The virtualization market inspires a lot of speculation about the elbow-in-your-eye competition between the various players. Who’s pulling ahead and who’s running behind?
For example, is market leader VMware, having lost a passel of key staffers, about to suffer some erosion? (The chattering class seems to think so.)
Will Microsoft, once again late to market, eventually dominate with its still-nascent Hyper-V? (Divided opinion on total victory, but general agreement that Hyper-V will be a leader.)
And what about scrappy Citrix, with its $500 million purchase of open source XenSource – can its virtualization revenues reach top levels? (Fair to partly cloudy based on industry scuttlebutt, but the jury’s still out.)
Oh, and don’t forget about Oracle. A dark horse in virtualization, but big-bucks customers will always take a phone call from this entrenched vendor.
Also crowding the market are Red Hat, which just purchased virtualization firm Qumranet; and Dell, which leverages its server strength.
A vendor that usually gets mentioned toward the end of this list is Virtual Iron. Although the company launched a server virtualization product in 2006 – and claims 2,000 clients – its profile so far remains low.
Andi Mann, research director at Enterprise Management Associates, calls Virtual Iron “a top five virtualization vendor.” Yet it’s clearly back of the pack.
Mann’s research firm conducted a survey that asked business executives: “Which of the following server virtualization products, if any, do you have or are you planning to implement?”
VMware ESX was top rated, with 82 percent; Microsoft Hyper-V garnered 32 percent, Citrix XenServer, 21 percent; Oracle VM, 11 percent; Virtual Iron scored 8 percent.
Despite its modest profile, Virtual Iron is taking aim at the market leader. One of Virtual Iron’s key sales pitches is “Comparable features to VMware, without the cost and complexity.”
Certainly the price aspect of that claim is solid. Virtual Iron offers a virtualization product for $799 a socket.
(Making an apples-to-apples price comparison in virtualization is difficult, because buyers face a blizzard of related choices and licensing issues, yet the $799 is clearly competitive.)
And the company’s technology is at least comparable to other vendors’, based on this recent chart from research firm Gartner:
So given that the company’s prices are competitive and its technology is – roughly – comparable, why is the Lowell, MA.–based company so little known? I asked that question of Ed Walsh, Virtual Iron’s CEO.
“I would say we’re the unsung hero,” Walsh says. “As a small company I have a lot of advantage against a big guy and I have some disadvantages.
Microsoft can come out with a substandard product and get market share – I can’t. I would not have been able to get to 2,000 clients if my product did not do what it does.”
The bulk of Virtual Iron’s 2,000 customers are small- and medium-sized businesses – the SMB sector is the firm’s strongest.
With 84 employees, Virtual Iron is itself a small business. By comparison, VMware has 6,300 employees and claims 120,000 customers. (And it’s owned by tech giant EMC, which boasts 400 sales offices worldwide.)
And that, simply put, may be why Virtual Iron has yet to build a profile equal to some of its competitors.
In the virtualization market – so far embraced more by bigger clients – large enterprise favors large vendors. In this league, price is less of an issue.
Yet Walsh insists that Virtual Iron’s offering is comparable to VMware’s. As he tells it, this David and Goliath pairing is closer than it seems due to the quality of Virtual Iron’s management software.
As any virtualization vendor will explain, the battle is no longer about the core hypervisor; now it’s whether you offer a multi-faceted management layer that implements rules and policies automatically.
“If you’re elegant from the beginning, either by luck or by strength of engineering team, you’re able to keep up toe-to-toe with the behemoth,” Walsh says.
In truth, though, Virtual Iron’s closest competitor is not behemoth VMware but instead XenSource, which is owned by software giant Citrix.
Both Virtual Iron and XenSource are based on the open source Xen hypervisor. And both are dwarfed by VMware, with its 75 percent of virtualization installations.
Yet XenSource has a towering size advantage over Virtual Iron. XenSource’s corporate parent Citrix, armed with a $3 billion market cap and 4,900 employees, is well equipped to push its offering into the emerging virtualization market. Walsh readily acknowledges the resource gap.
“Citrix is putting hundreds of people on it and millions of dollars of marketing,” he says. “They’ve said ‘This is the way to go’ but they don’t have the functionality.”
(That last bit from Walsh – “they don’t have the functionality” – is a standard issue rotten tomato, which XenSource and Virtual Iron routinely hurl at each other. This past summer a minor contretemps broke out when XenSource CTO Simon Crosby suggested that Virtual Iron was mooching off the open source Xen project, a charge that VI exec Tony Asaro called “dangerous” and “irresponsible.”)
One advantage of Virtual Iron’s small size: with revenues at a lower starting point, it’s easier to create dramatic percentage increases. Since the firm is privately held its income can’t be independently verified, but Walsh claims that revenues have been zipping upward at 25 percent, quarter over quarter, since late last year.
He expects this geyser of cash to continue. “I know I can sustain a 25 percent quarter-over-quarter growth for quite some time,” he says. “I’m over-accomplishing that now.”
Moreover, there’s big news on the way. “There’s a couple things that will be announced in Q4-Q1, some larger relationships that will provide us larger validation and greater traction,” Walsh says. “But that’s really built on a lot of sweat equity in what I’ll say is a true VMware alternative without the cost and complexity of VMware.”
The All-Important Management Software
Founded in 2003, Virtual Iron originally focused on server aggregation; its software enabled datacenters to create a pooled virtual machine from a room full of single processor servers.
But as multi-core processors became the norm, Virtual Iron reversed course. In October 2006 it launched the open source Virtual Iron 3.0.
It’s the company’s background in server provisioning that now helps it compete in the sophisticated world of virtualization management.
“Imagine a company that had a platform that would take all those disparate resources – CPU, memory, network bandwidth, storage – and aggregate up,” Walsh says.
“Imagine all the complexity you had to keep track of in that environment, as you had all these boxes present up to key applications like Oracle, a big 16-way processing environment.”
Handling complex tasks enabled Virtual Iron software to develop a top-flight management layer on its core hypervisor, Walsh explains.
“What we have, and what VMware has, is an architecture different than the others. We have a separate layer of management.
VMware is using the term VirtualCenter. Ours is called VI–Center. It’s a control and coordination layer.”
The all-important management layer provides intelligent oversight to the various OSes and applications sharing space on a server.
It allows tasks like high availability of processing power, optimization (directing CPU resources where its needed most) and power conservation (shutting down machines on nights and weekends).
The technology looks like this, with the management layer being the VI–Center:
virtualization management layer
But for Virtual Iron – or any company – to compete for top honors in virtualization management is a tough job. The reason: it’s what every last competitor has their eye on.
Everyone knows the hypervisor is yesterday’s battle. “What every [vendor] is going for is that management layer above – that’s where they can add value,” says Dan Olds, lead analyst at Gabriel Consulting Group.
Currently it’s generally accepted that VMware has the best management layer. “If you compare them to Oracle and Xen and Microsoft, theirs is probably the most comprehensive,” Olds says.
“But the other thing that starts happening is, you start bumping up against HP, IBM, CA, and everybody else who’s got management suites, trying to do the same thing.”
The Holy Grail of virtualization is, in fact, meta-management. It’s a solution that enables a company not to cobble together various vendors, but to buy one unified software tool that turns a datacenter into a single automated unit – one that handles any flavor of any OS. (Which – and this doesn’t get talked about much – also means fewer IT staff.)
It’s about “being able to manage that from ‘one pane of glass’ as they say,” Olds says. “IBM is doing the same play with their IBM Director. What you don’t have from VMware’s standpoint, or at this point from Microsoft or even Oracle, is the ability to really manage all those other machines.”
Virtual Iron: Acquisition Target?
Industry analyst Mann says he believes Virtual Iron’s claim that its virtualization solution is better than Microsoft’s, and that it’s (roughly) comparable to VMware without the cost and complexity.
“That’s probably a reasonable statement in actual fact,” he says.
Moreover, Virtual Iron has probably been smart to focus on the SMB market, he says, especially given the competition from heavyweights VMware and Citrix.
Yet that won’t insulate the small vendor from Microsoft. The problem for Virtual Iron is that Redmond is delaying the market.
For longtime Windows shops, Microsoft’s claim that it now has a hypervisor with management capability – with missing pieces on the way – is tempting.
“So some of these companies are potentially holding off until it delivers some of this stuff,” Mann notes. “So that’s going to stall some people.”
“Where things will get even more difficult for Virtual Iron now is against [Microsoft] Hyper-V,” Mann says.
“Obviously Microsoft has a very strong presence in small and medium business, as well as in large enterprise.” In short, there’s no place for Virtual Iron to hide.
“There is the possibility of having success in specific verticals, in specific segments. Virtual Iron is looking for the SMB segment.[Virtualization vendor] Parallels is looking in the service provider market. There is room to be a niche player here. But as the market gets crowded by Microsoft, VMware and Citrix, that niche capability gets less acceptable – and they need to be part of some bigger picture.”
Yet it’s this possibility of being part of something bigger that offers a lucrative ray of hope for Virtual Iron, Mann says. The company makes a tempting acquisition target.
“I can think of half a dozen vendors in software and hardware who might want to have Virtual Iron in their portfolio,” he says. A player along the lines of IBM or HP might want to scoop up the company.
In the mean time, the virtualization market is a growth story amid generally sagging budgets.
Perhaps the hefty growth will expand the customer base enough for all (or most) of the players.
Indeed, it’s early in the game. “The industry analyst, and some of the vendors and the press, I think they tend to overstate how quickly these trends are adopted,” Olds says.
“The majority of customer are using virtualization to some extent, but in x86 a lot of them are still kicking the tires and using it in places that are kind of the low hanging fruit, like testing and development.
Some will point to using it in production for mission critical, but my sense is that customers aren’t quite there yet, and it’s going to take years to get to that point.”