The Palo, Alto, California-based software vendor has been enjoying revenue growth of over 100% year-on-year for four years, according to CEO, Diane Green, and is both profitable and cash positive. The next step is to IPO, she said.

Having grown through internal seed funding and $26m from Dell Computer Corp, Veritas Software Corp, JP Morgan and Goldman Sachs, VMware has avoided the pressures of venture capitalists, according to Green, and has $40m in the bank.

Despite doubts over current economic conditions Green is confident that the market is ready for more technology public offerings. In the States the belief is that the market has opened up, she said. While the company is preparing itself for an IPO, VMware has not yet got to the stage of preparing a filing, according to Green, and she is reluctant to say when the IPO might occur. It’s not prudent to name a date, she added.

In the meantime the company is lining up two new product announcements for next week that will strengthen its position as one of the leading virtual machine partitioning software vendors, including version 2.0 of its flagship ESX Server product and the first delivery of Virtual SMP.

Launched into beta testing in March 2003, Virtual SMP is a new product that will enable users to create a virtual machine that spans across more than one processor and is capable of running multi-processor applications such as databases, enterprise resource planning suites, groupware and email applications and OLAP and decision support software.

Virtual SMP will initially enable virtual machines to run across two Intel Corp processors (the Intel platform being VMware’s focus), although the capability to go to four processors is in development. Green said that tests indicate that Virtual SMP was able to offer the same scalability performance as the native operating system, and that the limit of scaling Virtual SMP was tied to the scalability performance of the virtualized operating systems – Linux and Microsoft Corp’s Windows.

VMware is on a roll at the moment, having last week launched its Control Center active partition management software, which enables live applications running on ESX Server virtual machines to be passed around a network to enable the best use of available resources.

As well as Control Center’s VMotion technology, which enables the virtual machines to be moved around from one physical server to another, Control Center also includes a centralized management console through which users can manage virtual machines, groups and disk images from a central location and monitor virtual machine performance.

In order to integrate this functionality with systems management products, and specifically the new breed of utility computing management products, VMware is working with systems management vendors such as IBM Corp’s Tivoli, Hewlett Packard Co’s OpenView and Computer Associates Inc, and is preparing to launch a software development kit to better enable integration.

The importance of VMware’s virtual machine technology products to IBM and HP’s utility computing visions has led to some speculation that the company may find itself a takeover target. Green said, however, that there was more benefit for customers if its technology remained vendor neutral and that it would continue to protect its neutrality, at least as long as it remains private and does not have to respond to the whims of shareholders.

The focus right now is completely on building the software, she said. Now is the time to be investing in virtual machine technology and bringing that to customers. VMware sees a huge future, we have a lot of momentum and a clear ability to go public.

That public offering almost did not happen, Green said, after an approach by Microsoft Corp to acquire the company last year. They approached both us and Connectix, revealed Green. We just couldn’t agree terms.

Instead Microsoft acquired VMware rival Connectix Corp for an undisclosed sum in February 2003, and is preparing to launch its Virtual Server partitioning technology for Windows later this year.

Green added that this acquisition has led to a cooling of the relationship between VMware and Microsoft. Since they bought Connectix they’ve been a lot more difficult to partner with, she said. But we will always be willing to partner with Microsoft.

Source: Computerwire