Virtualisation taking on the ‘mega vendors‘

Virtualisation is being touted as the hottest trend in IT to occur in recent years, with analysts, vendors and resellers tipping it will continue to push
the envelope.

“Virtualisation will be the most impactful trend in infrastructure and operations through 2010,” said IT researcher Gartner.

Virtualisation has changed just about everything in the IT portfolio. It affects what products are being bought, how they are bought and how they are implemented.

This year, five key trends will completely change how users choose, deploy and manage x86 server virtualisation technologies.

Phil Sargeant, Gartner’s managing vice president technical and service provider storage research, said that virtualisation has reduced the global x86 server market revenue by four percent in 2006.

“More than four million virtual machines will be installed on x86 servers by 2009,” Sargeant said.

“The number of virtualised PCs is expected to grow from less than five million in 2007 to 660 million by 2011 as many more organisations look for virtualisation to deliver them cost savings.”

According to the researcher, virtualisation software from VMware now offers serious competition to “mega vendors” Microsoft, Oracle and Sun Microsystems.

Prices are dropping fast, changing the return on investment (ROI) equation and putting pressure on vendors to adjust.

The value proposition is shifting to management tools, and the market for virtualisation management tools is
becoming crowded.

The virtual machine is becoming an application platform and has created an entirely new method of software packaging, delivery and management – leading to software as a service.

“Virtualisation is really the catch all for lots of things divorcing physical underlying technology, such as the server network not dependent on underlying technology. It can be flexible because it is not tied to underlying hardware,” Sargeant said.

“Once you have got a virtualisation layer you can run on a lot of different applications and not be tied to underlying technology.”

He said that where previously IT departments would purchase one server for one application, with the use of systems such as VMWare a multiple number of virtual machines and applications can be run and utilise more than 80 percent of the sever workload instead of what in the past would be around only 20 percent.

“The big advantage is that you are not tied to underlying hardware and can move workloads around to other servers,” he said. “You can create additional capacity while implementing cost savings from reduced physical hardware and energy.”

Sargeant said the next steps in server virtualisation are in moving beyond cost savings to achieve better agility.

He said Australia has quickly embraced server virtualisation compared to other countries in the Asia Pacific region and is now set to develop the next step in virtualisation – the desktop.

“A lot of people are looking at desktop virtualisation – not so much as cost savings – but to offer users greater flexibility and the facility to operate multiple application,” Sargeant said.

“This virtual desktop infrastructure will typically be looked at by those who can understand what is being offered to them and can recognise the advantages to implementing it into desktop.”

Sargeant said there are new opportunities for the channels in the SMB market.

“SMBs are probably only starting to evaluate what advantages are likely to be afforded to them. They must see a demonstrated case of ‘what it can do for me?’ and what can it save me?’”

“They might have never used any virtualisation in the past and have to be convinced by a compelling reason to do so.”

David Blackman, director of VMware’s Partner Organisation, said virtualisation is undoubtedly the hottest trend in IT.

“In Australia, at all levels of business – private and public – we are seeing very high penetration levels of a virtualisation technology because it ticks all the right boxes – reduced costs and greater operational efficiencies to realise budgetary efficiencies, as well as the all pervasive ‘Green issues,’” he said.

Blackman said for the channel in Australia, virtualisation gives resellers “a license to hunt”.

“Once an infrastructure is standardised on VMware, there is up to a 10:1 drag from licenses on ongoing support and service opportunities, and this is the space the Australian channel should be targeting for continuing revenue streams.”

Blackman said the reason for the hype in the technology is that it fundamentally delivers cost saving on hardware deployment.

“It is really about the server platform utilising the entire hardware – that is every byte and piece of RAM.

“Typically in the past, servers were only five to 10 percent utilised just running programs such as Windows.

“We take all that excess capacity and utilise it so you can run 10 or 50 machines off one server.”

While the technology has been around for many years with mainframes from vendors such as IBM, the current Intel server environment allows for a virtualised system to operate at a much cheaper rate with increased power and easier management.

The next big opportunity for virtualisation according to Blackman is in the small to medium business space (SMBs) and in desktop virtualisation.

“IDC says only 25 percent of SMBs have virtualised, which means 75 percent have done nothing,” Blackman said. “A lot of resellers might think big partners have taken the lion’s share but there are plenty of greenfields customers and there is also plenty of continuing business with existing customers.
“The next virtualisation tsunami will be the desktop around concepts of the thin-clients as a basic network centre. If you think of a typical office with desktops on all day but only using applications such as Word or Excel you can offer seamless end-user experience as a desktop.

“This is finally happening as the cost of storage and server technology gets cheaper.

“For resellers we say that the fundamental implementation is not that complex and customers are prepared to pay for this useful knowledge.

“At a starting amount of as little as $10,000 virtualisation offers a compelling argument with less carbon emissions, less hardware and cheaper to run and this is the way the world is going.”

Dr Kevin McIsaac, analyst with Intelligent Business Research Services (IBRS), backs Blackman, saying that riding on the coat tails of server virtualisation, virtual desktops have become one of the hottest infrastructure topics of 2008.

He describes a virtual desktop as a type of thin desktop where independent desktop environments (operating system and application) are executed on a shared server, with each desktop environment running in its own virtual machine (such as VMware, Xen or VirtualPC).

McIsaac said that discussions about virtual desktops are often clouded by misinformation and unrealistic expectations that obscure the issues and stifle investigation.

“Too often the stated benefits are not closely examined because the answers seem self-evident. Desktop managers who fail to carefully examine each of the stated benefits may find themselves swept away by the hype and end up with an even more expensive and complex desktop environment,” he said.

However, McIsaac said potential problems from a channel perspective associated with virtualisation include the possibility of cannibalising their own sales of hardware.

“Like most things there is a limited margin to be made reselling the product,” McIsaac said. “If selling virtualisation to consolidate multiple workloads on a single machine, the hardware sales will decline and in fact they have been flat the last couple of years,” he said.

“The future for the VAR in all this is to focus on making money up on services.

They should be looking at planning and what can and can’t be virtualised and implementing programs in the IT budget such as disaster recovery.”

Mark Nielsen, storage works product marketing manager at Hewlett-Packard, said there has been a lot of talk about virtualisation from a server perspective but what is really taking off in the market is the storage perspective and delivering in mid-range arrays.

“Virtualisation is not new but it has taken some time to enunciate the benefits of the technology and we are now looking at how can it reduce complexity in environment and simplify management of data and effectively reduce management,” Nielsen said.

“But what resellers need to do now is have a higher level of conversation with customers and linking storage and server environments. What it allows is for our resellers to have much more strategic discussion with customers,” he said.

Nielsen said that the future trend for virtualisation technology is in automating more of an application layer and being able to provide additional capacity for customers.

“There is much more of a link between storage and server and we are now seeing greater automation. This allows resellers to talk to customers at a much more strategic level,” he said.

“We are going to continue to provide the link through virtual and storage applications that offer more automated management and the ability for us to move workloads in the server environment in automated level.

“We will continue to deliver growth in virtualisation array and help customers to be more aware of what they can do in SMB space offering them more agility.”
Ed Havlik, country manager for Australia and New Zealand at Avocent, said many are jumping on the virtualisation bandwagon.

“VMware is the hottest thing in Australia with 60 percent of Asia Pacific licences for VMware held in Australia,” Havlik said.

“Virtualisation goes back to the old days of mainframes in the US and the success from virtualisation has been in that it allows for the use of a single server to maximise capability through VMware implementation.”

Havlik said that while the virtualisation market leader is VMware, competitors including Zen and Microsoft are making considerable inroads.

“While Microsoft has always been behind the curve on applications, I see in the future the software will become more dominant mostly because of Microsoft’s deep pockets and licensing capability,” he said.

“They are giving way to a shift in the market and Microsoft will end up, as in other markets, dominating the industry.”

Havlik agrees with his colleagues in that the next growth area for virtualisation is in desktops.

“The desktop issue is where a whole new growth area is beginning to appear. To me the word is that we are in the early stages of a potential where the sky is the limit for doing more with less whether it is desktop or server,” he said.

Steve Kelly, channel director Australia and New Zealand, Hitachi Data Systems, said storage is a significant market for virtualisation applications.

He said the continued need for higher-capacity networked storage creates demand for storage virtualisation as enterprise data centres work to leverage existing assets, reduce costs, and simplify storage management.

“Many partners providing server virtualisation are also finding that their clients are needing storage virtualisation infrastructure,” Kelly said.

“But it is not new. For many years we have been offering systems such as IBM mainframes in a big box down to little boxes in economies of scale but we are now seeing virtualisation shift into the mainstream.

“Virtualisation storage might mean you have one or two SANs and a variety of applications that vendors want to bring all together to use for storage as a whole,” he said.

“The cool thing is that you can build new storage and migrate applications seamlessly between blades and offer storage online according to demand.”

In terms of the channel going forward, Kelly said they should look at more value- added services.

“They should be moving towards offering managed services – not just equipment – but conversation about me as business partner or as a reseller of storage on demand.”

Kelly said partners should be offering storage economics. For instance, on how to consolidate storage and customise storage managed services.

He said the biggest trend in storage is with the massive increase in disk space required to accommodate the exponential growth in unstructured data expected between 2008 and 2015.

The reseller must be able to talk around intelligence in storage array and how they can differentiate around smart infrastructure.

“We can provide this and act as a tipping point so partners can offer value-added smarts,” Kelly said.

“Organisations are aggressively moving forward to make their IT dynamic by introducing virtualisation to their server, storage, application and desktop environments,” he said.