DOG-FIGHT
This New York Times article by Steve Lohr (via Techmeme) on VMWare and Microsoft today is a must-read for anyone with an interest in where the software business is going over the next five to ten years.
Although it discusses a fairly geeky topic, it's an important element in understanding the software industry going forward for more casual observers of the software industry.
Even though the article focuses more on the user of virtualization on the enterprise side, there are hugely important stakes for the mainstream consumer user in the long-term.
Here's the crux of the matter (items in bold parenthesis below are mine):
"VMware (owned by EMC, the enterprise storage company), a young Silicon Valley company, is the early leader in a fast-growing market for what is called virtual-machine software. And that puts it on a collision course with Microsoft, the industry’s Goliath..."
"A virtual machine essentially mimics a computer so that several copies of an operating system — say, Windows or Linux or both — can run on one physical machine. It allows computing chores to be done on fewer computers, using less electricity and taking up less space, promising a way to control costs at corporate data centers straining to keep up with the ever-increasing demands of the Internet age."
It's not just about operating systems like Windows or Linux, but also about other mainstream consumer operating systems like Apple's Mac OS X Tiger today and Leopard tomorrow.
As I've discussed before, there are other virtualization software companies like Parallels, owned by a Russian software company, which illustrate the importance of virtualization on the consumer side of the equation. There are also other virtualization startups like Virtual Iron and XenSource, mentioned in the NYTimes article.
As the NY Times article explains, there is a fundamental debate between the operating systems companies like Microsoft and Apple and virtualization software companies about who is the dog and who is the tail:
"It is also a product that occupies strategic ground in computing, as a layer of code that resides between a computer’s hardware and the operating system, usurping some tasks, and potentially undermining the importance of the operating system.
In a meeting with corporate customers in New York last month, Steven A. Ballmer, Microsoft’s chief executive, said, “Everybody in the operating system business wants to be the guy on the bottom,” the software that controls the hardware. And he vowed that Microsoft, whose Windows operating systems are the main source of its corporate wealth and market power, would “compete very aggressively with VMware.”
Companies like Microsoft are very aggressively focused on making sure they're the dog wagging the tail in this relationship, with their own virtualization products as "features" of the operating system.
Although the NY Times article doesn't mention this, Apple is doing the same thing with it's Bootcamp offering that competes with Parallels on the Mac OS X side.
But the NY Times article does do a good job illustrating how seriously Microsoft takes this potential threat:
"When quizzed on Microsoft’s plans, Mr. Ballmer replied, “Our view is that virtualization is something that should be built into the operating system.”
Bundling new technology into Windows has long been the Microsoft game plan. The most storied case came a decade ago when Microsoft overcame the challenge posed by another Silicon Valley highflier, Netscape, offering another crucial layer of software, the Internet browser. Microsoft feared a competitor’s Web browser, running on top of the operating system, could reduce the power of Windows.
“There are certainly some analogies here to what Microsoft did with Netscape,” said Mendel Rosenblum, a founder of VMware and its chief scientist..."
"...in recent months, according to VMware, Microsoft has introduced new restrictions on how Microsoft products can be used in virtual machines in new ways, beyond simply dividing a single physical computer into several virtual ones."
Here's the long-term promise of virtualization software, both at the enterprise and consumer levels:
"This next wave of virtual technology, analysts say, includes software that lets virtual machines move freely across many physical machines, juggling computing chores, so that applications do not crash and Web response times are faster. Another promising new ability is running desktop personal computers as virtual-machine software, hosted and managed securely from a data center."
With more robust and available wired and wireless broadband networks, there's no reason why this couldn't be extended beyond enterprise servers and personal computers to handhelds, PDAs and cell phone operating systems.
The real crux of the matter though is this quote by Mike Neil, the general manager of virtualization strategy at Microsoft:
“Virtualization, frankly, is a feature,” Mr. Neil, the Microsoft manager, said. “It’s a great operating system feature.”
Increasingly, for users like me though, operating systems are becoming the feature, just like an application or service.
An early example of this is the "Coherence" feature of the latest Parallels RC3 release that allows a Mac user to access Windows features without ever "seeing" Windows on their Mac.
With increasingly powerful hardware available at more affordable prices every day, virtualization then allows me to pick and choose the OS and/or JUST the OS feature I wish to run in order to,
- run specific computer applications and/or web applications that I can't run on another OS,
- access certain peripherals that I can't use on another OS using the same hardware,
- get certain OS features that are not available on another OS.
In each of these cases though, it's a critical matter of convenience for the ultimate user, whether it's an enterprise or consumer.
Having the OS company try and offer virtualization as a "feature" is fairly contradictory and self-serving from the ultimate user/customer's perspective in the long-term.
Companies like Google and Yahoo! also have a dog in this fight in terms of their longer-term strategies (a subject for a future post).
But ultimately, it's an important business model conflict between the software incumbents of today and mainstream computer users of tomorrow.
Disclosure: I am a long-standing investor in EMC, Microsoft, Apple, Google and Yahoo!.
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