Executive Viewpoint: Dave McCrory, Hyper9

By Dave McCrory
published: Wednesday, December 03 2008

Virtualization Industry and the Economy

Due to the tight economic conditions, we'll see companies of all sizes cut costs through 2009. In the IT department, administrators will be charged to do more with the technologies and resources they have in place. This is similar to the environment early in the decade when the tech bubble burst and VMware first emerged. They gained significant market share by focusing on the value of consolidation. We are at an advantage in the virtualization industry since virtualizing servers and desktops presents administrators with a way to decrease spending on expensive hardware and software. That said, I'd expect the industry to continue to grow, but we will see some significant shifts.

• Expect a buyer's market as hypervisors are available for less:  We're seeing price drops on everything from gasoline to housing prices - so why should IT be any different? While VMware will continue to own the high end of the market, there will be more, lower priced options, such as Xen and VMware's ESXi, which can be downloaded for free, and Microsoft Hyper-V, which is bundled along with Windows Server. The result will be downward pricing pressure on all hypervisor vendors.

• Hardware advances will enable IT to pack more VMs on fewer physical machines;

• More virtual appliances, which are less expensive to implement and easier to deploy and use;

• Automation will enable organizations to do more with the same resources. Look to both VMware with VI4 and Microsoft with SCVMM 2008 to push the envelope in managing automation. While virtual machine (VM) provisioning is mature, the next step will be reining in all those VMs by creating processes around the unbridled creation of VMs. 

• Cloud-based services will drive virtualization adoption. Organizations will turn to cloud providers, such as Amazon's EC2 to outsource development of specific applications before deploying the applications in house.

• High Availability and Disaster Recovery will also drive consolidation.  Organizations will adopt virtualization as a way to consolidate physical machines onto VMs to be better prepared for disaster at a lower cost than deploying dedicated hardware.

• Cloud computing offers a significant cost advantage, but companies will remain protective of their data: Cloud computing has the potential to revolutionize the way companies leverage resources on the Web. However, it is going to be a long time before you see a large organization allow a cloud computing company to handle confidential information, especially since those organizations have the resources to store and secure data in-house. However, smaller companies will be willing to take more risk in moving data and applications to the cloud, since the price is right. Most cloud applications still lag in terms of features and functionality, but with a few improvements, they could give traditional applications a run for the money.

• VDI won't take off without demonstrating value and ROI: While there have been a few large-scale virtual desktop infrastructure (VDI) implementations, adoption is far from widespread. There are clear advantages to VDI, but vendors need to define the value proposition especially in environments with existing investment in desktop hardware and management tools. Sever virtualization erupted when it offered a solution to the problems of space and power in the data center. VDI needs the same type of catalyst.

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