Saturday, August 18, 2007

Virtualization: The Next Generation

The success of VMWare's IPO last week took none of its customers - which include Authentium - by surprise. The intra-day run-up, from $29 to over $50 a share (resulting in a $19 billion market cap), shows that market watchers believe that virtualization is barely out of the front gate in terms of economic potential.

One of the reasons for this is because virtual machines are still really only being installed on servers. And despite the obvious reduction in support costs and physical overhead that is enabled by installing multiple virtual machines on a single physical server, many IT administrators are only a small way into their migration plan.

Which means, come rain or shine, VMWare revenues should continue to grow healthily for many, many years.

But are servers really the most profitable line of business? Or are there other forms of virtualization that could enable an even bigger payday, a few years down the line?

I believe there are. According to our experience (and Microsoft's volume pricing tables), for every 30 servers in an organization, there are approximately 500 PCs, or, increasingly, laptops. Obviously, desktops and laptops present an attractive market for virtualization in the future.

However, I don't think we're going to see the same form of virtualization take root on the desktop.

I believe by the time new technologies like VirtualATM, which is based on our VERO ("Virtual Environment, Restricted Operations") virtual environment take seed, purely web-based forms of "the applications formerly known as desktop applications" will have arrived in force, creating a situation where the operating system may become redundant with respect to many of today's tasks.

Certainly, tasks requiring heightened security will use virtualization and restricted runtime environments almost exclusively. It makes *zero* sense for a large bank or online trading firm to expose their transactions to processes running in the non-virtualized environment.

Far better to elevate the application and restrict interaction to only those processes and network assets which can be absolutely trusted - which is what we do with VERO.

Of course, this all begs the question as to what will happen to the faithful desktop PC, and/or Mac? Will our computers simply become pretty boxes capable of instantly downloading any number of virtual environments, such as VERO, and metering their use via mechanisms like KPP?

Microsoft seems to think so. Here's a quote from an article in the Wall Street Journal last year that showed up in a 2006 article by the ever-alert Mary Jo Foley, over at

“Meanwhile, a cadre of respected Microsoft computer scientists and programmers formed a group under Chief Software Architect Ray Ozzie to start building software that could be a critical piece of what Windows might become, say people familiar with the work.

That group, says a person familiar with the matter, sees the future of Windows as much more as an Internet service than software that runs on a PC.”

In other words, "Windows as a webOS".

I personally think by this time (2012?), virtualization and servicizing of the services we consumers use the most (web browser, word processor, spreadsheet, financial management software, games, etc.) will be so far along, and so easily accessible and secure, that Microsoft - and Apple - could find themselves in 2012 with highly-virtualized operating systems that no one, except die-hard fans, will want or need to use.

Note: One potential piece of gold at the end of the Microsoft virtual rainbow is KPP - otherwise known as PatchGuard. PatchGuard provides metering support for software application usage and license management - such as desktop applications deployed using Microsoft SoftGrid.

KPP - and Microsoft Update - could become the critical components of the Microsoft webOS. It will be interesting to watch Microsoft's upcoming technical releases, including kernel-level APIs, in this area.

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