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Veeam CEO interviewed; Future of Virtualization tools discussed

I spoke to our good friend and entrepreneur Ratmir, the founder of Aelita (which he sold to Quest for over $100M) some time back. When Ratmir started with this new idea on this newer turf, he was entering a "stage battlefield"where he has learned to master the game during the Microsoft-Novell battle and eventual migration abilities. This seems to be repeating itself with a possible Microsoft Citrix acquisition. I am personally advising that this should better happen at a later stage, like 2009 Q2, but any other developments and an aggressive push from a third party can make this happen this year as well.

Anyways, you know what I am getting at. Microsoft has a different challenge today and on a different turf (horizontal, flatter, blogomaniacal age) and we are very curious how the "new middle" will be situated established in this game.

Anyways, here is the (summarized) chat I had with Ratmir :

1. Hi Ratmir, what has changed at Veeam Software since we last spoke, back in 2006?

We’ve been busy! The adoption of virtualization, and specifically VMware ESX Server, is speeding up – and our growth as a company is keeping pace. In 2007 we introduced three major commercial products, and at VMworld Europe in February, we’ll introduce a fourth. In addition to those four products, our popular FastSCP freeware has been widely embraced. As of today, it’s been downloaded more than 26,000 times. Obviously, our R&D team is hard at work, and in the past year we’ve also added sales, marketing and distribution channel capacity. Revenue is steadily growing, and we’re moving rapidly to become a strong leader in the virtual server management space.

2. What do you think has changed in virtualization?

Right now we’re seeing a mini-bubble around virtualization. When someone buys a company with very little revenue (like Citrix buying XenSource) for $500 million, that’s a bubble. Lots of vendors are scrambling for market share, and customers are proceeding with the move from testing virtualization to full production implementation. We’re seeing this in all sizes of organizations, as virtualization offers benefits to SMB all the way up to the largest enterprises. We’re beginning to see scalability issues emerging, and our products can add value at all points along the spectrum. Small businesses typically have lean IT staffs that need to make the best use of their time, and large enterprises need scalable management tools that let them see across multiple VirtualCenters. We see opportunity in both those scenarios.

3. Your FastSCP is the most wanted tool by Sys Admins, what else is coming from Veeam in the future?

Our first priority is to continue maturing all our current products. Veeam Reporter is the most mature – in fact, it’s won two awards, so people are seeing the value in it. It’s a solid product, but there is even more functionality our customers want that we plan to add. Veeam Configurator and Veeam Monitor are newer products, so there is still plenty to add there. Second, we will launch Veeam Backup, which is a major new product for us, and we will add some exciting new functionality to FastSCP. FastSCP and Veeam Backup are integrated, and we think customers will really like what they’ll offer together. During the second half of this year, we will announce more innovative products – but it’s a little too early to talk about it now. Our goal remains to find simple and elegant solutions to the most complex customer problems, and by doing that, to be the most innovative leader in virtualization systems management field.

4. How closely are you monitoring Microsoft's Hyper-V?

Yes, we are monitoring it closely. We believe that once Microsoft releases Hyper-V it will become a major player in virtualization, along with VMware, within 1-2 years after its release. It’s interesting, because today Microsoft has more competition than they’re used to having. Google and VMware are stronger competitors than Netscape was, for example.

5. Will Microsoft's entry in the virtualization game by 2008 Q2 affect your relationship with VMware?

As you know, we’ll never be the platform provider – we fill the gaps that larger vendors create. That’s who we are. So for us, priorities are always very simple: where there is the largest market share, we will provide tools for that platform. We are partnering very closely with VMware, with the goal of creating complementary products that add value without competing. Our next platform priority will be Microsoft, when they’ve gained market share, and Xen will probably be the third – but I’m not sure when Xen will offer a big enough opportunity for systems management companies like us. Our relationship with VMware will continue to be good. At some point, they will realize we are partners forever. We’re the company that fills the gaps in terms of management, and this helps the platform provider’s business by helping their customers. VMware doesn’t have time to address every issue. They have to fight a multi-billion dollar battle with Microsoft and Xen.

6. What is your strength at Veeam? You are shipping products very fast. How do you do it?

We’ve invested heavily in a very innovative R&D team. We have more than 40 dedicated people focused exclusively on management tools for VMware ESX server. Not a lot of other small companies can afford that kind of investment. We are fortunate to be well funded by the proceeds from the sale of our previous company, Aelita Software. And we’re not just aggressively working on one product, but on a whole comprehensive management suite. Some other small companies are also aggressive, but most are working only in a single area, which makes them more vulnerable if VMware decides to build or acquire that functionality. Our R&D strength is a huge differentiator for us. We’re looking ahead at the opportunity, and investing now with the strong belief that it will pay off. Our solutions will be both broad and deep – we’ll keep adding to their functionality in response to our customers’ feedback.

7. You are an experienced entrepreneur and have seen a Novell/Microsoft migration phase and capitalized well on it, are you planning anything in that direction, should Microsoft's Hyper-V get adopted rapidly?

The virtualization market today is actually very similar to the early days of Windows NT, when with our previous company, Aelita, we were able to grab market share in very competitive space. Our team has been down this road before. Now, as then, there are many small vendors plus the large traditional systems management vendors, all scrambling for market share. In any market, there are usually one to three really great opportunities. One is migration, which in virtualization is the P-to-V opportunity where PlateSpin is enjoying success. Then there are a lot of tools around that – reporting and analysis to help with migration – which we offer. Next comes the opportunity around backup and recovery. We believe we will be a major player in that market. Other tools, such as change management and reporting, are important because whoever is first in a customer environment will typically have the opportunity to provide other tools as well. That is our strategy. We’re not afraid of CA, BMC or IBM because we believe virtualization is a different, parallel world. You cannot just expand the functionality of products designed for the physical world to encompass the virtual. The best tools are built from scratch with a virtualization mentality – and that’s what we’re doing.

8. What can we expect more from Veeam? Are you planning to look into adjacent territories such as chargeback, ITSM?

Our strategy is to continue to be extremely innovative and to offer solutions to real customer problems. It’s very important to continue listening to our customers, and to act on what we learn from them. Our first strategy is to provide a complete suite of management solutions for VMware ESX Server. Longer term, our second strategy is to offer heterogeneous management tools. If a customer has both VMware and Microsoft – as we know will happen, Microsoft is everywhere – someone has to provide the interoperability and cross-platform virtual server management. That’s another opportunity we will be in an ideal position to address.


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