Virtual Markets

I do love playing technology markets.  At times picking future technology survivors and corpses requires less brainpower than ever seeped from Paris Hilton’s alleged mind.

But right now, I wouldn’t handicap the virtualization market on a plugged nickel bet.  In this week alone, there has been enough news and intrigue to rattle Robert Hanssen’s cage.

First came word that Intel, and Microsoft’s bride Novell, had concocted a way to virtualized Windows Server on top of Xen.  Between them they developed some drivers that bridged Xen’s modus operandi to present it as real, live hardware to Windows.  In previous announcements Microsoft made it painfully clear that they were positioning their Virtual Server as being reluctantly tolerate of a guest Linux OS, but not for Windows to be a guest under anything else.

Apparently Microsoft relented, for they and Novell announced that Windows would eventually become paravirtualized on top of Xen.  This requires modification of Windows itself, showing that Microsoft has bowed to certain market inevitabilities. I say this because Microsoft never cheapens their recurrent "we control everything" stance until the market slaps them up side the corporate head.

All this is happening as VirtualIron dumps some Open Source alternatives into the mix to keep up with Xen Source, and VMWare starts to exit the hypervisor market while seeking an IPO.

So who, if anyone, will win at this game?  I can’t say.  But some things are becoming obvious:

1) Virtualization — at least the hypervisor part — is becoming commoditized, and will likely have Xen as its core.  It is not unthinkable that due to  Novell connections that Microsoft may well sell a Xen-based virtualization package in the future … one tuned to support Windows,
naturally.

2) With commoditization, most virtualization vendors will exit the hypervisor market, switching their attention to virtual machine management suites.  Insiders tell me that VMWare is doing this as a strategic directions, and VirtualIron has done so already.

3) The real winners are not the virtualization companies — they will fight one another for differentiation, that will become less and less available over time.  Companies that offer other products that can be optimized for dynamic and virtualized environments will thrive.  These include DBMS, systems administration, network monitoring, and identity management.  These product groups have untapped opportunities with customers who have densely virtualized servers.

Strap in boys and girls.  This will be a wild ride.


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