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Virtually Speaking: Waiting to Shift Gears

By Amy Newman (Send Email)
Posted Feb 5, 2008


Since IBM unveiled solutions designed to make virtualization attainable to the small fry last week, the virtual pipeline has slowed to a trickle. Perhaps that (or more likely the looming Microsoft-Yahoo deal) has rendered everyone speechless. Or maybe it's a Super Fat Tuesday Phenomenon — everyone is either voting or at Carnival?

Is a virtual lull a sign of a virtual shift?

Whatever the case, it's no doubt temporary. The calendar remains full, and despite the much-talked-about economic slowdown, nothing about virtualization appears to be slowing down any time soon.

The funding appears to be as fluid as enterprise interest. Last month, for example, Virtual Iron Software secured $20 million in new venture equity financing. The funding, provided at an increased valuation, is intended to be used to accelerate product development and expand global sales, marketing and distribution efforts. The investment brings Virtual Iron's total venture funding to $65 million

But perhaps a bigger shift is afoot. The slowness gives room to ponder what exactly is going on. For several years, virtualization has been described as an architectural shift. Now that some aspects of the technology have been commoditized, or close to it, the architectural shift is under way. But perhaps even more than an architectural shift, virtualization is facilitating other functionality. Cool as it is, virtualization itself doesn't actually do anything. It does, however, make it easier to accomplish many other things.

Virtualization also requires a ecosystem of its own, an ecosystem that must integrate itself with the goals and mission of the organization.

Several weeks ago, Virtually Speaking spoke with Justin Perreault, a general partner at Commonwealth Capital ventures, a venture capital firm that funds, among other endeavors, virtualization companies. Perreault said, "the virtualization wave is a big platform shift that is significant, if not more so, than any other platform shifts we've seen." It is akin to the shift from a mainframe-dominated server room to one that follows a client/server model and "it is totally revamping the computing stack."

He further said that, historically, such shifts have created opportunities at all levels.

In the case of virtualization, the real value add, and thus opportunities, are moving up the stack, Perreault said. He noted that although the hypervisor arena is "getting sealed up," the true opportunities are surfacing in management and other broad areas as well as adding capabilities for management and monitoring.

And therein lies a conundrum. Perreault said that although there are many options, VMware remains the "800-pound gorilla." However, he also noted that VMware, "is not moving quickly enough. A lot of companies are filling that footprint. VMware will need to move fast."

Perhaps the lull is more of a regrouping. Trade show season is gearing up, financial results are being announced, and alliances and products are being revealed. Now that enterprise (and SMB) interest has been piqued, perhaps its key selling point from the CTO to the CFO for virtualization won't be so much what it can accomplish, but the fact that it can facilitate green — both economically and environmentally — along with the enterprise's mission.

Amy Newman is the managing editor of ServerWatch. She has been covering virtualization since 2001.

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