Peter Christy

Virtualization (and financial jitters)

The frothiness in VMW and GOOG stock has to make you wonder if we learned anything during the dot com bubble or not (seems not). RVBD recently got an unpleasant Wall Street haircut for no apparently good reason other than a partial return to investment fundamentals. VMW and GOOG float above all that. Since VMW is now valued at roughly $40B and parent EMC at $47B if you do the math since EMC owns 90% of VMW, the market doesn't value the rest of EMC very much (to be fair the market knows that EMC can't just go and liquidate the position). The froth in virtualization places an intense and not very pleasant light on Microsoft and exactly where Viridian is (or isn't). There is no shortage of grim stories if they are to be believed. Microsoft should (in my opinion at least) get the Nobel Prize in Software for having collapsed all their operating systems down to a single code base, but now if you reflect on the consequences, there is high pressure to get Windows Server 2008 (the operating system previous known as "Longhorn") out, and pressure to release Vista SP1 (the likely trigger for real enterprise uptake) and in the middle of that you have the Viridian team trying to ram intimate hypervisor code right into the middle of the code base. Thank goodness I don't manage software development anymore! Anyway, if you talk to customers they all will look at Viridian when it finally shows up (a) because (remember) virtualization is all about Windows primarily and (b) it will be free and free is a lot cheaper than what VMW charges today. Or maybe VMW will conspire with private equity and do a hostile leveraged buyout of EMC, or even Microsoft J.

VMworld Rocks

This was my fourth VMworld and the biggest and the best by a goodly margin. The attendee count was up to over 10,000 (the first was 1,400), the exhibition huge, and the buzz bigger than ever (nothing like a successful IPO and $30B market cap to create quite a party atmosphere).  The interesting news was the announcement of ESX-3i which is just the hypervisor.  It's been slimmed down and it's being bundled as integrated flash memory with a new generation of virtualization optimized servers (to steal Dell's term). These diskless machines just have to be racked and cabled and powered on, and the VMware management system automatically discovers them and adds them into the hardware mix (so simple that even a CEO can do it as Diane Green gamely demonstrated). Having the hypervisor a cleanly separated layer (previously it was shipped with an attached Linux based controller) makes it easier to visualize some of the ways in which it might be exploited. In Mendel Rosenblum's closing keynote they used hypervisor-to-hypervisor communications to implement an experimental high-availability system, and Mendel gamely demonstrated pulling power on the primary Exchange server and in fact the backup took over mid stride (showing I guess that even a CEO's husband could do it although he's also a Stanford CS Professor so the test might be rigged). Mendel suggested an interesting strategy of taking some more of the nastiest system problems (HA in this case) and looking to see whether the virtualization abstraction could be used to greatly simplify them as was the case in data center consolidation.  The future of virtualization is clearly in front of it. The only dark cloud is that it is also becoming quite clear that it is getting to be really complex stuff so the simplicity is somewhat skin deep. It's clearly going to be another exciting year for virtualization!

First Mover Advantage

The energy that was around at VMworld was electric -- the type of energy that comes from being around an exciting market disruption.  Things are moving fast in the virtualization world -- customers are racking and stacking VMware systems at breakneck speed.  Vendors want to partner with VMware in the hopes that some of its magic will rub off in the process.  Channel players are moving to get a piece of the action.  For you business school majors, VMworld was a hands-on look at First Mover Advantage.  Since most of the server virtualization taking place is around Windows servers, you'd expect Microsoft to chime in pretty soon which, from the looks of things, won't happen until Microsoft's new hypervisor ships which will be about six months after Windows 2008 ships.  In the meantime, VMware is moving quickly to consolidate its first mover advantage.  Unlike what's happened with emerging markets in the past, Microsoft has no margin of error -- they've got to "get it right the first time" just to remain in the game.  There are those legendary stories about how Bill Gates had to personally intervene to get Microsoft to take the Internet seriously.  From the looks of the virtualization world, Microsoft is going to need a similar monumental course correction or else this market slips away without even a fight.

Chambers at his best

We're shameless John Chambers keynote groupies and from that perspective have watched his current theme evolve over the last 6-9 months. It starts with the issues of productivity and GNP growth and discussions with Alan Greenspan, and evolves into organizations based on collaboration rather than command and control and the contribution of network-enabled collaboration. He really got it together for VMworld (or maybe he doubled his Coke input for the event). We highly recommend watching (especially the last third or so). It was one of the best discussions on the business value of virtualization that we heard all week because he went beyond the ROI value propositions to make a strong case for business improvement -- he really nailed it.  You can find it from the front page of www.vmware.com following the VMworld keynote pointers (John was on the second day).

Jagadeesh Surfaces

Our old friend B.V. Jagadeesh emerged as CEO of 3Leaf, a server virtualization company.  3Leaf, like Xsigo -- a similar company that came out of stealth this week -- develops intelligent I/O fabrics built today on Infiniband interconnect (although all claim to be interconnect agnostic and will go with what makes most sense over time). These fabrics simplify and optimize I/O in virtualized data centers by helping consolidate the dense LAN and SAN server connections onto Infiniband as well as by adding significantly to the management of these subsystems under virtualization. Interestingly, at the same time Cisco is moving away from this direction having taken the Infiniband-based TopSpin system and moved it back to a control appliance that is no longer in the data path. If all that weren't complicated enough, Ed Bugnion -- Vmware founder and CTO -- is now CTO at Nuova, a Cisco-funded startup. Nuova is working to make Ethernet safe for SAN (which requires some changes to the Ethernet standards). With these changes Cisco will use Ethernet for the consolidated virtualization fabric.  3Leaf's founding CEO and now CTO -- Bob Quinn -- had what might be the clarifying perspective as to these different approaches. Quinn argued that virtualization isn't going to quickly break down the functional stovepipes in the data center, and you can't build products that are for the storage guys, the network guys and the server guys. 3Leaf is very explicit about building products for the server guys and making its use transparent to the network and storage teams. Cisco is obviously going to build for the network team. Cisco can evolve Ethernet but startups can't.  Having turned NetScaler around and arranged the marriage with Citrix we were wondering what BV would do next. Now we know and we're excited to watch it unfold.

VMW

Infrastructure Home Run: Who says geeks can't make money any more with geeky stuff. In the much anticipated IPO VMware priced at $29 and then opened and traded in the low $50's creating a market cap north of $15B (an interesting good/bad news for parent EMC which had a closing market cap of $38B including their 90% share of VMW). What could be more geeky than virtualization infrastructure but that didn't keep the VMware team from turning technology that almost no one actually understands into one of the largest (and richest) software companies in record time. A tip of our hat to Diane and her team!

How to Virtualize a Network

A year ago at InterOp Cisco talked to us about notions of virtualizing a campus network. The idea is simple and yet profound. After you've finished consolidating everything onto a single IP network you don't necessarily want to see just that single network. You want various VLAN's for security. You would like to see the telephony, video and email networks separately (so you can manage it all separately). Cool we thought and waited for the product announcements. Interop 2007 rolled around and Cisco held their Analyst Dinner so I had a chance to talk to the same spokesperson and ask what happened. She reported that it was taking the IOS engineers longer to change the router software than had been anticipated. My mouth fell open. "I thought you were talking about network management" I blurted out. "Oh, no" she replied, "Cisco wouldn't do it that way!" It's a really interesting topic. As the data center gets virtualized more and more of what we think of as the "network" (and "SAN") will show up as software. If I were Cisco I would start thinking about virtual appliance versions of the boxes they sell now. It will be interesting to see how Cisco sorts all this out.

Even File Virtualization is Disruptive

Virtualization changes everything we like to note and it even seems to be true. On my (Peter's) Eastern swing I stopped by to visit with Acopia, the file virtualization company started by Cheng Wu, the Arrowpoint founder. CTO Rick Gillett (an old friend from way back) and the technical team have made a neat network appliance that I think of as Veritas in a box in the sense that it does all the storage management stuff that lots of distributed Veritas (or Legato) software would otherwise do. The product works (no small feat!) and provides real value, and by good old start-up effort (what they call heroic selling -- a nice evocative term) Acopia has real customers and real revenues. In the past Acopia has partnered with storage vendors because it was a nice way to introduce new network-attached storage into a customer since the Acopia box could transparently observe what storage was being used and migrate the right stuff to the new product. The good and bad news is that once customers start to use the technology they realize that with this file virtualization capability they can commodify storage so that the customer can change (or threaten) storage vendors at will. Understandably this isn't exactly what the storage vendors hoped for although may be their virtualized fate. Virtualization indeed seems to change everything. 

Virtual Appliances / Virtual Whining

It was a big couple of weeks for virtualization and IRG. Generally that's good since we've decided that virtualization is a key topic ("changes everything"). We had a great discussion about virtual appliances at our N2 Dinner, actively doing research in the area and of course chatting up with people at Peet's to get the real skinny.  In the middle of this I (Peter) get a note from the VMWare Analyst Relations team drawing attention to a white paper they've published that describes how Microsoft's licensing policies are making it harder for customers to use VMWare.  My initial reaction was "Doh!" but then I couldn't resist diving in a wallowing. VMWare pointed at a piece that Steve Lohr had written for the Times (24 February -- a nice picture of Diane and Mendel!). The good business writers (like Steve) do a great job with virtualization issues, not surprising since the key value propositions are economic and not technical, and Steve's piece included a quote from Andrew I. Gavil, a law professor at Howard University -- "This seems to be a far more subtle, informed and polished form of competitive aggression than we've seen from Microsoft in the past and Microsoft has no obligation to facilitate a competitor." This lead to a great follow up "remedial" discussion with Dan Chu, a VMWare VP, and a discussion on how VMWare, Microsoft (and Cisco) cooperate and compete, and how that evolves over the next few years. It's a deliciously complex and rich question, and promises to get even my youngest son through college (and he's not even in high school!). More to come.

Books, CD's and a Cup of System Power?

In our recent investigations multiple threads lead to the Amazon's Elastic Grid Computing Services and a briefing with Adam Selipsky, Vice President for Product Management and Developer Relations, Amazon Web Services. Like we used to say in the 60's, there seems to be a revolution underway. Amazon is selling computer resources by the sip at prices that are only high compared to Google's costs. With no long term contract required, Amazon will happily sell you storage, bandwidth and processing power on demand at what could be called "mouse nuts" pricing. It's an exciting opportunity for start-ups (Stu Phillips and his partners at newly formed RidgeLift venture partnership are actually filtering opportunities on their willingness to use such approaches) because it lets computing be done without up front capital investment for poorly utilized hardware and instead allows resources to be bought when needed in just the right amount.  rPath the innovative software packing spinout from Red Hat builds EG images (as well as virtual images for VMWare, Xen and Microsoft).  Amazon started this effort as part of their work to make it easy for others to host eCommerce sites in partnership with Amazon, but now seem to be aiming at much bigger opportunities.  As the Asians would note, we sure live in interesting times.