Virtually Speaking: Getting Down to Business

By Amy Newman (Send Email)
Posted Oct 30, 2007


Amy Newman
A new captain takes the helm at Virtual Iron. Plus, stellar earnings for VMware.

It may seem counterintuitive, but having the best product in the world, does not alone make for a successful company. Sure a good product is critical, but without an effective sales strategy and strong management it will get you only so far.

Virtual Iron has learned this the hard way, and this week it began taking steps to rectify the situation.

First up, a new CEO. Up until now, Chairman John Thibault has worn the two hats. Effective Monday, Ed Walsh, is on board as president and CEO.

Walsh comes to Virtual Iron from nemesis VMware's parent company, EMC, where he ended up via an acquisition in late 2006. Prior to being tagged as vice president and general manager its Information Management Software Group, Walsh was CEO at Avamar Technologies. Avamar developed products centered around next-generation data protection and, according to Walsh, "defined data deduplication" and products to enable it. Revenue during Walsh's tenure increased seven-fold over 18 months.

Walsh brings with him to Virtual Iron former EMC and McData sales executive John McCarthy as senior vice president of sales. McCarthy will lead the company's worldwide sales, channel and field operations.

Part of Walsh's appeal to Virtual Iron is his track record for building ecosystems, a philosophy Virtual Iron has always employed. The vendor plans to partner and sell through the ecosystem of complementary products, in particular in the storage arena, which Walsh is most familiar with and where his strengths lie.

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Virtual Iron, Walsh said, "has a good angle to integrate with the current storage infrastructure." VMware products' architecture, in contrast, "forces overlaying and masking."

There is another reason Virtual Iron will focus on storage. Walsh told ServerWatch he believes, "The latest threat to storage is VMware," as the vendor has fingered companies it intends to "take out." Not surprising, given VMware's strategy of growing its own solutions to gel with its hypervisor rather than partnering. Walsh noted that the construction of the VMware stack leads to exclusivity and potentially a situation similar to what existed in storage industry circa 1990, when IBM controlled the stack.

Granted, some of this fear, no doubt, boils down to business that fills his previous employer's coffers.

Although Walsh intends to keep partnering as a cornerstone of Virtual Iron's culture, he is bolstering the sales efforts of the 100-percent channel-driven company. His main goals, he told ServerWatch are "leveraging the ecosystem and getting the message out."

Part of the message is marketing differentiation, and that means setting apart the Xen hypervisor from Citrix Xen, technology Citrix Xen's and Virtual Iron's products share.

In addition to a new senior vice president of of sales, an inside sales team is being added, and marketing communications are being ramped up. "Previously, no money and little time" was spent on marketing, Walsh said.

Despite VMware's lead in the market, Walsh said the company has "plenty of white space to grow." One place Virtual Iron has made strides to expand is in the channel. Two weeks ago, it reaped the first fruits of an agreement it signed with Tech Data. The value-added reseller began shipping three IBM system X and two HP ProLiant servers preloaded with Virtual Iron.

While Virtual Iron sharpens its tools to build the ideal product/marketing/management three-legged stool, VMware may well be sitting on it.

Last week, the company posted third-quarter earnings, which far exceed analysts' expectation. For its first public quarter, VMware reported earnings of $64.7 million, or 18 cents a share, on sales of $358 million. When adjusted for the cost of stock option expenses, the write-off of in-process research and development and the amortization of various intangible assets, earnings were a whopping $85 million, or 23 cents a share.

If that doesn't grab you, bear in mind that VMware's $358 million in sales marks a 90 percent improvement from the year-ago quarter when it took home $19.2 million, or 6 cents a share, on sales of almost $189 million.

VMware's earnings further prove that virtualization, in Walsh's words, "is unstoppable."

The commonality between Virtual Iron and VMware may be limited to the fact that both play in the virtualization space. However, a varied approach to any technology is beneficial to customers. If Virtual Iron's changes accomplish what they are intended to accomplish, organizations will at the very least be aware that they have choices.

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

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