Virtualization Beyond Microsoft and VMware

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Many cliches could be applied to Virtual Iron — dark horse, always a bridesmaid. It doesn’t have the market share of VMware and several years ago it opted out of the hypervisor business, even before the technology became a commodity.

Last week, Andi Mann, research director at Enterprise Management Associates, called Virtual Iron “a top five virtualization vendor.” EMA is not alone in its accolades. Gartner also praised Virtual Iron for delivering much bang for its buck.

As a result, Virtual Iron has been getting more press coverage than normal recently. Just last week, Datamation took a deep dive into Virtual Iron to see what the company has been up to and where it’s going.

Virtual Iron is in a unique spot. It leverages Xen’s hypervisor, yet has built an ecosystem around it, which is where much of its value lies. It considers itself technologically on par with VMware, yet the price point is significantly lower. Although it pursues many of the same customers as Microsoft, it brings more value to the equation, at least in CEO Ed Walsh’s mind.

Mann provided an interesting market breakdown within the Datamation article:

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.

That makes sense, but something Walsh told me at VMworld makes sense as well. Dell, as of mid-September, was Virtual Iron’s largest reseller, and the relationship was fairly reciprocal. Dell sells more Virtual Iron than it does Citrix or VMware.

Why?

Because, as Walsh explained, the typical Dell box is priced at $2,000. The typical VMware configuration is $5,000. The economics of a VMware infrastructure on a Dell box for the most part don’t make sense.

Dell, Walsh noted, is not an innovator. But neither is Microsoft (mor, really, when it comes down to it, is Virtual Iron.) When it comes to virtualization, Dell and Microsoft’s combined presence really drive the “S Curve,” a descriptor of critical mass. People no longer need to be sold on the merits of virtualization; They want to be able to implement it.

Virtual Iron has done a good job of finding a niche in the SMB community. The question looms, however, whether it has enough to differentiate it from other vendors and or whether its value is transferable. In which case, a cash-rich competitor, or an OEM or ISV, looking to add a virtual ecosystem to its offerings may decide to go shopping.

Amy Newman is the managing editor of ServerWatch. She has been following the virtualization space since 2001.

This article was first published on ServerWatch.com.