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Interview with Steve Kiser and Paul Sexauer, Sychron

This morning's interview is with Austin-based Sychron (www.sychron.com), which is developing software for the desktop virtualization market. We spoke with Steve Kiser, President and CEO of the firm, along with Paul Sexauer, the company's Senior Vice President of Sales and Marketing, to learn more about what the firm is doing, and to learn more about the desktop virtualization world.

For the readers who aren't familiar with Sychron, what is your product, and what is it used for?

Steve Kiser: There is a movement toward virtual desktops, which is an extension of the server virtualization world. There is the client side and the server side, and our focus is on the server side. From the time you get on a URL, or a thin client, or a browser, and type in your password, we're responsible for making sure you have a desktop experience that is the same from the PC to the laptop, but from a central environment. That environment is associated with centralized management, lower cost, and the flexibility to add applications quickly. Every time someone logs on, they get a brand new, pristine desktop, with all of the current updates, which from a CIO's perspective makes data more secure.

Paul Sexauer: There's a convergence in the advancement of virtual hypervisors, high performance network bandwidth, and the advanced capabilities of server offerings from manufacturers. That has enabled server-based desktop computing, which is not just preserving but also enhancing the user experience at the desktop.

Is this similar to, and does this compete with things like Citrix XenDesktop?

Steve Kiser: Our product OnDemand Desktop competes with VMware and their View product, and Citrix XenDesktop. There are lots of little players, but at the enterprise level those are the people we compete with.

How does this relate to virtual server products like VMware and XenServer?

Steve Kiser: We leverage the leading hypervisor technologies, from VMware ESX to Microsoft Hyper-V, and allow customers of ours to use one of those standard hypervisors. We provide the brokering and management of virtual desktops. That's one of the key benefits of our solution, the heterogeneity and support for a variety of hypervisors.

What's the story behind how the company came about?

Steve Kiser: We're privately held, with two primary investors. We acquired technology that came out of the grid computing world eight to ten years ago, and were looking to see how we could take advantage of the end user computing cycles--kind of what the cloud is now. We had the vision, back in 2006, that the market for virtualization would evolve to where virtual desktops were a bigger market, and where managing virtual machines would be based on the desktop, instead of servers. We felt that was the bigger problem, and tougher to solve, and would lend itself to the technology we'd acquired out of the grid computing space. We delivered our first product OnDemand Desktop in Q2 of 2007, and very quickly had Dell Outsourcing select the product for a pilot project at a major healthcare chain in Austin. That pilot was successful, and in February of 2008, we began deploying across hospital systems. We have about a 2,000 seat capability now, and the current investors continue to fund it. The market is just starting to explode, and we think it's time to add resources and go after the market. We're seeing large deployments, a great deal of interest, and we're able to successfully compete with VMware and Citrix.

From your viewpoint, I'm sure you watch the hypervisor market closely. What do you make of who is winning that race--is it still VMware, or are folks like Microsoft and Citrix catching up?

Paul Sexauer: True, it's a three horse race, relative to the hypervisor itself. VMware certainly has the largest market share, compared with Microsoft or Citrix. In the virtual desktop subsection, VMware has its own offering for VDI brokering and management. Citrix also has its own, but Microsoft does not have its own broker manager in its solution offerings. What we're seeing evolve is less emphasis on the actual hypervisor technology itself, and instead, adding feature sets to the hypervisors. Most of the emphasis in development and marketing is managing those environments, especially as server virtualization initiatives continue to grow. The other, the area of desktop virtualization, is where you're seeing an extension of the initial thrust and adoption of virtualization technology. As virtualization proliferates and deployment increases, management becomes even more important.

Steve Kiser: Standing with what Paul said, the latest numbers say only 17-18 percent of the market is virtualization. In terms of dominant players, it was clear that this year, when Microsoft announced it had acquired Hyper-V, and Virtual Iron was acquired by Oracle, that bets are still off. We see multiple hardware vendors, multiple hypervisor vendors, and the challenge being that people want a single pane of glass, and a single management console. It's going to be a mixed environment--you don't know if the desktop will be from a VMware hypervisor or from Virtual Iron, and you need your automation to work across platforms. I think it will be awhile before a clear winner happens. Certainly, VMware is in the lead, but there are so many players in the hypervisor space, the battle will be more about who runs and manages those environments, not the low level, operating code.

Can you talk about your investors?

Paul Sexauer: Our investors were formerly investors in the grid computing world. One is an Austin business man in commercial real estate and oil and gas, and who has also invested in technology. Our other investment partner is a dual British/US citizen, one of the early U.S. ventures guys years and years ago, and had invested in a number of high tech things. They've kept this investment between the two of them, although we've now reached the state where we need to get to another level of funding to take advantage of the explosive market. They're continuing to invest, although we're actively looking for an A plus round, because we want to expand in the market, and take advantage of our success and growth of our pipeline through our channel partners.

Finally, how big is the firm, and how many people are in Austin?

Steve Kiser: Paul is in Chicago, and the technology was originally developed in oxford and the UK. Our QA Assurance group is in the UK, with the rest of the resources in Austin. We're about 20 equivalent heads between full time, consultants, and 1099's. We'll do about $1.3M over this year, although we really haven't focused on revenue--we're focused on setting up partners and reference accounts, and building strong relationships with Symantec, Dell, and one of the top 5 outsourcers globally. We're now finding business through our channels, expanding to meet their requirements, and to support them and sell with them.

Thanks!