Yahoo Mail users can now access their email even when they are offline. Yahoo has just released the Yahoo Zimbra Desktop as a free download for both Mac and Windows.

Zimbra Desktop is an application that you install locally on your PC. It functions like a traditional e-mail client such as Microsoft Outlook or Apple’s Mail App. In fact, the Zimbra interface has been designed to closely mirror Outlook’s general look and functionality.

Zimbra Desktop’s main benefit is that it gives you offline access to your Webmail accounts – it even works with Gmail accounts. It also throws in some productivity elements into the mix – specifically spreadsheet and word-processing applications; however, these are quite rudimentary even compared to Google Docs applications.

The Zimbra Desktop’s email features are certainly impressive – tagging, conversations threading, comprehensive search, etc. However, it does not seem able to synchronize with the Yahoo Address Book or Calendars just yet.

The Zimbra Desktop technology originates from Zimbra Inc – a company that Yahoo acquired in September 2007. Its primary product is the Zimbra Collaboration Suite – a full-featured collaboration platform that supports email, instant messaging, group calendars & contacts, and document sharing.

Michael Arrington at TechCrunch is reporting that New South Wales Department of Education in Australia has accepted a bid to switch over the email accounts of 1.5 million students over from Microsoft Exchange to Gmail (via Google Apps).

NSW DoE was unahppy because their 2004 MS Exchange installation cost 33million and took 3 years. It’s unclear why the system took so long to setup. The Gmail roll-out will increase current email storage allocated for each student from 35MB to 6GB.

The move represents a big win for Google – which is breaking into Microsoft’s mail and office collaboration market, at every scale. Last year Macquarie University elected to shift the email accounts of its 68,000 students and recent graduates onto Gmail. This new instillation will create what’s being reported as the single largest private deployment of Gmail. On the other end of the scale small and medium business are also increasingly switching away from Microsoft Exchange and Outlook, to SaaS services like Google Apps, and Yahoo’s Zimbra.

Reports are circulating that Microsoft has offered $44.6bn to purchase Yahoo.

The news follows Yahoo’s announcement on Tuesday that they would be lowering their revenue forecasts, that they intend to lay of 1000 employees, and that chairman Terry Semel would be leaving. The share price of yahoo stock has fallen 46% since October.

Microsoft is offering, what some analysts are calling an exorbitant, 62% more per share, than todays closing price of $19.18. The premarket trading price has already jumped to $29.

According to Microsoft’s Kevin Johnson, the move is targeted squarely at facing competition from Google. In recent years, the growth of SaaS, and enterprise web applications has put pressure on Microsoft’s position. At the same time, Yahoo, poster child of the early dot-com-revolution, has found it harder and harder to compete with Google’s growing dominance on the web.

It’s hard to predict how such a merger would affect Yahoo’s open source efforts, some of which compete directly with Microsoft products (the Zimbra groupware suite, for example).

Anyway you look at it, if the deal does go ahead, it’s likely to change the internet landscape significantly.

Following is the letter sent to Yahoo’s board.