Should CIOs be Afraid of Virtualization Startups?

If you watched HBO’s Sex and the City series, you know “Big.” Big was Carrie’s important and rich boyfriend, such a big-time New York player in fact, that he didn’t need a name. The women on the show all just called him “Big.” Enterprise IT has always had its share of bigs: HP , IBM , Sun , Novell , Oracle , Cisco and of course, Microsoft , come to mind. While I was working on an editorial project listing top virtualization vendors, an interesting question kept coming up: Is it a plus or a minus to be a big, when you’re selling virtualization technologies?

VMware , the biggest big in virtualization right now, has owned the virtualization market for the past few years. Microsoft is racing to catch up; we’ll see how its efforts play out this summer when Hyper-V arrives. As has happened with other hot IT trends, a wave of new startup companies, like Akorri , Marathon , and Embotics , have entered the virtualization market, with offerings such as management and security tools. Many of these tools are quite innovative. But is their startup status a stigma?

After all, some IT veterans look at venture-funded startups in a hot market space like virtualization with a somewhat jaded eye. Is this virtualization startup company just trying to be bought out for a gajillion dollars by one of the bigs? Will this company be around to help me solve my enterprise technology problems for the long haul? Or will this nifty solution all too soon become part of a monolithic package from Mr. Big, for which I’m asked to pony up tons of annual fees? These are some of the questions an IT leader who’s skeptical asks himself of any startup.

Notably, at this same moment in time, some of the old-world bigs find themselves shut out of the loudest buzz about virtualization. Novell and Sun for example, are working to re-explain and emphasize to the press and customers that they “get” virtualization. When you think virtualization, you probably think one name: VMware. (Did IBM pop into your mind? I didnt think so.) The bigs other than VMware find themselves having to work hard to win your virtual affection.

Meanwhile, venture funding has poured into the virtualization space, as companies try to cash in on enterprise IT’s favorable reaction to server virtualization so far. And it hasn’t been just smoke and mirrors (a la so many startups of 1998): IT leaders actually have an interesting lineup of startup virtualization products to consider. But when you do consider a virtualization technology from a startup, you face a classic IT question: Is it smarter to develop a group of best-of-breed applications from several startup companies, or stick with offerings from one or two big vendors with whom you’ll have a long-term relationship?

Is the mere fact of being a startup a strike against a virtualization vendor?

Are IT leaders less afraid of virtualization startups than any other startups?

My impression, based on my many conversations with IT leaders about virtualization, is that because this is such a game-changing technology for your organizations, you are more willing to look past the bigs. You are more willing to consider virtualization startups than other startups.

For example, your overall architecture plans (and perhaps your key vendors in those plans) may be changing. Also, you need to move fast to solve tactical challenges with virtualization projects. If a startup can solve your load-balancing problem, bring it on. Even your IT team’s structure is changing. As CIOs like First American’s Evan Jafa have learned, it makes sense to bring together a team that includes members from various IT disciplines to plan the enterprise virtualization effort. Your storage gurus have different favorite vendors than your networking gurus, and both sets of gurus are working together in new ways. This helps open the door for new vendors.

But I want to road test my impressions, with those of you in the midst of virtualization efforts, and in the midst of being pitched by both the bigs and the startups on virtualization products. Are you treating virtualization startups less skeptically than other startups? If so, that’s even more bad news for Mr. Big. Let me know what you think.

Laurianne McLaughlin has served as technology editor for CIO and CIO.com since 2006, with virtualization as a primary area of coverage. McLaughlin, a technology journalist since 1992, previously served as a senior editor for IDG’s PC World magazine and for Business 2.0 online. She has won numerous ASBPE (American Society of Business Publication Editors) awards for her writing and editing work at PC World and CIO. Her freelance work has appeared in venues including Macworld, Network World, MIT Technology Review, Yahoo!, and IEEE publications.