microsoft play-book by driving software costs down further than even Microsoft (who's success in part was due to their being a lower cost provider)."

Another top provider in open source is Jitterbit, which develops software for integration. I also talked to the company's CTO and co-founder, Ilan Seyahek who mentioned that companies like Dell, Google and Amazon.com are already big users of open source. "Market adoption is the only relevant fact to consider when forming an opinion on the reliability and dependability of open source products," said Seyahek.

BBC - The Code Breakers

News.com - Microsoft: Open source 'not reliable or dependable

Zimbra Interview

Jitterbit Interview