Inside Virtual Iron's New Strategy

CIO —

It might be a good idea to keep an eye on Virtual Iron during the next few months.

Not because it recently changed its strategy away from a head-to-head competition in the virtualization market with VMware to one in which it focuses on the small- to mid-sized businesses.

That's a good enough reason, if you're among the SMBs. VMware doesn't spend much effort on that market, so Virtual Iron has more room to build, using its low-cost, packaging of its Xen hypervisor and management products as the primary attraction.

The real reason is that it's expanding its delivery methods to focus on more than just getting product into the hands of its customers—a tactic that's becoming all the rage, even among customers.

Virtual Iron has already packaged and designed its software to make it easy to install and manage, which is important among midmarket companies that can't afford to hire a raft of virtualization specialists.

Now it's working on a series of new service offerings and partnerships to allow it to offer virtual-server management, disaster recovery, integration, technical support and other services on a pay-as-you-go basis, provided either by Virtual Iron or its DR and reseller channel partners.

The strategy is in place, according to Virtual Iron Chief Strategy Officer Tony Asaro, but the company won't lay out any details or make any announcements for the next month or so.

What he will say is that the service offerings will be friendly to the reseller channel—on which Virtual Iron relies exclusively for sales.

They'll be structured in such a way as to give both customers and VAR partners a choice in how they want to buy or sell the services. Customers could hire an MSP directly for management or disaster recovery, for example, buy through Virtual Iron, or rent on a relatively ad hoc basis from providers specializing in managed services or software as a service (SaaS).

It's a smart strategy for a company that would otherwise be competing directly with market leaders VMware and Microsoft.

So far Virtual Iron has grown, but has had limited success pitching itself as the low-cost, full-featured alternative to VMware.

Its shift to a focus on the mid-market puts it in a segment where low product cost has a greater impact than in segments dominated by multi-billion-dollar companies.

Its reliance on the channel limits how directly it can challenge either Microsoft or VMware from a marketing perspective, but VARs and resellers own the midmarket—they're the ones mid-size companies rely on as infrastructure designers and integrators.

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