Virtualization: It's a Race Up the Stack

• By John K. Waters
• October 22, 2006

Analysts at IDC are reporting that the worldwide virtual machine market grew last year to $560 million—that's 67 percent growth over the year before (which saw 63 percent growth over the year before that).

Yeah, statistics annoy me too, but it's comforting to see that the numbers are validating market developments we've all been feeling in our bones. The only IT technology trend hotter than virtualization right now is Web 2.0. But Web Two vendors are just beginning to attract enterprise interest with serious software; virtualization is the must-have corporate IT capability of the moment.

Even without the numbers, Microsoft's recent moves in this market alone validate its importance. (Where goeth Microsoft…) Earlier this year, the Redmond software maker bought Softricity, a provider of app virtualization and streaming technologies. In July, it disclosed plans to begin working with open-source virtualization vendor XenSource. And its Virtual PC 2004 software is available now as a free download.

We're reporting this week on Microsoft's latest virtualization maneuver: The company has added its Virtual Hard Disk (VHD) technology to the list of license-free technologies covered by its Open Specification Promise (OSP). The VHD format, which was first introduced in May 2005, is a key element in Microsoft's virtualization product stack, industry analyst Neil Macehiter of Macehiter Ward-Dutton tells me. It's a significant move, but as my favorite British Microsoft watcher has said before, the real race in the virtualization space will take place on higher ground.

''Ultimately, the battleground in virtualization is going to be fought at a higher level—management, monitoring, optimization, resource allocation—rather than the core hypervisor or virtualization file formats,'' he says. ''Of course, he who defines the standard or gets their format adopted is very well positioned to exploit that opportunity; hence VHD and OSP.''

The VHD format allows the entire virtual machine operating system and the application stack to be captured in a single file. It's now used in the free Virtual PC 2004 and the Virtual Server 2005 products, and Microsoft says it will be used in the hypervisor layer provided by XenSource in the upcoming release of Windows Server ''Longhorn.''

So far, VMware appears unimpressed with Microsoft's recent elbow-throwing moves in the market the Palo Alto, CA-based subsidiary of EMC Corporation all but created just a few years ago. At a chalk talk for reporters, held in San Francisco last Friday, VMware's director of product management, Srinivas Krishnamurti, shrugged off the suggestion that the folks in Redmond are hot on his company's heels. VMware launched its own Virtual Machine Disk (VMDK) format into the open-source firmament earlier this year, and reportedly doesn't plan to adopt the VHD format.

''There's only so much value in what Microsoft is offering,'' Krishnamurti said. ''People are already looking beyond these basic ideas. First it was the data center: where I had six machines, now I have two, and it takes less power, and the heat is not so much of a problem. But once they begin to work with virtualization, people begin to see its real potential.''

As a means of distributing software, for example? Say, as a pre-built, pre-configured, ready-to-run application bundled with an operating system inside a virtual machine? In what you might call a ''virtual appliance''? (Can you guess the topic of the chalk talk?)

VMware bills its virtual appliance solution, which runs on any standard x86 desktop or server, as ''an evolutionary step in the software distribution model.'' The company has posted a directory on its website that lists more than 300 VMware-based virtual appliances, including about 30 commercial offerings from partners. VMware's list of virtual appliance partners includes Novell, Oracle, Ubuntu, BEA, SugarCRM, MySQL, Red Hat, and Zimbra, among others.

Zimbra, a San Mateo, CA-based provider of open-source server and client technology for enterprise messaging and collaboration, has used the VMware virtual appliance to offer both trial and production versions of its Zimbra Collaboration Suite. Zimbra's VP of marketing and product management, John Robb, was at the chalk talk. ''We created this virtual appliance and we put it up on the website, but we weren't too sure how many people would want it,'' he said. ''But it's been one of our top downloads--thousands a month of just that particular bundle.''

VMware is still miles ahead in this race; IDC estimates that the company owned more than 55 percent of the market in 2005. However, we're going into another lap, and Microsoft is starting to kick. Where is this race heading? According to John Humphreys, research director for IDC's Enterprise Computing group, right up the stack.

'The growth in the dynamic VMS [virtual machine software] market will continue as organizations increasingly deploy VMS as a means of decoupling the application stack from the underlying hardware,' Humphreys writes. 'While we believe VMS is a foundational technology to the creation of dynamic IT environments, the challenge going forward is to get users to integrate virtualization with legacy management tools and enhance management functionality to solve specific business issues.'