The Year Past, The Year Ahead in Virtualization

The virtualization momentum of 2011 will lead to some interesting trends in 2012, involving pricing, heterogeneity, and a company’s right to choose.

By Lynn LeBlanc, Founder and CEO, HotLink

It was a busy year for IT professionals in 2011. With major events across the virtualization ecosystem, IT leaders witnessed three key trends emerging to influence decisions inside the data center. These trends also drive my predictions for the next year.

2011 Trend #1: Server virtualization reached critical mass at 50 percent installed workloads

Once again, it was another year of tremendous growth for virtualization, permeating all levels of the data center. Gartner estimates there were more virtual machines deployed in the last 12 months than from 2001 through 2009 combined. Whether to virtualize a workload is no longer a question for IT organizations, even for the most demanding mission-critical applications. This growth dovetails with the rise of new applications and an increase in hardware technology, enabling even greater virtualization awareness and consolidation ratios.

Despite aggressive adoption to date, significant technical and financial barriers stand in the way of virtualizing the next 50 percent of server workloads. IT leaders must re-think their system management strategies for the next-generation environment as cloud computing, networking, storage, and economics intersect with virtualization.

2011 Trend #2: Hypervisors from Citrix and Microsoft gained momentum

As server virtualization deployments expanded and matured, a new wave of hypervisor vendors emerged as legitimate contenders, increasing IT choice and spawning further competition between VMware, Citrix, Red Hat, and Microsoft. Rising hypervisor market share by Citrix and Microsoft is being fueled by new deployment scenarios with strong business and technological affinity towards Citrix XenServer and Microsoft Hyper-V.

For example, Citrix’s success in desktop virtualization enables XenDesktop to serve as the gateway for XenServer adoption in the enterprise. As customers successfully run XenDesktop with XenServer, those same customers increasingly include XenServer in traditional server virtualization deployment plans. On the other hand, Microsoft provides particularly attractive business and licensing terms for enterprises deploying Microsoft applications and operating systems with Hyper-V. This combination of maturing hypervisor alternatives, application affinity, and basic economics are creating a rapid increase in the momentum of heterogeneous virtualized data centers.

2011 Trend #3: CIOs received a surprise wake-up call with new VMware pricing and packaging

This past August, every virtualization administrator eagerly awaited VMware releasing details about the latest generation of the flagship VMware vSphere product. Despite numerous, compelling new capabilities in VMware’s announcement, the Internet buzz was aggressively focused on the radical pricing shift to vRAM and the significant impact these changes would have on IT budgets. Overnight, IT leaders were forced to look hard at the economics of deploying vSphere in the future, and virtualization administrators struggled with proper vRAM forecasting to adequately plan for the number of licenses needed to deploy vSphere inside their environment.

The negative response was so dramatic that VMware quickly responded with another pricing modification. However, the damage was done. CIOs latent concerns about vendor lock-in moved into the forefront of 2012 expansion planning, particularly when VMware ELA renewals are on the horizon.

The radical and unexpected pricing change by VMware was a trigger now fueling technical evaluations and trials of Microsoft Hyper-V, Citrix XenServer, and Red Hat KVM. This event will have a lasting effect on the overall server virtualization landscape.

Predictions for the Year Ahead

Looking ahead to 2012, I predict that the adoption of Microsoft Hyper-V, Citrix XenServer, Red Hat KVM, and hybrid deployments with VMware vSphere will increase dramatically. CIOs will insist that their virtualization strategies include alternative hypervisors to mitigate risk. VMware competitors will capitalize on this fear and create many economic incentives for customers to transition workloads. A heterogeneous virtual data center will become the norm, not the exception.

2012 Prediction #1: VMware will continue to flex its muscles to protect price premiums

Predatory practices by vendors with monopoly positions are legendary and expected. From operating systems to browsers to databases, those who control the market will inevitably attempt to extract more. VMware has indicated a desire to move towards VM-based pricing across their portfolio of products. The justification is to better align with IT’s new unit of consumption, the virtual machine. This change has already taken place inside multiple products in the vCenter family, including SRM, operations, and vCloud directors. Naturally, VMware has financial incentive to capitalize on its market position to fuel aggressive growth. Consumption-based licensing models, product bundling, and vRAM accounting are tools to this end.

As hypervisor differentiation converges to zero, CIOs will seek refuge in lower-cost alternatives, particularly for non-mission-critical workloads. Enterprise trials of non-vSphere hypervisors will happen quickly when VMware ELA renewals are eminent.

2012 Prediction #2: Enterprises will get serious about heterogeneity

In Gartner’s most recent Magic Quadrant for server virtualization, for the first time both Citrix and Microsoft are positioned in the “leaders” quadrant alongside VMware. This is a significant achievement for the virtualization sector, signifying true hypervisor competition for VMware. The increasing feature parity and giant delta in price points are perfect incentives for enterprises to deploy mixed-hypervisor environments. Anxiety over VMware license model transition only fuels this inevitable market maturity cycle.

The technological advances of the new entrants as well as the increasing confidence enterprises have to deploy both Citrix XenServer and Microsoft Hyper-V will motivate more customers to adopt heterogeneous strategies for their virtual infrastructure. Industry analysts will boost CIO resolve by strongly encouraging enterprise clients to evaluate Hyper-V, Xen, and KVM right now and instruct them that multi-vendor competition produces the best financial outcome.

2012 Prediction #3: Emerging technology companies will defend a company’s right to choose

Customers have always looked to emerging technology companies to offer innovative solutions to help address leading edge requirements and address deficiencies in mainstream vendor offerings. As customers seek to tier virtual infrastructure to meet a range of use cases, service levels, and economic priorities, management that spans a range of platforms is mandatory. The next generation of management technology is emerging to bridge the gap between formerly disparate virtual infrastructures and enable IT shops to mix and match virtual platforms but still manage all compute resources as a single homogeneous environment. In 2012, these next generation management platforms will gain market acceptance, mature in capability, and provide a practical technical foundation for an agile virtual enterprise.

Lynn LeBlanc is the founder and CEO at HotLink, developer of a unified virtual platform that unifies management and tiers virtual infrastructure. You can contact the author at lleblanc@hotlink.com
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