The software market changes quite slowly, plus enterprise customers have to be very comfortable with virtualization—for example, with tasks like live migrations of VMs between machines, Waldman says. (IDC and CIO.com share the same parent company, IDG.)

To consider the big picture of what this new model means for you, think about a hypervisor on a physical server as a sort of USB bus, Marshall says. You can plug a bunch of software virtual appliances into that bus. They won't step on each other, running independently in their own VMs, though they will of course all grab memory and CPU power from the physical server.

Lots of Activity Among Virtualization Vendors

Are the hardware and hypervisor heavyweight vendors liking this picture? You bet. Already the hardware vendors and hypervisor vendors are working together to create new standards for making the various pieces of software and hardware share management information. And you should expect more cooperation in 2008, Marshall says.

A management standard in this arena would simplify work for the hypervisor and hardware vendors and, ideally, help an application pass critical information to the hypervisor—for instance, the minimum share of memory and CPU resources that it needs, Marshall says. "The hypervisor has to let the team members (applications) communicate with each other," he asserts.

A standard called Open Virtual Machine Format (OVF) is the start of this process, Marshall says. A draft specification of the OVF standard, created by companies including Dell, HP, IBM, Microsoft, VMware and XenSource, has been accepted by the Distributed Management Task Force (DMTF) standards organization.

The DMTF describes the basics of the standard in this way (in its press release announcing the standard): It "uses existing packaging tools to combine one or more virtual machines together with a standards-based XML wrapper, giving the virtualization platform a portable package containing all required installation and configuration parameters for the virtual machines." (Click for more details on the standard.)

The hardware vendors have financial incentive to encourage this software as a virtual appliance model as well, Marshall predicts. "Dell has historically not been able to sell much server software because the software is so complicated," he says. "When a hypervisor becomes the bottom layer, Dell can also install virtual appliances on top. They can tell a customer, 'If you like them, buy them.' It'll start with simple applications like wikis, maybe a CRM or content management app," Marshall says. "The good thing is, these virtual appliances don't take up resources unless you run them."