Egenera Looks Beyond Blades

Egenera Inc. upgraded its virtualization software today to kick off what its CEO promises will be an aggressive” year.

What's he mean? CEO Bob Dutkowsky envisions a year in which Egenera will double its revenue and broaden its customer base, roll out a slew of products based on new technology, and perhaps even develop a different form factor than the blade servers it currently uses for its software. And if things work out, maybe it will go ahead with the IPO it filed for last June (see Egenera Seeks IPO).

Talk about ambitious. But the company's taking steps to at least try and make it happen.

Today, Egenera added capabilities to its fourth-generation BladeFrame virtualization software, mostly aimed at making it easier for customers to set up and run Egenera’s blade servers. The new features include the ability to configure blade servers while they are running; the addition of automatic failover for customers running EMC Corp. (NYSE: EMC) VMWare GSX Server with Egenera blades; support for open standards and EMC PowerPath load balancing software (also used with Egenera blades); and a graphic management interface.

Dutkowsky hopes the changes will help Egenera broaden its customer base beyond financial services, which traditionally embrace cutting-edge technologies with less regard for simplicity.Indeed, some of Egenera’s biggest customers have been the banks that were originally set to underwrite its IPO -- Credit Suisse First Boston Corp., J.P. Morgan Chase & Co., and Goldman Sachs & Co. While that's great, Egenera wants more business from the likes of Savvis Communications Corp. (Nasdaq: SVVS), which it signed with last April (see Savvis Gets Virtual)

“Last year we were singularly focused around the financial sector,” Dutkowsky says. "We’ve diversified now. We’re going after telcos, federal government, and hosting companies. We have aggressive plans: We'll have more product announcements this year than in the history of the company.”

Attracting customers outside of financial services could prove challenging, though. Daniel Fleischer, senior analyst at market research firm IDC, says Egenera offers true utility computing -- but customers have to rebuild their infrastructure to take advantage of it.

“If you’ve got an IT manager who is visionary enough to see the ROI benefits, it’s not a difficult sell,” Fleischer says. “Egenera designed its product from the ground up. But when you tell customers they have to dump a whole lot of the infrastructure they previously bought, that’s a difficult sell for a lot of companies.”

Given this, it's no wonder Egenera is trying to make it as easy as possible for customers to configure its blade servers. And Dutkowsky says his company will keep up with the latest technology, offering 4-Gbit/s support later this year. It also added support for Advanced Micro Devices (NYSE: AMD) processors today in hopes of reaching a wider customer base.And Egenera might eventually go beyond blades, perhaps offering its PAN software on a switch-like appliance that runs on a server. That would help Egenera move out of the blade market firing line, where it's up against Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), and Sun Microsystems Inc. (Nasdaq: SUNW).

“We’re perceived as a blade vendor, but the days of being able to make it as a blade company are over,” Dutkowsky says. “We sell disaster recovery, failover, provisioning, and other applications. We deliver them on a blade form factor, but we could’ve just as easily delivered them on a rack of white boxes.”

Dutkowsky says Egenera started 2004 with 20 customers and finished with 80. Apparently, he felt good about sales last June when the company filed for an IPO, claiming $20.3 million in total revenue in the first quarter of the year. He says Egenera has yet to go public, because the market went soft soon after it filed. But Dutkowsky says the company is profitable and ready to go public when market conditions improved.

“The work is all done,” he says. “We’re technically ready to go.”

— Dave Raffo, Senior Editor, Byte and Switch0