In-Depth

Competition: Tiny Giant

This server virtualization startup is growing rapidly, and believes it can compete with VMware by offering similar functionality at a lower price.

• By Keith Ward
• 06/01/2008

In fact, it's about one-quarter of the VMware price, if you buy into Virtual Iron's numbers. Assuming a standard two-socket server, Virtual Iron's virtualization capabilities come out to about $1,600, while an equivalent setup for VMware will run about $6,000, according to Virtual Iron VP and Chief Marketing Officer Mike Grandinetti (who recently left the company).

Stacking up to the Competition
Given that disparity, it's perhaps not surprising that Virtual Iron's primary customer base is in the small and midsize business segment; Grandinetti estimates that approximately two-thirds of Virtual Iron's customers fall into that category, with the other third coming from enterprise businesses.

But less expensive doesn't equate to less capable, Grandinetti maintains. He believes Virtual Iron's Extended Enterprise Edition stacks up well to VMware's flagship product, ESX Server (recently renamed simply "ESX").

"When you look at all of the major-use cases supported, we support the same ones [as VMware]. We've used third-party products to fill gaps, [such as] P2V [physical-to-virtual] virtualization. We really do match up, feature for feature, on the things that matter to customers."

Especially so with Virtual Iron's latest release, version 4.2. Some of the upgrades include:

• Support for several Linux distros. These include SuSE Linux Enterprise Server 10 (32-bit and 64-bit) and Red Hat Enterprise Linux 5 (32-bit and 64-bit).
• Multi-pathing. A high-availability technology that provides redundancy for networking and storage channels. If one network path goes down, for example, another Ethernet path will take over automatically.
• Snapshots. Virtual Iron's implementation is called LiveSnapshot, and provides virtual machine (VM) snapshots for live (that is, hot) backup and patch management. Snapshots allow for no-downtime recovery of VMs.

Smart Choices for Growth
Even though Virtual Iron is often aiming at smaller game than VMware, its approach appears to be paying off. As a private company, Virtual Iron doesn't release sales figures, but Grandinetti says that sales have doubled every quarter since the last quarter of 2006, a trend that he sees continuing.

One big reason is that Virtual Iron made several key decisions in 2006. One was to move from a proprietary hypervisor to the open source Xen hypervisor. The other was to broaden its support to include Windows OSes; previously it was Linux only.

Those smart choices are why Virtual Iron gained about 1,000 customers in 10 months, according to Grandinetti. It took VMware about 10 years to grow to 1,600 customers, Grandinetti argues. He attributes the difference in large measure to price, and what he sees as VMware's cocky attitude as the industry leader.

"It's about taking the cost and complexity out of server virtualization," Grandinetti says. "This is where VMware has failed. They've been very arrogant in how they approach the mainstream [that is, non-enterprise] market. They treat the mainstream market as second- or third-class citizens."

'Healthily Paranoid'
Of course, free beats both expensive and inexpensive, and free is what Microsoft's Hyper-V, will basically be. Hyper-V comes bundled with 64-bit versions of Windows Server 2008, and a standalone version is offered for what is essentially the giveaway price of $28. Is Virtual Iron scared of this new entry from Microsoft, which tends to bundle software for which it wants broad, immediate adoption? You bet.

"I think [if] you're not healthily paranoid about Microsoft, you shouldn't be in the business," remarks Grandinetti. "There will be some part of the market for which free offerings from Microsoft will be good enough."

Virtual Iron, of course, is hoping that only a tiny segment feels that way. Grandinetti points to a key missing feature of Hyper-V that he hopes sways potential customers in Virtual Iron's direction: live migration, which is the ability to move VMs from one physical server to another without shutting it down.

'Coopetition at Its Best'
Still, Virtual Iron needs Microsoft. More specifically, they need Windows, as about 90 percent of the company's guest OSes are Windows, compared to about 10 percent Linux.

To that end, Virtual Iron has become a staunch Microsoft partner.

"This is coopetition at its best," believes Grandinetti. For instance, Virtual Iron was the first vendor to sign up for the Server Virtualization Validation Program. With the program, Virtual Iron will test and validate its virtualization stack for use with Windows Server 2008 and previous Windows Server OSes. In turn, Microsoft will support the OS within the Virtual Iron environment. "We were with them on the stage" for the announcement of the program, Grandinetti notes.

But at this point in its lifecycle, Virtual Iron's main competitor continues to be VMware. Virtual Iron -- as are all virtualization platform vendors -- is looking up at the big dog on the porch. Virtual Iron, however, is holding to the belief that it can kick the dog off the porch, or at least join it there.

As Grandinetti concludes, "As long as we continue to do the right things, and build a reliable, production-worthy product, it's going to change over time."