Virtualization’s a Commodity, VMware: What Else Can You Offer?

In case you needed any more evidence that basic virtualization capabilities were becoming a commodity, Dell has announced a wave of servers and services designed to “simplify the deployment and management of virtualization in enterprises of any size,” per a company press release.

Leave aside for the moment the questionable proposition that hardware needs to be extensively customized for virtual environments. Other than virtualization-specific chips and extra-beefy I/O specs or extra RAM, there’s not a lot you need to do to a server to make it a decent host for virtual machines. That’s the whole idea: having to buy extra-special hardware for virtual-server installations would negate much of the cost- and administration-savings virtualization is supposed to deliver.

Let’s focus more on the phrase “enterprises of any size,” by which Dell means the mid-sized companies likely to buy the $6,000 servers it’s pushing with this announcement, not the large companies that have been driving the virtual-server market by consolidating lots of $6,000 servers onto much larger machines.

“Enterprises of any size,” when that size is larger than a few hundred employees, don’t buy servers by logging onto Dell.com to run the capacity planning and configuration management applications that the company brags about later in the release.

Mid-market companies do, however. Mid-market companies that don’t have the staff or time or IT budget to do a lot of custom app dev or hardware integration or data-center construction or management.

Those companies, by and large, don’t buy cutting-edge technology. They buy cutting-budget technology, which is what virtualization has become.

That’s good news for mid-market companies and for large companies, in that the hardware and software available for virtual-server environments is becoming more common, more stable and less expensive.

The tools to manage those installations are also becoming more common and more capable. Rather than have one harried admin at a console trying to track down an errant VM, there are tools available to automatically monitor, provision, manage or kill VMs as needed.

It’s bad news for VMware, which is still counting to a disturbing degree on its hypervisor to keep it ahead of competitors like Microsoft and, increasingly, every other operating system or server-manufacturer out there.

“We have never believed that the hypervisor would be commoditized,” VMware director of marketing Ben Matheson told Computerworld’s Rob Mitchell recently. “To imply that it’s a commodity would imply that there’s no differentiation.”

Bingo. Right now there is some differentiation, and will continue to be for another year or so, until Microsoft’s Hyper-V really gets its legs. After that, Microsoft’s Hyper-V will be a credible choice for IT managers counting on not being fired for buying technology from an industry leader, whether it works best or not.

For others, who make choices based more on technical merit than intangibles like market leadership, third-party support or the quality of the golf outings vendor reps take them on, it will become increasingly clear that VMware and its premium prices are facing withering competition not only from Microsoft, but also from Citrix and the half-dozen other major companies offering implementations of the open-source Xen hypervisor, often bundled and specially integrated with their own hardware.

Despite its protests that its flavor of vanilla is much better than everyone else’s, VMware is aware of this, of course. That’s one reason it’s pushing products that are tangential to its virtual-data-center strategy, such as Fusion, its version of software designed to run Windows applications on the MacOS.

It’s also why VMware is expanding its reseller channel program ⬠always a sign the vendor is concerned about expanding its market into a customer base that is not only smaller than “enterprises of any size,” but also tends to avoid leading-edge technology in favor of the hand-holding and custom services that a value-added reseller can supply.

Of course virtualization has become a commodity, in the same way that simple networking, multi-processor computing, and distributed grid- or cluster-computing models have become common to modern server farms.

No vendor has to advertise that its higher-end servers run multicore chips or come in two-way, four-way, six-, eight-, or twelve-way configurations. That used to differentiate high-end server makers from the others; it doesn’t any more.

That means IT managers at “enterprises of any size,” any real size, anyway, should be making their decisions on virtualization products based on things other than the virtualization itself. How good is the SMP support? The RAS? The failover and disaster recovery? Built-in business continuity? Built-in or bundled management capability? Troubleshooting and security?

VMware has a pretty decent lineup in most of those areas, as well. But when Dell is selling your basic capability by mail-order (without really mentioning that it’s your hypervisor its customers are most often buying) it’s time to realize your big differentiator has gone completely away and you need to focus on something else. Because your customers already have.

Veteran journalist Kevin Fogarty has covered the technology and business worlds for more than 18 years. Fogarty is a former editor or analyst at Computerworld, Baseline, eWeek, and Illuminata. Fogarty won an ASBPE (American Society of Business Publication Editors) award for column-writing during his stint at Computerworld.