Xen & the Art of Virtualization

Data center startup XenSource Inc. has clinched $6 million in Series A funding as it rolls out its own brand of server virtualization.

The round was co-led by Kleiner Perkins Caufield & Byers and Sevin Rosen Funds. There is one thing that sets XenSource apart from most companies getting funded -- its core technology is free.

XenSource, which was founded last year, was spun out of an open source project at Cambridge University that started in 2002. The Cambridge project -- called Xen -- aims to boost the performance of virtualized applications running on multiple servers. But open source means "free," and that's the case with the Xen Hypervisor technology on which XenSource software is built.

So, how will XenSource make money? By offering support and maintenance subscriptions to Xen users, according to the startup's CEO, Nick Gault. Service will be our main focus in the near term but then we will start to provide more management capability,” he says.

Gault, who was hard at work in Cambridge University’s computer lab when NDCF contacted him, admits the company is still thrashing out the specific details of its product roadmap. He does have staffing plans in place with the new cash, though. Gault says he will more than triple staff, which currently consists of eight employees split between Cambridge and XenSource's Palo Alto, Calif., headquarters. Gault expects to increase this number to around 30 by the end of 2005, with around 22 in Palo Alto.Gault says XenSource is already used in data centers by "enterprise customers for whom virtualization is mission critical. There’s a number of banks and other large places that are using the core Xen technology.”

Gault won't name any customers, but hopes that XenSource can emulate commercial Linux vendors such as Red Hat Inc. (Nasdaq: RHAT). “The more users Linux has, the better for Red Hat, similarly the more people involved [in the Xen project] the better for XenSource."

But XenSource has a couple of formidable competitors out there. EMC Corp. (NYSE: EMC), with its VMware software, and Microsoft Corp. (Nasdaq: MSFT) are already well established in the server virtualization space. Gault believes that the open-source, non-proprietary nature of Xen will help win users on to the platform, although he's unwilling, at this stage, to divulge the XenSource master plan.

Gault was vice president of business development at Hummingbird Ltd. and founder of Network Physics Inc., and Common Ground Software before starting XenSource. Xen project guru Ian Pratt, a member of the senior faculty at Cambridge’s computer lab, and open-source veteran Moshe Bar were also involved in the creation of XenSource.

Gault expects the firm to reach profitability by the end of 2006 and does not anticipate another funding round “for another year, at least.”— James Rogers, Site Editor, Next-Gen Data Center Forum