Archive for May, 2008

HP – EDS: A good deal, actually

May 29, 2008

Is the EDS deal bad for HP shareholders? The market’s initial reaction suggests so, with HP losing several billion dollars in market cap because the deal introduces operational risk to what has been a remarkable turnaround / margin expansion story for HP investors.

A more in-depth look though at the likely strategic rationale, potential alternative targets and possible financial rationale leads us to conclude that the deal may not be so bad if you take a longer term perspective.



The Possible Paths From Today’s Virtualization To Cloud Computing

May 26, 2008

George Gilbert

From Virtualization To Cloud Computing

Virtualization and cloud computing have been getting a ton of buzz. But there has been less discussion about how virtualization, now known mainly for its server consolidation capability, will morph into cloud computing. For that to happen, servers, storage, and networks have to all fuse into one virtual machine from a developer’s and an administrator’s perspective. If the rumors that Cisco will buy EMC (and by extension its majority stake in VMware), the industry will have the first vendor who has a credible shot at putting together all the pieces. This post and the one that follows attempt to layout the different ways this transition could unfold. (Disclosure: I’m an investor in VMware).

Cloud computing, previously known as utility computing, is where all computing resources in Internet data centers look to users, developers, and administrators like one giant computer. It offers seamless scalability and radically reduced administrative overhead. There is more than one path from today’s virtualization to tomorrow’s cloud computing, and they’re not necessarily straightforward.

Ray Ozzie highlighted the importance of the transition from virtualization to cloud computing as one of the “three core principles that we’re using to drive the reconceptualization of our software so as to embrace this world of services that we live in… Most major enterprises are, today, in the early stages of what will be a very, very significant transition from the use of dedicated application servers to the use of virtualization and commodity hardware for consolidating apps on computing grids and storage grids within their data center. This trend will accelerate as apps are progressively refactored, horizontally refactored, to make use of this new virtualization-powered utility computing model. A model that will span from the enterprise data center, and ultimately, into the cloud…”


Elaborating On The Scenarios From Virtualization To Cloud Computing

May 25, 2008

George Gilbert

In the last post, I outlined why virtualization was morphing into cloud computing.  In this post, I elaborate on the potential paths it could take.

1.  VMware manages compute virtualization, Cisco manages network virtualization, and another vendor such as EMC or Network Appliance manages storage virtualization:

In this scenario, VMware provides the developer and management interfaces for making all the servers look like a single machine.  But customers adopt Cisco, which recently introduced its Nexus line of switches, as the network virtualization layer.  This product creates virtual networks and connections between computers and storage networks out of a physical switch. There are a variety of approaches to storage virtualization, but for the sake of simplicity let’s say companies choose to deploy EMC or NetApp.  Again, developers and administrators see only one logical device.  The downside of this approach relative to one vendor owning all the virtual resources end to end is twofold.  Software developers have to write to three separate interfaces to work with the cloud.  Second, administrators also have to work with three consoles to make sure software can deliver on its SLAs.

2. VMware becomes the end to end infrastructure:

Today VMware only offers virtual compute infrastructure.  It would still need to offer file system virtualization and network virtualization.  And of course, it would have to build the whole policy-based management infrastructure, or at least a framework other vendors could plug into to complete the platform.  The challenge with this scenario is that VMware has the reputation of being somewhat closed.  So the burden of the storage and network virtualization work, which is non-trivial, would fall mostly on VMware.

3. Microsoft manages end to end virtual and physical resources for Windows shops:

Microsoft has made a lot of noise with its Hyper-V server virtualization product and the emerging suite of management tools it is promising that go along with its management tools for physical resources.  Although it also supports SUSE and Red Hat Linux, it’s possible it could spread its footprint in the Windows environment to support storage and network virtualization with the proper hardware partnerships.  For Windows-only shops, managing all the physical and virtual resources with one set of interfaces for developers and administrators would be ideal.  I don’t know how difficult it would be to accomplish the storage and networking portions.

4. Red Hat or Citrix could do the same as 1 or 2 for Red Hat Linux shops

Although XenServer supports more Linux distributions than Red Hat, plus Solaris on X86, it’s hard to see application developers and system administrators committing to another distribution for end-to-end deployment.  The challenge with a Red Hat deployment as platform for end to end virtualization is that they’ve lost control of their virtualization technology to Citrix.  And it’s hard to see application developers committing to API’s promoted by a firm known for terminal services.

5.  HP Openview or IBM Tivoli manage both virtual and physical infrastructure in mulit-vendor shops:

At the beginning of the decade, this was the default assumption held by industry analysts and probably most customers.  The core assumption for this scenario today is that these are the incumbent vendors for multi-vendor shops and they are the only ones who can bring order to the chaos.  The challenge they face is that they appear to have almost no presence in the market for virtualization infrastructure right now.  Their server businesses are among VMware’s biggest partners.  They are in no position to define the developer interfaces to virtualization products.  A more likely scenario is that they integrate their management tools with VMware, Xen, and Microsoft’s Hyper-V.

6.  Individual vendors like Oracle and SAP write their own policy-based virtualization into their infrastructure:

Oracle already announced support for the Xen server but SAP’s plans for multi-tenancy are less clear.  But in this scenario, each vendor builds virtualization support into its own products.  In Oracle’s case, presumably this would be the database, application server, and the business applications that support them.  In SAP’s case, this would probably mean its NetWeaver application server and the related business applications.  This vertically integrated approach has some challenges of its own.  Customers running SAP on top of Oracle infrastructure, for example, would have conflicting policy-based administration layers trying to ensure SLAs.

7. Cloud computing vendors create their own purpose-built virtualization infrastructure

Rather than adopt the commercially available products, the major cloud computing vendors such as Google, Microsoft, Yahoo, Amazon, and, etc. all build technology specifically for their platforms.  So far, all but Microsoft seem to be pursuing this path.  However, only Microsoft is talking specifically about seamless scalability from running software hosted on the customer’s premise to cloud-based deployment.  If customers are interested in seamlessly migrating their enterprise software into the cloud, other than Microsoft, they’re going to have trouble working with these vendors.  More likely, these vendors are going to be the platforms for a new class of consumer-facing Web software.  Microsoft and other yet to emerge vendors are likely to be the cloud platforms of choice as today’s enterprise software migrates to the cloud.