Intel Funds Data-Center Virtualization Upstart

Virtual Iron Software, which came out of stealth mode last month, finally took the wraps off its channel plans Monday. The company, which develops Windows-based virtualization technologies for the data center, also revealed that Intel Capital has invested $8.5 million in the startup’s third round of venture funding.

While many companies develop software that allows businesses to virtualize servers, storage or applications, Virtual Iron's technology addresses all of the elements in a data center, including CPUs, memory, I/O, and storage, said Mike Grandinetti, chief marketing for Virtual Iron, of Acton, Mass.

"This gives users the ability to pool those resources as needed," Grandinetti said. "They can provision servers, networks, and storage automatically without having to touch them. In the past, whether in the mainframe or Unix space, there have been substantial capabilities to manage those resources. We are aimed at the Windows space."

The investment will help Virtual Iron and Intel work together to develop data center virtualization, said Grandinetti. "It's rare that Intel announces it is leading a round of funding," he said. "The funding includes a collaboration agreement. We get access to Intel's roadmaps, and to technologies like Intel's VT (Virtualization Technology) chip."

Lucy McQuilken, investment manager of Intel Capital, said that her company invested in Virtual Iron because of its technology for virtualizing an entire data center, which lets customers balance workloads and increase resource usage, all without the need to purchase excess capacities to meet peak loads. "Our strategy is to invest in companies aligned with [Intel's] strategic goals," McQuilken said.

This is not Intel's first investment in the virtualization industry. Besides developing its Vanderpool virtualization technology for its processors, the company in June also invested in Herndon, Va.-based SWsoft, a developer of technologies to allow multiple virtual servers to share one physical server.

The initial version of the Virtual Iron virtualization platform was released early summer, said Grandinetti. Part of the funding will be used to expand its marketing efforts, which will now include a channel. "We were direct at first, like any early-stage company," said Grandinetti. "We are now working with application vendors, and are recruiting resellers with data center experience, server and storage virtualization experience or experience in certain markets. A formal reseller program will be rolled out pretty quickly."