VMware (NYSE: VMW), the leader in virtualization, recently had its IPO. It was a red-hot offering and the company now sports a market cap of $22.8 billion.No doubt, there are other companies that want a piece of the market. One contender is Virtual Iron.
I had a chance to interview the company's CEO, John Thibault, who has more than 27 years experience in the tech industry. Some of his prior gigs include senior positions at companies like Cisco (NASDAQ: CSCO) and Convergent Networks.
Q: "Background on the company?"
A: "Virtual Iron was founded in 2003 with the goal of delivering high performance virtualization and management software solutions.
"In June 2005, we introduced the first server virtualization solution with advanced management and policy-based automation capabilities to the market. In October 2006, we were the first to deliver enterprise-class server virtualization and management capabilities on top of an open source foundation.
"With the increasing commoditization of the underlying virtualization technology (commonly called the hypervisor) our philosophy has been to leverage the latest advances in industry standards and open source technologies and build our advanced policy-based management capabilities on top of that. We believe the true value of virtualization is in the management of the virtual environment. And as virtualization becomes more pervasive in the data center, virtual infrastructure will replace physical infrastructure, making these virtual infrastructure management capabilities more strategic than ever."
Q: "Backed by venture capital?"
A: "Yes. Virtual Iron's investors are Highland Capital, Matrix Partners, Goldman Sachs (NYSE: GS), Intel Capital (NASDAQ: INTC) and SAP (NYSE: SAP). The Intel and SAP investments both include strategic collaboration agreements as well. For example, our relationship with Intel brings us early access to Intel's latest processor technology advances, strategic marketing and sales support, and expanded market visibility. As a result, Virtual Iron was the first server virtualization platform to take advantage of Intel's hardware-assisted virtualization capabilities. We continue to have a head start on other solutions in optimizing our platform and architecture for the latest advances in Intel processor technology and this delivers significant performance advantages to our users."
Q: "How does your firm differ from the main competition? Is the main focus on price?"
A: "Price and complexity are the two most significant obstacles to future adoption of server virtualization according to Gartner and IDC. Virtual Iron is focused on minimizing both to bring all the value of virtualization to the mainstream market. We're focused on delivering a highly reliable, cost-effective and easy to deploy platform that everyone can use. Price is attractive to users (we're a fraction of the cost of VMware for comparable capabilities), but the product absolutely has to meet their needs. Price is irrelevant otherwise.
"Complexity is also a big issue for users, especially in the small/midsize enterprise market. Virtual Iron has some unique capabilities that really simplify installation and deployment and make it much easier for users to leverage server virtualization to support some of the more advanced use cases (and bigger ROI) such as business continuity, disaster recovery and capacity management."
Q: "What's your take on the virtualization marketplace and the huge success of the VMware IPO?"
A: "By all accounts, VMware has been an extraordinary success. It has built the x86 server virtualization category on its own over the last nine years. Despite VMware's achievements though, the market is still only penetrated at less than 5 percent. Uptake so far has largely been the result of early adopters in large enterprises. As mentioned above, the primary obstacles to adoption have been the cost of existing solutions and the complexity and required skill set of the technology.
"IDC forecasts the market to grow from $5.5 billion in 2006 to $11.7 billion by 2011. But many believe that estimate to be conservative if solution providers can crack the small and medium-sized business (SMB) market. To date, this group has largely been priced out of the market, with VMware software licenses alone costing as much as new mainstream x86 servers.
"Fortunately for everyone in the industry, including users, the VMware IPO has brought broad attention to the promise of server virtualization and the problems it tackles. At the same time, advances in industry standards, open source and new 'built-in' virtualization capabilities in the latest Intel and AMD processors are converging to enable new, lower cost, easier-to-use alternatives. With these advantages, Virtual Iron is turning the economics of virtualization on its head and opening up all of the significant benefits of virtualization to the mainstream market.
"For example, for SMBs in any vertical market, where price, simplicity and value are critical purchasing considerations, vendors like Virtual Iron that can deliver comparable server virtualization alternatives to VMware, will enjoy significant market share gains in this huge market. Virtualization is a critical enabling technology which directly impacts many pain points in data centers of all sizes. The opportunity is huge and there is plenty of room for multiple players to capitalize on this historic market opportunity."
Also, if you want to check out more recent IPOs, click here.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
8-31-2007 @ 5:02PM
Schmeebs said...
Look at who invested in VMWare offering. You will see that Virtual Iron shares some investors with VMWare. A general, albeit quite hyped, bet being placed on this space. A very strong sign.