Parallels Stakes Out Tricky Spot in the Cloud

Parallels, best known for its desktop virtualization software, is betting its future on software for cloud services providers. But despite some high-profile customers, such as Go Daddy, Parallels customers face giant competition in the race to provide everything from hosting to SaaS apps to small businesses.

By Laurianne McLaughlin
Thu, February 25, 2010


Parallels, known widely for its Parallels Desktop software that lets Mac users run Windows in a virtual machine, faces a problem that currently plagues many cloud companies: an identity crisis.

At its annual summit for partners, held in Miami this week, Parallels execs presented a clear vision of what they want to be known for in the cloud market. Parallels aims to dominate an unusual spot: the software that web hosting companies use to provide services in the cloud — such as web hosting, e-mail, collaboration software and other productivity apps — to small business customers.

Cloud Computing Definitions and Solutions

In other words, companies like Go Daddy use Parallels software to deliver services via the cloud to their customers — without the customers ever thinking about the word "cloud" much.

Parallels has many of the necessary technology pieces, from its Virtuozzo Containers software that efficiently packs many virtual machines onto one server for the hosting company, to virtualization automation tools, plus Small Business Panel software that lets small business customers do IT provisioning tasks themselves via wizards.

If Parallels gets its way, it will be a dominant but mostly invisible software backbone for the small businesses that continue to warm to the idea of SaaS and hosted IT services. Whether it can reach that goal remains to be seen — because Parallels customers have competition not only from each other but also from giants, including Google (GOOG).

Battle of the Titans

Parallels customers on the cloud services side range from small and medium-sized hosting companies to well-known players like Go Daddy. Many of these web hosting companies now need to sell a wider menu of services to their customers, and the Parallels software is designed to help them do it quickly and efficiently.

For instance, at the summit this week, Go Daddy announced it would begin offering Cloud Server powered by Mac OS X, an "office in a box" solution including mail, hosting, file sharing, chat and related features to its customers who want to use Macs. It's all backed up by the Parallels technology, specifically, the new Parallels Server for Mac Bare Metal Edition, announced this week.

One big question is this: Will small businesses buy products, such as collaboration software delivered via the Web, from the likes of giants including Microsoft (MSFT) and Google, or from hosting companies?

If Go Daddy's experience is indicative, these customers are open to new vendor choices. People in the tech industry may not think of and Go Daddy in the same breath, but Go Daddy, with 7.5 million customers, is quietly becoming quite a SaaS player. Go Daddy President and Chief Operating Officer Warren Adelman, a keynote speaker at the Parallels event, showed Goldman Sachs (GS) survey data listing Go Daddy as the no. 7 provider of SaaS software. "We've been in the cloud since before the word was fashionable," he told the crowd.

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