Tiny XenSource doubles customers, battles VMWare

By Jim Finkle

BOSTON, June 29 (Reuters) - XenSource Inc., a tiny rival to the VMWare software business that EMC Corp. (EMC.N: Quote, Profile, Research, Stock Buzz) plans to take public, has doubled its customer base over the past three months and expects further strong growth, its vice-president said on Friday, though the client list still only numbers about 500.

Privately held XenSource started selling its Windows-based software at the end of last year, taking on VMWare, one of the fastest-growing companies in Silicon Valley, whose sales have doubled on a year-on-year basis in recent quarters.

Both XenSource and VMWare sell so-called virtualization software, which boosts the efficiency of business computers by harnessing processing power that would otherwise go unused.

Customers save money because the software reduces the number of computers needed to run data centers.

EMC is preparing to take VMWare public in what analyst say could be one of the hottest IPOs of the year.

XenSource Vice President John Bara said the startup expects to have between 1,000 and 1,500 customers by the end of the year.

XenSource, founded in December 2004, is now getting ready to roll out a new version of its flagship product in August.

While its current software lacks key features in VMWare's main products, the new version will narrow the technology gap between the two, Bara said.