RoudyBob.NET

I somewhat miss the days when virtualization was at the fringe of the market and just about everything that came along was new and exciting. Now, it’s a high-stakes game – with hundreds of millions (if not billions) of dollars of software and services to be had for the company that plays it right. Along with maturity comes incremental, conservative product releases aimed to grow cautiously while nurturing the existing customer base. Also involved now is the politics and strategy of mergers and acquisitions – not the typical fare for your standard geek. The more I thought about my last post, the more I realized what we’re seeing in the market today is a lot like the RISK game most of us played as a kid. Take for example, the game board:

Instead of vying for land masses, though, the likes of Microsoft, VMware, SWsoft, XENSource and other smaller players are trying to carve out their piece of the total virtualization pie. The company that claims the most territory (share of the market) wins. Sure, it’s probably a bit of an obvious analogy to make – but it does provide a little different perspective on things.

Let’s say for the sake of argument that the virtualization RISK map is laid out like this:

North America – Data Center Virtualization
South America - Development and Test
Africa - Virtual Infrastructure Management (a.k.a., utility computing)
Europe – Linux Virtualization
Asia – Virtualized Desktops
Australia / Pacific Rim – OS X Virtualization

Each time we observe the likes of Microsoft and VMware (EMC) opening the war chests to dole out large sums of money for smaller companies doing interesting things, the map shifts a little more in the favor of one or the other. New entrants also shake up the dynamics of the map.

Take the Microsoft acquisition of Softricity for example – having the ability to virtualize applications on the desktop would significantly advance Microsoft’s position in the Virtualized Desktops arena – a place that has seen little traction to date. Previously, VMware’s ACE product was really the only large player in that game. When VMware acquired Akimbi this month, they definitely made a further push in two areas they are already strong in – Development and Test as well as Virtual Infrastructure Management.

Continuing the RISK analogy, then, which players occupy the most territory and where should a company like Microsoft (amazingly the underdog, for once…) focus its efforts?

I think it’s safe to say that the North American continent, er, the Data Center Virtualization space is occupied in a big way by VMware. The fact that they were first to market with an enterprise-class virtualization product (ESX Server) made it easy to make headway in IT organizations who made the early move to virtualization. The ESX Server product is fairly well positioned to satisfy companies’ urge to consolidate and rationalize their physical servers onto virtual machines. Microsoft’s Virtual Server product, despite the company’s efforts, has made little progress in getting into these larger-scale virtual machine environments. Remember, though, that the first player to advance isn’t always the winner.

Development and Test is a different story. I think Microsoft has an amazing opportunity to leverage the Windows platform and its broad developer tools offering to really win this part of the market. And, if you want my opinion, that’s a much better strategy for going after Data Center Virtualization than trying to fight an uphill battle against ESX Server. A large presence in this space and some strategic offensive moves to the north (remember the analogy, right!?) could turn the tide away from VMware. Everyone is waiting with eager anticipation the release of the Windows-based hypervisor due sometime after “Longhorn”. But in a year and a half – the market will have likely left Microsoft behind. I think it’s a very large bet on their part that will most likely not pay off.

Virtual Infrastructure Management is where all of the major players (and other folks like Altiris, BMC, Acronis, etc.) seem to be focusing these days. And rightly so. Being able to manage a large virtualized infrastructure easily and bring the concept of “utility computing” to reality is a guaranteed way to differentiate yourself. Again, I think VMware has the early lead as its VMotion and VirtualCenter solutions have helped them to garner mindshare in this area. But, products like System Center Virtual Machine Manager, Systems Management Server and Operations Manager from Microsoft give that company at least a way to make inroads.

This is undoubtedly the biggest portion of the virtualization market (the greatest customer need) and would be the place where I would choose to play if I were an up-and-coming company that wanted to focus on the space. The reason management is so appealing is that there are all sorts of interesting problems to solve – management, monitoring, backup, restore, provisioning, auditing, asset management, etc. And for the most part, they’re problems that customers are willing to spend some money to address. Startups can grow quickly by providing something customers need and folks like VMware, Microsoft and SWsoft can easily differentiate themselves from one another by leveraging the management “story” around virtualization.

Linux Virtualization, analogous to the Europe of RISK, is where companies like SWsoft with their Virtuozzo product and XENSource with their Xen product have dominated. Sure, VMware Workstation and VMware Server both run on Linux and the ESX Server hypervisor is based on it. But, in terms of catering to the needs of the open source community and the requirements of large-scale hosting providers running Linux, the Virtuozzo and Xen products have the most traction. SWsoft used their Virtuozzo for Linux product as a foothold into the broader Windows market when it released Virtuozzo for Linux. And Xen is scrambling to provide Windows guest OS support based on the new virtualization support in the latest generation of Intel processors. Your starting position on the game board doesn’t dictate the outcome, just the strategy.

The biggest untapped market for virtualization has to be leveraging virtualization as part of the end user experience on the desktop. VMware’s ACE product was the first to focus on this, but no one company – even VMware – has seemed to get any traction. The potential opportunity for an interesting solution to problems like mobile workforce empowerment, workstation security, etc. is enormous. The shear numbers dictate that a successful solution could yield impressive financial returns.

Ironically, Microsoft is probably best positioned to do something in this space and hasn’t. There are plans for providing VirtualPC capabilities to enterprise Vista customers but in reality this is just more of the same. What if users could run their browser in a seamless window running as part of a background virtual machine that was isolated from the corporate network? What if the applications and user date for a workstation PC were somehow virtualized so that users could move easily between different pieces of hardware? These are some of the possibilities that Microsoft could start to address by leveraging its Windows monopoly on the desktop and the pervasiveness of centralized management solutions like Active Directory and Group Policy. And their “innovation” in this area is to bundle a couple of license together and calling it Virtual PC Express.

Lastly, there’s the OS X Virtualization market. In the game of RISK, completely occupying Australia is one way to gain an advantage early – leveraging the additional armies provided by controlling the entire continent. As far as virtualization is concerned, I don’t think owning the Mac market is going to yield any huge advantage in areas like Data Center Virtualization or Virtual Infrastructure Management. It’s still an interesting space – especially with the switch to Intel-based Macs. What was once dominated by Microsoft’s Virtual PC product is now up for grabs again with products like Parallels Workstation for OS X gobbling up earlier adopters who bought new intel-based machines and want to virtualize Windows. Apple may also have a play here as well if rumors are true that they are looking to integrate virtualization into the next version of the OS X operating system.