Brains Behind Browsers on Web 2.0 Horowitz on the Value of Opsware Clint Boulton
Q: You also discussed how this will mean more virtual servers for Opsware to manage, but does Opsware fear push-back from IT guys who don't want to pay for management of each operating system instance on a machine?
Ben Horowitz
Horowitz: Well, [the IT manager's] cost is driven by how many operating systems he's running. So how many versions of Windows do you need patched is what his cost is based on, so it's pretty natural for us to price against that.
The value of Opsware is how many fewer operations you have to do on, for example, Windows. So how do you measure that? And whether there are six instances on a virtual machine or six on six different physical machines doesn't really figure into the customer's mind in terms of the pricing. Our customers have been pretty comfortable with us pricing on a per virtual
instance basis.
Q: Is Web 2.0, with all of its mashups and wikis, driving this application explosion?
Andreessen: Perfect examples. Wikis, mashups, mapping applications. There's the new generation of all of these video-sharing sites. These new generation of startups doing video editing as a Web service. Doing the equivalent of Adobe Premiere or Final Cut Pro but doing it in a Web site. All of this social networking is generating content.
These are all applications that, speaking as someone who was in the dot-com bubble, that were not economically feasible to do in 1997. You had to buy huge expensive Sun servers with Oracle databases and EMC storage. They are economical now with Intel or AMD multi-core CPUs running virtualization software, running Linux. It's a great example of elasticity; these ideas are taking off in huge volume that have become economical to do.
Q: What's the value in buying the run-book automation provider iConclude?
Horowitz: Run-book is the first application of process automation. The run book is the set of processes the networks follow when something goes wrong. Something comes in from the network operations center and you've got to react to it. So, different things that happen if you're rolling out a new application. You've got a security vulnerability alert or you're making some kind of performance change. All of these are processes throughout IT that require coordination among networks, servers and storage.
Iconclude automates those tasks, coordinating the IT people with the software and coordinating the software with the other software in the environment. From a business standpoint, we can tell customers they can go from this horrible manual way of doing things to this great automated way of doing things.
Q: How has last year's reseller deal with Cisco helped Opsware hit the $100 million revenue mark?
Horowitz: It is early days so I don't want to overstate the deal with Cisco. To have the ultimate endorsement from a company that is probably the most important company to the datacenter in the world... they're in every account that we're in. For them to say, "If you're going to automate things on our networks, you need to use Opsware's software," is just huge in terms of the perception of our company.
In terms of them actually selling our product, they had initial sales in Q3 and sold about eight times that in Q4, so they're starting to ramp. We would expect that next year they will be a significant contributor.
Q: Cisco is obviously an aggressively acquisitive company. Has it made any such overture to Opsware?
Horowitz: We don't comment much on M&A just cause we have to update those comments and that's not a good thing to do. Right now we think the market is really going good and we are on the acquiring side and continue to see a lot of opportunity.
