VC Predicts Virtual Upheaval

Virtualization startups are increasingly causing systems vendors to reach for the Advil, warns Peter Wagner, managing partner of Accel Partners.

In a column on NDCF, Wagner argues that new technologies are emerging which could potentially “suck the brains” out of incumbent systems vendors (see Building Virtual Empires).

This is a pretty serious threat, Wagner says, because virtualization enables the substitution of commodity systems. This may lead the larger incumbents to either buy the upstarts -- or seek to destory them. EMC Corp. (NYSE: EMC), for example, has already stumped up $635 million for partitioning-trailblazer VMware Inc. (see EMC Buys VMware for $635M).

Partitioning technologies such as VMWare's have already made a splash, although aggregation technologies from the likes of Acopia Networks Inc. and Topspin Communications Inc. are now stealing market share, Wagner asserts. (Wagner's firm, Accel, is an investor in both Acopia and Topspin.)

Topspin's core technology comprises server switches that provide InfiniBand, Ethernet, and Fibre Channel connectivity between servers. These are supported by a range of products including a host channel adapter and server virtualization software.Because of its ability to link different data center protocols, Topspin has aleady been touted as a good IPO prospect and potential acquisition target (see IPO Talk Twirls Around Topspin).

The Mountain View, Calif.-based vendor has already racked up a slew of OEM partners, including Sun Microsystems Inc. (Nasdaq: SUNW), IBM Corp. (NYSE: IBM), Dell Computer Corp. (Nasdaq: DELL), NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701), and RLX Technologies Inc.

But Topspin is just one of any number of startups jostling for position in the data center market (see Azul Attacks Data Center Apps and Xen & the Art of Virtualization).

Wagner also predicts a boom in security based around virtualization technology. “Early activity appears promising,” he says. “Probably with the best yet to come.”

So, how are the incumbent vendors handling all this, and which are most at risk? If you want to know more then you will have to check out Wagner’s column on NDCF: Building Virtual Empires.— James Rogers, Site Editor, Next-Gen Data Center Forum