However, as a warmup, another flash company, Violin Memory, announced today that it has closed a $40 million Series C round of funding at an implied valuation of $440 million. Violin, based in Mountain View, Calif., is run, oddly enough, by Don Basile, a former chairman and CEO of Fusion-io. Obviously, he will be watching that company’s opening days of trading with significant interest, presumably because he still has some equity in it, but also because of the implications for his new company, which he’d like to take public as well.

Where Fusion-io sells flash-based cards that make servers run faster–Facebook and Apple buy them for use in the servers running inside their data centers and between them constitute about 70 percent of its revenue–Violin sells flash-based memory arrays that are intended to replace the hard disk-based memory arrays that make enterprise applications run faster. Violin’s arrays come in a range of sizes from tens of terabytes up to hundreds of petabytes, and are said to significantly speed up Oracle and other databases by a factor ranging from 10 to 100 depending on the situation.

HP has set speed records running Microsoft’s SQL Server using Violin arrays, Basile told me. Not only does it speed them up, but the Violin arrays eliminate 80 percent of the required hardware footprint and reduce the necessary power by 90 percent, cutting back on operational costs. Hewlett-Packard resells Violin arrays, and AOL is a big customer, Basile told me.

Violin hasn’t been raising money via the traditional venture capital route. Its investors have included Toshiba, the Japanese electronics concern that happens to be a big manufacturer of flash memory chips used in the arrays, and Juniper Networks. It has also taken money from large funds that dabble in private investments, and from several wealthy individuals, among them Atiq Raza, the former number two at Advanced Micro Devices, Arjun Gupta, the founder of TeleSoft Partners, and venture capitalist Dixon Doll. Basile has taken investments from nine such individuals, and these are only three that he named. He also stressed that they are personal investments.

Violin raised $35 million earlier this year in a Series B, and raised $10 million in a series A last year. In addition, the company has $140 million in combined debt and credit, giving it a combined $180 million to fund its operations and growth for the foreseeable future. The company expects to do more than $100 million in revenue this year.

Still, Basile would like to go public, and will be watching the IPO both of Fusion-io and of Groupon to see how the market reacts to them. If they react well, he says he plans to hire bankers by the end of the summer. “I don’t have a compelling reason yet, but if the markets react favorably it would be in our interest to look at the public option very seriously,” he said.

Meanwhile, Fusion-io will debut under the trading symbol FIO on Thursday. You can expect CEO David Flynn to make the rounds with a series of interviews tomorrow on CNBC and elsewhere. When last heard from, the company said in an updated S1 filing with the U.S. Securities and Exchange Commission that it expected to price in the range of $13 to $15$16 to $18 a share, in order to raise $185 million. A price in that range would value the Utah-based company north of $1 billion $1.4 billion (see today’s latest updated S1 filing here). It is one of two companies set to go public on Thursday, the other being Taomee Holdings, a China-based company that produces media for children.

As Dow Jones Newswires noted yesterday, Fusion-io’s debut is coming against the backdrop of a market that has been declining in recent weeks, giving it a certain headwind. And there’s already been plenty of criticism of Fusion-io’s prospects. As noted, two customers, Facebook and Apple, account for about 70 percent of revenue, while 10 customers account for more than 91 percent of revenue. (The Wall Street Journal commented on this in March.) As risks go, a concentrated set of customers is a classic one. If one or two suddenly stop buying–a fair risk when you consider that Facebook and Apple will soon complete construction of their respective data centers–then sales can drop just as suddenly. Investors like seeing a large, diverse customer base.

I asked Basile about that and whether the same long-term risk applies to Violin. “It is a legitimate risk,” he says. Violin doesn’t have the same kind of concentration. While AOL is a big customer, he says, Violin has no significant customer who accounts for more than 50 percent of sales. Its revenue splits roughly even, with about half of its sales coming from “channel” customers who build Violin’s memory arrays into their own products, while the other half buy Violin products directly to integrate with systems they’ve purchased from other vendors.

Then he pointed to language in Fusion-io’s S1 filing as a way of making a point about the wider prospects for flash memory use in the data center. Yes, Fusion-io has a handful of big customers, but it also has more than 1,500 end-customers. Among those are customers of Hewlett-Packard, IBM, Dell and Supermicro, who all sell Fusion-io’s cards as an option on their own servers. Among them they sell about 9 million servers a year, and if you do the math, he says the current run rate reveals that 12,000 of those servers have flash cards from Fusion-io. “That leaves a lot of room for growth.” Room enough for both companies, he said.

Dubbed LizaMoon after the Web site where some users are in some cases redirected, the attack was first documented by the security research firm Websense. The hack seeks to trick Web users into believing that their computer has been compromised by viruses and prompts them to download fake security software that itself causes further problems. Among the sites serving up the links to the fake software sites are some belonging to Apple and used on its iTunes store, though Apple is said to have cleaned up the affected code on its site.

Websense says that so far it appears that sites using Microsoft SQL Server 2003 and 2005 are at risk, though as yet SQL Server 2008 doesn’t appear to be affected. No word yet from Microsoft about any of this, though I’ve asked them for a comment.

Update at 4:25 pm PDT: I just got this statement from Microsoft:

“Microsoft is aware of reports of an ongoing SQL injection attack. Our investigation has determined these sites were exploited using a vulnerability in certain third-party content management systems. This is not a Microsoft vulnerability.” I did not, however, get a hint as to the identity of the “third-party content management system.”

SQL injection attacks take place when malicious code–essentially commands to a Web server to do things it’s not supposed to do–are inserted into routine queries of a Web site’s database. A basic way to carry out these attacks is to add extra commands into the URL bar of a browser when visiting a vulnerable Web site. It’s not entirely clear exactly how this series of attacks has been carried out.

I talked with Josh Shaul, CTO of Application Security, Inc., a database security vendor that specializes in researching attacks on databases. “It’s a very new take on a very old type of attack,” Shaul said. “SQL injection has been the primary way that databases have been attacked for years. What’s different here is that people are putting the code that runs their Web sites in the database itself. And that’s what’s so troubling. Effectively you’ve exposed your code to an attacker so they can go modify it.”

Attackers found hundreds of thousands of sites that use a single user account to query their databases for all visitors, Shaul said. “The databases are clearly configured in an insecure way,” he said. “That’s what it all comes down to. Why is it that the log-in to use the database has the right to modify the code for the Web site itself? That makes no sense at all.”

In this case, the attackers took advantage of the weakness to insert a script that creates a pop-up that sends a site’s visitors to another site that looks like a legitimate place to download new Microsoft security software. That makes the attack on the Web sites themselves just a means to an end–the end being tricking innocent Web users into clicking on a series of links and paying to download fake security software.

Websense produced a video demonstrating what happens. The short lesson is this: If you see a pop-up that tells you you’ve got a virus or that your computer is compromised by a bunch of security issues, don’t click any of the links in it; it’s probably not legit.

Today’s the day we all find out. The two are showing the first fruits of their combined quarter billion dollars worth of labor. The pair announced they have built four enterprise-focused appliances that they say will combine applications, infrastructure and productivity tools into a single unified system. The first half of this quartet is being announced today, with more to follow.

One is the HP Business Decision Appliance, which is intended to run business intelligence applications. The appliance, they say, greatly reduces the time and effort for companies to deploy and manage business intelligence, which is a fancy way of saying you’re analyzing the data from the operation of your business, and looking for patterns or trends that might not otherwise be apparent. It’s optimized to run for Microsoft’s SQL server database software and its SharePoint collboration software, and takes less than an hour to install, they promise.

The second is the HP Business Data Warehouse Appliance, a data store designed for small- and mid-size companies that they say delivers performance that’s suitable for a big enterprise, but doesn’t require an administrator to run it. It’s a smaller version of the HP Enterprise Data Warehouse Appliance, which the two first previewed in November and is available now.

Next up is a messaging appliance geared toward making it easy to install Microsoft Exchange 2010, the server piece of Outlook, Microsoft’s all-purpose email, calendar and contact software that’s so widely used in companies around the world. Its formal name is the HP E5000 Messaging System for Microsoft Exchange Server 2010, and the two companies say it’s the industry’s first self-contained server for enterprise-class messaging that can be deployed in only a few hours. It comes pre-configured and with “best practices” designed in. The mailboxes are large, centrally archived and available to any device. It will be available in March.

What’s after that? HP and Microsoft are also working on something they call the HP Database Consolidation Appliance, which can bring hundreds of databases into a single appliance. This one will run SQL server and Microsoft’s Hyper-V Cloud.

It’s all about making IT projects easy to deploy, says Mark Potter, HP’s senior vice president and general manager for industry standard servers and software. “It can take anywhere from one to 18 months to roll out a sophisticated service to end users,” Potter told me in an interview yesterday. “About 32 percent of all IT projects are rated a success. It takes our customers a lot of time, planning and risk. We’re trying to bring a solution to the market that does for business applications what Microsoft Office did for desktop productivity.”

Why spend so much to team up? Microsoft and HP think that by 2015 there’s a combined market worth $55 billion for business intelligence, data warehousing, messaging and online transactions, making that quarter billion potentially worth it. Now they just have to prove these appliances can sell.

Here is the full memo Microsoft CEO Steve Ballmer sent out to the troops about the big changes in its organization, including the departure of Platforms and Services Division President Kevin Johnson, in which he addresses Apple, Yahoo, Google and more:

From: Steve Ballmer
Sent: Wednesday, July 23, 2008 4:30 PM
To: Microsoft–All Employees
Subject: FY09 Strategic Update

I also have news about an organizational change and a transition in our Senior Leadership Team.

First, I want to thank you for your hard work and the dedication you showed during the past 12 months. FY08 was a milestone year. Our revenue jumped $9.3 billion to more than $60 billion. Operating profit grew 21 percent to $22.5 billion.

These outstanding numbers are the direct result of your commitment to the priorities I outlined last July. A lot has happened since then, but our fundamental strengths, challenges, and strategic goals remain largely the same. Therefore, my priorities are consistent with last year. In FY09 we must continue to:

1. Invest in the right opportunities;

2. Expand our presence with Windows, Office, and developers;

3. Drive end user excitement for our products;

4. Embrace software plus services; and

5. Focus on employee excellence.

By focusing on these five areas, we can continue to grow revenue, increase profit, and expand our market share. These priorities are also critical as we work to address key issues surrounding our business in the coming year:

· Windows: The success of Windows is our number one job. With SP1 and the work we’ve done with PC manufacturers and our software ecosystem, we’ve addressed device and application compatibility issues in Windows Vista. Now it’s time to tell our story. In the weeks ahead, we’ll launch a campaign to address any lingering doubts our customers may have about Windows Vista. And later this year, you’ll see a more comprehensive effort to redefine the meaning and value of Windows for our customers.

We also have to drive developers to create rich applications for Windows. With Internet Explorer and Silverlight, we have great tools for creating applications that run everywhere. But we also need to make sure developers have the .NET skills to write unique Windows applications using Windows Presentation Foundation. To keep today’s Windows applications alive, vibrant, and exciting, we need both—applications that run everywhere and rich client applications.

· Apple: In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We’ll do the same with phones—providing choice as we work to create great end-to-end experiences.

· Business and enterprise: Our enterprise and server business has never been stronger—today we are on the verge of becoming the number one enterprise software company. We need to continue to push on all fronts—mail with Exchange, business intelligence with PerformancePoint, virtualization with Hyper-V, and databases with SQL Server. We have to drive our enterprise search capabilities, our unified communications solutions, and our collaboration technologies. And we must continue to compete against Linux in key workloads such as Web servers and high performance computing.

· Software plus services: Some people think software plus services is all about search. But it’s really about changing the way software is written and deployed. The future is about having a platform in the cloud and delivering applications across PCs, phones, TVs, and other devices, at work and in the home. It’s also about driving change in business models through advertising, subscriptions, and online transactions. Software plus services is a huge opportunity for us to deliver new value on the desktop and the server to all of our customers. This year at PDC, you’ll hear more about our cloud platform initiatives and the next versions of our Live and Online technologies.

· Google: We continue to compete with Google on two fronts—in the enterprise, where we lead; and in search, where we trail. In search, our technology has come a long way in a very short time and it’s an area where we’ll continue to invest to be a market leader. Why? Because search is the key to unlocking the enormous market opportunities in advertising, and it is an area that is ripe for innovation. In the coming years, we’ll make progress against Google in search first by upping the ante in R&D through organic innovation and strategic acquisitions. Second, we will out-innovate Google in key areas—we’re already seeing this in our maps and news search. Third, we are going to reinvent the search category through user experience and business model innovation. We’ll introduce new approaches that move beyond a white page with 10 blue links to provide customers with a customized view of their world. This is a long-term battle for our company—and it’s one we’ll continue to fight with persistence and tenacity.

· Yahoo: Related to Google and our search strategy are the discussions we had with Yahoo. I want to emphasize the point I’ve been making all along—Yahoo was a tactic, not a strategy. We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo. We have the right people, we’ve made incredible progress in our technology, and we’ll continue to make smart investments that will enable us to build an industry-leading business.

As I mentioned earlier, I have important organizational news. Today we are announcing that the Platforms and Services Division will be split into two businesses: Windows/Windows Live and Online Services. We are also announcing that Kevin Johnson will leave the company. He will work to ensure a smooth transition.

Since 1992, Kevin has been a key contributor to many of this company’s most important achievements. As president of the Platforms and Services Division, Kevin has built an incredibly talented organization and laid the foundation for the future success of Windows and our Online Services Business. Over the last 16 years, through everything from his work as head of the company’s worldwide sales, marketing, and services efforts, to his leadership in transforming our field operations and repositioning the company to focus on opportunities in emerging markets, Kevin has played a vital role in this company’s success. There is no doubt that his passion and dedication will be missed.

Effective immediately, Steven Sinofsky, Jon DeVaan, and Bill Veghte will report directly to me to lead Windows/Windows Live. In the Online Services Business, we will create a new senior leadership position and conduct a search that will span internal and external candidates. In the meantime, Satya Nadella will continue to lead Microsoft’s search, ad platform, and MSN engineering efforts, and Brian McAndrews will continue to lead the Advertiser and Publisher Solutions Group. Both Windows/Windows Live and the Online Services Business are led by a strong group of executives on the technical and business side who have the talent and experience to address the challenges we face and drive the next generation of growth and success.

Looking ahead, I see an incredibly bright future for our company. As I said at the June 27th Town Hall for Bill, we are the best in the world at doing software and nobody should be confused about this. It doesn’t mean that we can’t improve, but nobody is better than we are. Nobody works harder than we do. Nobody is more tenacious than we are. We’re investing more broadly and more seriously than anybody else. Our opportunities to change the world have never been greater.

I look forward to working with all of you as we focus on our five priorities in FY09.

Steve