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The Cloud Gets Crowded and more Competitive

2022, Featured, Laura's Insights ITIC Blog / By Laura DiDio

The cloud is getting crowded.

In 2022 the cloud computing market – particularly the hybrid cloud – is hotter and more competitive than ever.

Corporate enterprises are flocking to the cloud as a way to offload onerous IT administrative tasks and more easily and efficiently manage increasingly complex infrastructure, storage and security. Migrating operations from the data center to the cloud can also greatly reduce their operational and capital expenditure costs.

Cloud vendors led by market leaders like Amazon Web Services (AWS), Microsoft Azure, Google Cloud, IBM Cloud, Oracle Cloud Infrastructure, SAP, Salesforce, Rackspace Cloud, and VMware, as well as China’s Alibaba and Huawei Cloud, are all racing to meet demand. The current accelerated shift to the cloud was fueled by the COVID-19 global pandemic which created supply chain disruptions and upended many aspects of traditional work life. Since 2020, government agencies, commercial businesses and schools shifted to remote working and learning. Although COVID is generally waning (albeit with continuing flare-ups), a hybrid work environment is the new normal. This in turn, makes a compelling business case for furthering cloud migrations.

In 2022, more than $1.3 trillion in enterprise IT spending is at stake from the shift to cloud, and that revenue will increase to nearly $1.8 trillion by 2025 according to the February 2022 report “Market Impact: Cloud Shift – 2022 Through 2025” by Gartner, Inc. in Stamford, Conn. Furthermore, Gartner’s latest research forecasts that enterprise IT spending on public cloud computing, within addressable market segments, will outpace traditional IT spending in 2025.

Hottest cloud trends in 2022

Hybrid Clouds

Hybrid cloud is exactly what its name implies: it’s a combination of public, private and dedicated on-premises datacenter infrastructure and applications. Companies can adopt a hybrid approach for specific use cases and applications – outsourcing some portions of their operations to a hosted cloud environment, while keeping others onsite. This approach lets companies continue to leverage and maintain their legacy data infrastructure as they migrate to the cloud.

Cloud security and compliance: There is no such thing as too much security. ITIC’s 2022 Global Server Hardware Security survey indicates that businesses experienced an 84% surge in security incidents like ransomware, email phishing scams and targeted data breaches over the last two years that were especially prevalent and commonplace. The hackers are extremely sophisticated; they choose their targets with great precision with the intent to inflict maximum damage and net the biggest payback. This trend shows no signs of abating. In 2021, the average cost of a successful data breach increased to $4.24 million (USD); this is a 10% increase from $3.86 million in 2020 according to the 2021 Cost of a Data Breach Study, jointly conducted by IBM and the Ponemon Institute. The $4.24 million average cost of a single data breach is the highest number in the 17 years since IBM and Ponemon began conducting the survey. It represents an increase of 10% in the last 12 months and 20% over the last two years. Not surprisingly, in 2021, 61% of malware directed at enterprises targeted remote employees via cloud applications. Any security breach will have a domino effect on regulatory compliance. In response, cloud vendors are doubling down on security capabilities and compliance certifications. There is now a groundswell of demand for Secure Access Service Edge (SASE) cloud security architecture designed to safeguard, monitor and access connectivity among myriad cloud applications services, as well as datacenter IT infrastructure and end user devices. SASE gives users a single sign-on capability across multiple cloud applications while ensuring compliance.

Cloud-based disaster recovery (DR): The ongoing concerns around security and compliance issues has also shone the spotlight on the importance of cloud-based disaster recovery. DR uses cloud computing to back up data and continue to run the necessary business processes in case of disaster. Organizations can utilize cloud-based DR for load balancing and to replicate cloud services across multiple cloud environments and providers. The result: enterprise transactions will continue uninterrupted if they lose access to their physical infrastructure in the event of an outage.

Cloud-based Artificial Intelligence (AI) and Machine Learning (ML): Another hot cloud trend is the use of Artificial Intelligence (AI) and Machine Learning (ML). Both AI and ML allow organizations to cut through the data deluge and process and analyze the data to make informed business decisions and quickly respond to current and future market trends.

Top cloud vendors diversify, differentiate their offerings

There are dozens of cloud providers with more entering this lucrative market arena all the time. However, the top four vendors: Amazon AWS, Microsoft Azure, Google Cloud and IBM Cloud currently account for over 70% of the installed base.

Amazon AWS: Amazon AWS has been the undisputed cloud market leader for the past decade. And it remains the number one vendor in 2022. Simply put, Amazon is everywhere and it has amazing brand recognition. Amazon AWS offers a wide array of services that appeal to companies of all sizes. The AWS cloud-based platform enables companies to build customized business solutions using integrated Web services. AWS also offers a broad portfolio of Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS). These include Elastic Cloud Compute (EC2), Elastic Beanstalk, Simple Storage Service (S3) and Relational Database Service (RDS). AWS also enables organizations to customize their infrastructure requirements and it provides them with a wide variety of administrative controls via its secure Web-based client. Other key features include: data backup and long-term storage; Service Level Agreement (SLA) of “four nines” – 99.99% – guaranteed SLA uptime; AI and ML capabilities; automatic capacity scaling; support for virtual private clouds and free migration tools.

As with all of the cloud vendors, the devil is in the details when it comes to pricing and cost. On the surface, the pricing model appears straightforward. AWS offers three different pricing options. They are “Pay as you Go,” “Save when you reserve” and “Pay less using more.” AWS also offers a free 12-month plan. Once the trial period has expired, the customer must either choose a paid plan or cancel its AWS subscription. While Amazon does provide a price calculator to estimate potential cloud costs, the many variables make it confusing to discern.

Microsoft Azure: Microsoft Azure ranks close behind Amazon AWS and the platform has been the catalyst for the Redmond, Washington software giant’s resurgence over the last 12 years. As Microsoft transitioned away from its core Windows-based business model, it used a tried and true success strategy: that is, the integration and interoperability of its various software offerings. Microsoft also moved its popular and well-entrenched legacy on-premises software application suites like Microsoft Office, SharePoint, SQL Server and others to the cloud. This gave customers a sense of confidence and familiarity when it came to adoption. Microsoft also boasts one of the tech industry’s largest partner ecosystem. Microsoft regularly refreshes and updates its cloud portfolio. In February, Microsoft unveiled three industry-specific cloud offerings: Microsoft Cloud for Financial Services, Microsoft Cloud for Manufacturing and Microsoft Cloud for Nonprofit. All of these services leverage the company’s security and AI functions. For example, new feature in Microsoft Cloud for Financial Services, called Loan Manager will enable lenders to close loans faster by streamlining workflows and increasing transparency through automation and collaboration. Microsoft Azure offers all the basic and advanced cloud features and functions including: data backup and storage; business continuity and DR solutions; capacity planning; business analytics; AI and ML; single sign-on (SSO) and multifactor authentication as well as serverless computing. Ease of configuration and management are among its biggest advantages, and Microsoft does an excellent job of regularly updating the platform, but documentation and patches may lag a bit. Azure also offers a 99.95% SLA uptime guarantee which is a bit less than “four nines.” Again, the biggest business challenge for existing and prospective Azure customers is figuring out the licensing and pricing model to get the best deal.

Google Cloud Platform (GCP): Like Amazon, Google is a ubiquitous entity with strong brand name recognition. Google touts its ability to enable customers to scale their business as needed using flexible, open technology. Google Cloud consists of over 150 products and developer tools. GCP is a suite of cloud computing services provided by Google. It is a public cloud computing platform consisting of a variety of IaaS and PaaS services like compute, storage, networking, application development and Big Data analytics. The GCP services all run on the same cloud infrastructure that Google uses internally for its end-user products, such as Google Search, Photos, Gmail and YouTube, etc. The GCP services can be accessed by software developers, cloud administrators and IT professionals over the internet or through a dedicated network connection. Notably, Google developed Kubernetes, an open source container standard that automates software deployment, scaling and management. GCP offers a wide array of cloud services including: storage and backup, application development, API management, virtual private clouds, monitoring and management services, migration tools, AI and ML. In order to woo customers, Google does offer very steep discounts and flexible contracts.

IBM: It’s no secret that IBM Cloud lagged behind market leaders AWS and Microsoft Azure, but Big Blue shifted into overdrive to close the gap. Most notably, IBM’s 2019 acquisition of Red Hat for $34 billion gave IBM much needed momentum, solidifying its hybrid cloud foundation and expanding its global cloud reach to 175 countries with over 3,500 hybrid cloud customers. And it shows. On April 19, IBM told Wall Street it expects to hit the top end of its revenue growth forecast for 2022. IBM’s Cloud & Data Platforms unit is the growth driver Cloud revenue grew 14% to $5 billion during the just ended March 31 quarter. Software and consulting sales which represent over 70% of IBM’s business were up 12% and 13%, respectively. IBM Cloud incorporates a host of cloud computing services that run on IaaS or PaaS. And the Red Hat Open Shift platform further fortifies IBM’s hybrid cloud initiatives. Open Shift is an enterprise-ready Kubernetes container platform built for an open hybrid cloud strategy. It provides a consistent application platform to manage hybrid cloud, multicloud, and edge deployments. According to IBM, 47 of the Fortune 50 companies use IBM as their private cloud provider. IBM has upped its cloud game with several key technologies. They include advanced quantum safe cryptography which safeguards applications running on the IBM z16 mainframe which is popular with high end IBM enterprise customers. Quantum-safe cryptography is as close to unbreakable or impenetrable encryption as a system can get. It uses quantum mechanics to secure and transmit data in a way that currently makes it near-impossible to hack. Another advanced feature is the AI on-chip inferencing, available on the newly announced IBM z16 mainframe. It can deliver up to 300 billion deep learning inference operations per day with 1ms response time. This will enable even non-data scientist customers to cut through the data deluge and predict and automate for “increased decision velocity.” AI on-chip inferencing can help customers prevent fraud before it happens by scoring up to 100% of transactions in real-time without impacting Service Level Agreements (SLAs). AI on-chip inferencing can also assist companies with compliance; automating the process to allow firms to cut audit preparation time from one month to one week to maintain compliance and avoid fines and penalties. The IBM Cloud also incorporates the Keep Your Own Key (KYOK) which uses z Hyperprotect in the IBM public cloud. Another key security differentiator is IBM’s Confidential Computing which protects sensitive data by performing computation in a hardware-based trusted execution environment (TEE). IBM Cloud goes beyond confidential computing by protecting data across the entire compute lifecycle. This provides customers with a higher level of privacy assurance – giving them complete authority over data at rest, data in transit and data in use. IBM further distinguishes its IBM Cloud from competitors via its extensive work in supporting and securing regulated workloads, particularly for Financial Services companies. The company’s Power Systems enterprise servers are supported in the IBM Cloud as well. IBM Cloud also offers full server customization; everything included in the server is handpicked by the customer so they don’t have to pay for features they may never use. IBM is targeting its Cloud offering at customers that want a hybrid, highly secure, open, multi-cloud and manageable environment.

Conclusions

Cloud computing adoption – most especially the hybrid cloud model – will continue to accelerate throughout 2022 and beyond. At the same time, vendors will continue to promote AI, machine learning and analytics as advanced mechanisms to help enterprises derive immediate, greater value and actionable insights to drive revenue and profitability.

Security and compliance issues will also be must-have crucial elements of every cloud deployment. Organizations now demand a minimum of four nines of uptime – and preferably, five and six nines of availability – 99.999% and 99.9999% to ensure uninterrupted business continuity. Vendors, particularly IBM with its newly Quantum-safe cryptography capabilities for its infrastructure and IBM Z mainframe, will continue to fortify cloud security and deploy AI.

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Microsoft: Bullish or Bottoming Out? Part 2

Laura's Insights ITIC Blog / By Laura DiDio

According to some press and industry, you’d think that Microsoft was all but dead. Microsoft’s tactical and strategic technology and business missteps are well publicized and dissected ad infinitum. Less well documented are Microsoft’s strengths from both a consumer and enterprise perspective and there are plenty of those.

Microsoft Strengths

One of the most notable company wins in the past five years is the Xbox 360 and Kinect.

Xbox 360 and Kinect: Simply put, this is an unqualified success. The latest statistics released earlier this month by the NPD Group show that Microsoft has a 47% market share and sold 257,000 Xbox 360 units in the U.S. in June, besting its rivals the Sony PlayStation 3 and Nintendo Wii for the 18th consecutive month. But Microsoft and indeed all the hardware games vendors find their sales shrinking due to the sharp increase in the numbers of users playing games on their smart phones. In Microsoft’s 2012 third fiscal quarter ending in March, Xbox 360 sales dropped 33% to $584 million. The consumer space is notoriously fickle and games users are always looking for the next big thing. Microsoft’s ace in the hole is the Kinect motion-controller, which still has a lot of appeal. The company is banking on that as well as slew of new applications and functions like the Kinect PlayFit Dashboard which lets users track the number of calories they burn when they play Kinect games. …

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VDI Vendor Wars Intensify

2010, Laura's Insights ITIC Blog, News / By Laura DiDio

There’s no hotter market in high tech this year than Virtual Desktop Infrastructure (VDI) and you don’t need sales and unit shipment statistics to prove it. No, the best measurement of VDI’s hotness is the sudden flurry of vendor announcements accompanied by a concomitant rise in vitriol.
The main players in the VDI market are actually two sets of pairs. It’s Citrix and Microsoft lining up against VMware and EMC for Round 2 in the ongoing virtualization wars. On March 18, Citrix and Microsoft came out swinging, landing the first potent, preemptive punches right where they hope will hurt VMware the most: in its pocketbook.
Citrix and Microsoft unveiled a series of VDI initiatives that include aggressive promotional pricing deals and more simplified licensing models. To demonstrate just how solid and committed they are to their alliance and taking on and taking down VMware and EMC, the two firms even went so far as to combine their respective VDI graphics technologies.
At stake is the leadership position in the nascent, but rapidly expanding global VDI market. The results of the ITIC 2010 Global Virtualization Deployment and Trends Survey which polled 800+ businesses worldwide in the December/January timeframe indicate that 31% of respondents plan to implement VDI in 2010; that’s more than double the 13% that said they would undertake a VDI deployment in 2009. Application virtualization is also on the rise. The same ITIC survey found that 37% of participants plan application virtualization upgrades this year, up from 15% who responded affirmatively to the same question in the 2009.
The current installed base of VDI deployments is still relatively small; hence the statistics that show the number of deployments doubling year over year must be considered in that context. Nonetheless, double digit deployment figures are evidence of strengthening demand and a market that is robustly transitioning from niche to mainstream. The spate of announcements from Microsoft and Citrix were clearly intended to capitalize on the growth spurt in VDI. At the same time, the companies threw down the gauntlet with initiatives aimed at solidifying and expanding their base of current VDI customers while serving the dual purpose of luring VMware customers away from that company’s VDI platform. They include:
• “VDI Kick Start” This wide ranging sales promotion, which runs from March 18 through December 31, 2010, seeks to jump start VDI deployments by lowering the entry level pricing for customers purchasing Microsoft and Citrix technologies. As part of this deal, existing Microsoft client access licensing (CAL) customers will pay $28 per desktop for up to 250 users to purchase the Microsoft Virtual Desktop Infrastructure Suite, Standard edition, and Citrix’s XenDesktop VDI Edition for one year. That’s roughly a 50% discount off the list prices that corporations have paid up until now for their annual CALs. This is crucial for cost conscious businesses. Client access licenses typically represent the lion’s share of their licensing deals since desktops outnumber servers in mid-sized and large enterprises. In addition to merging Microsoft’s 3-D graphics technology for virtual desktops, called RemoteFX, with Citrix’s high-definition HDX technology.

• The Microsoft Virtual Desktop Access (VDA) License Plan. Organizations that use Thin Client devices which are not included or covered under Microsoft’s SA maintenance plan, can now purchase the VDA licenses at a retail price of $100 per device per annum. This targets end users who travel or telecommute and need to use personal devices or public networks to access their corporate data. Microsoft also made another move towards simplifying its virtualization licensing plan. Starting July 1, Microsoft SA customers will no longer be required to purchase a separate license to access Windows via a VDI.
• The “Rescue for VMware VDI” (the name says it all) this promotion is a direct attack on VMware. Like the VDI Kick Start program it runs from March 18 through December 31, 2010. Under the terms of this deal, any Microsoft Software Assurance licensing/maintenance customer can replace their existing VMware View licenses for free. VMware View users who opt out of that platform in favor of the Citrix and Microsoft offerings will receive up to 500 XenDesktop VDI Edition device licenses and up to 500 Microsoft VDI Standard Suite device licenses free for an entire year once they trade in their VMware View licenses.
Dai Vu, Microsoft’s director of virtualization marketing said the announcements were all about delivering more value to desktop customers and simplifying and extending organizations’ licensing rights.
The Citrix/Microsoft announcements also cement the close working partnership and the “enemy of my enemy is my friend” relationship the firms have enjoyed for many years. By bundling their respective VDI offerings together, the two companies should also ensure integration and interoperability which are crucial components for each and every layer in a virtualized data center environment.
VMware and EMC: Not Standing Still
VMware and EMC executives have yet to publicly respond to the Microsoft/Citrix initiatives. However, it’s almost certain that VMware will have to offer its current and prospective VDI accounts incentives to counter the Microsoft/Citrix alliance. Cash strapped corporations and IT departments are all on the lookout for top notch products at bargain basement prices. And it doesn’t get much better for customers than the free Rescue for VMware VDI program.
VMware built up a commanding lead in the server virtualization arena over the last five years by virtue of being first to market and delivering leading edge features and performance in its signature ESX Server product. VMware’s competitors have spent the last several years playing catch up in server virtualization. This allowed VMware to charge a premium price for its premier offerings. Depending on the size and scope of the individual organization’s server virtualization deployment, customers paid on average 35% to as much as 75% higher for VMware server-based offerings. There were surprisingly few complaints.
The emerging VDI and application virtualization markets are a different story. Only about 5% to 8% of organizations worldwide have fully virtualized their desktop infrastructure. So it’s too soon to declare a clear market winner. It’s safe to say that Citrix, Microsoft and VMware are all market leaders in this segment. This time around though, Microsoft and Citrix are determined not to let VMware and EMC run away with the race by building an insurmountable lead.
Meanwhile, VMware and EMC have not been idle. Former Microsoft executive Paul Maritz succeeded VMware founder Diane Greene following her 2008 departure as the company’s president and chief executive officer. Since then he has made tangible moves to bolster VMware’s position in the VDI and application virtualization arenas. Maritz and EMC CEO Joe Tucci make a formidable combination, as do EMC and VMware. EMC purchased VMware in 2004 for $635 million and it owns an 86% majority stake in the server virtualization market leader. In the past several years, VMware’s fortunes and revenues have risen faster than EMC’s. VMware’s year-over-year (YoY) quarterly revenue growth stands at 18.20% compared with EMC’s modest 2.10% Y0Y quarterly sales. Another key indicator is net earnings and in this regard, VMware experienced negative YoY quarterly earnings growth of -49.4 0% . By contrast its parent EMC recorded a very robust and positive 44.70% jump in YoY quarterly earnings. It is also worth noting that VMware’s annual revenues of $2.02 billion represent only 15% of EMC’s annual sales of $14.03 billion. And to date, EMC’s solutions have only been related tangentially to VMware’s VDI products. For practical purposes, this may continue to be the case. From a PR standpoint though, EMC and VMware are presenting themselves as a sort of virtualization “dynamic duo.”
At an EMC Analyst event at the company’s Hopkinton, MA headquarters on March 11, Pat Gelsinger, president of EMC’s Information Infrastructure Products group described the combination of EMC and VMware – specifically with respect to storage virtualization, virtualization management and private cloud infrastructures — as the “Wild West” of the virtualization market, saying “we want to be disruptive and change the way people fundamentally think of IT.” Though Gelsinger mainly confined his comments to EMC’s core bailiwick in the storage arena, it is clear that EMC and VMware are pro-actively presenting a united front.
In February, the two firms moved to reposition some of their assets; EMC and VMware inked a deal for VMware to acquire certain software products and expertise from EMC’s Ionix IT management business in an all cash deal for $200 million. EMC does retain the Ionix brand and gets full reseller rights to continue to offer customers the products acquired by VMware. Maritz said VMware’s acquisition of the Ionix products and expertise promises to further establish VMware vCenter as the next generation management platform for private cloud infrastructures.
The agreement also calls for VMware to take control of all the technology and intellectual property of FastScale, which EMC acquired in 2009. The FastScale Composer Suite incorporates integrated software management tools to enable organizations to maintain peak performance in a virtualized environment.
Also, recently, VMware introduced ThinApp 4.5, a new version of its application virtualization package designed to simplify enterprises’ migration to Windows 7.
End Users are the Biggest Winners
What makes the latest competition for VDI market dominance noteworthy is the extreme actions the combatants are willing to take in order to retain and gain customers’ at their rivals expense. With last week’s joint announcements and deepening partnership, Citrix and Microsoft have signaled their intention to lead but it’s still too early to call the race.
The joint Microsoft/Citrix initiatives to cut costs and simplify virtualization licensing plans remove two of the more significant barriers to VDI adoption. The largest looming challenge remains the willingness of corporations to embrace a new technology model as their organizations and IT departments continue to grapple with the lingering effects of the ongoing economic crunch. In this regard, all of the virtualization vendors in concert with OEM hardware vendors like Dell, Hewlett-Packard, IBM, Stratus Technologies and Wyse who partner with them must convince customers that transitioning to VDI will provide tangible Total Cost of Ownership (TCO) and Return on Investment (ROI) benefits. This entails providing organizations with the necessary guidance – including tools, training, documentation, Best Practices and solid technical service and support – to ensure that a conversion to VDI can be accomplished with minimal disruption. Admittedly, this is a tall order.
Hardware vendors like Dell, HP, IBM et al all have a stake in the future success of the VDI market. Organizations that migrate to VDI will seek to upgrade to newer, more powerful desktops (PCs, notebooks) and servers, which in turn, potentially boosts the hardware vendors’ individual and collective bottom lines. Additionally, both HP and IBM boast huge service and support organizations, which also stand to benefit from an uptick in VDI adoptions. So the hardware vendors have every reason to partner with Citrix, Microsoft and VMware to promote and expand the VDI market segment. Regardless of which vendor(s) prevails, the biggest winners will be the customers. When several big name vendors vie for the hearts, minds and wallets of customers, it usually means that feature-rich, reliable products get to market sooner at more competitive prices. Let’s hope the VDI race is a long one.

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HP, Microsoft Still Have Some ‘Splainin’ to Do on Application-to-Infrastructure Pact

Laura's Insights ITIC Blog / By Laura DiDio

The recently announced joint Hewlett-Packard/Microsoft Application-to-Infrastructure Model Partnership has intriguing possibilities for both companies and their respective and overlapping installed customer base. However, it remains to be seen how quickly and efficiently the two industry giants can deliver products and market the merits of the solution. Now $250 million is huge investment even for two high tech powerhouses like HP and Microsoft. So we know this is a serious committment.

To recap, HP and Microsoft said they will invest $250 million into their Frontline Partnership. The deal aims to deliver full, integrated stacks that support Microsoft’s Exchange Server and SQL Server, including management, virtualization and cloud implementations. The resulting product offerings will consist of pre-packaged application solution bundles that incorporate the aforementioned management and virtualization capabilities. The two companies said the pact calls for them to partner on engineering, R&D, marketing and channel sales.
Still, the announcement left many industry watchers with more questions than answers. As my colleagues Charles King and Merv Adrian noted in their Breaking News Review in the January 14 special edition of Charles King’s Pund-IT, HP and Microsoft “have worked closely for years, share tens of thousands of common customers and channel partners and have long supported each other’s interests.”
So what’s new about this announcement? That question should be answered during the coming months. A $250 million investment is considerable even for two high technology titans. It now remains for HP and Microsoft to execute on their promise to produce solutions that thoroughly integrate the two companies’ infrastructure and applications stacks to ship pre-configured and optimized solutions for Microsoft’s Exchange Server, and SQL Server, virtualization, cloud computing converged infrastructure and pre-packaged application tools.
But perhaps the most immediate and daunting challenge is for HP and Microsoft to deliver a product roadmap that also includes specific details about the pricing, training and services the two firms will commonly deliver. Above all, companies must market and sell this deal to the legions of skeptics. The high tech industry has witnessed numerous high profile partnership deals announced amidst much industry fanfare never to be heard from after the initial press releases.
Remember the Cisco Systems/Microsoft Directory Enabled Network (DEN) initiative of the late 1990s? No. Not many people do. Announced with great fanfare, this dream team was supposed to incorporate the functionality of Microsoft’s Active Directory into Cisco routers and provide network administrators with a more comprehensive means of managing various devices on their network. In reality, the Cisco/Microsoft DEN initiative was a partnership on paper only. There are dozens of similar examples. Hence, the skepticism that greets such announcements is understandable.
This is all the more reason for HP and Microsoft executives to follow up on last week’s announcement with quick, decisive action and not just more fodder for the PR Newswire. For example, when can we expect to see the first fruits of the so-called “deeply optimized machine environment” that will provide turn-key, pre-packaged and pre-integrated server, application, networking and storage solutions? Who are the specific target users and how will they benefit? How will Microsoft and HP license and service these products? Those are just a few of the questions that need to be answered.
Non-Exclusive Partnerships Sometimes Make Strange Bedfellows
The partnership also has especially intriguing implications for HP which now has pacts in place with all of the major virtualization providers, including Microsoft’s biggest rival, and VMware. The new HP/Microsoft Application-to-Infrastructure is a non-exclusive three year partnership. It’s worth noting that HP already has a deal in place with VMware, whose ESX Server is the market leader in server virtualization. Microsoft also gets a boost from this deal. Microsoft’s Hyper-V has been gaining ground, particularly among small and mid-sized corporations. However, it has a long way to go to catch up to ESX Server’s installed base, particularly among large enterprises, so this pact helps keep Microsoft competitive. Additionally, HP also delivers a full suite of management solutions that integrates VMware’s vCenter offering with HP’s Insight management product. HP and Microsoft intend to similarly integrate HP’s Insight and Microsoft’s Systems Center. So again, this helps Microsoft broaden the appeal of its virtualization appeal to its existing base and makes it a more attractive solution for prospective customers.
The partnership with Microsoft put’s HP in the proverbial cat-bird’s seat: it now has a full line of its own servers that runs all the VMware products and similar plans to support Microsoft’s SQL Server and Exchange Server. This gives HP the ability to offer a full line of integrated hardware and services customers their choice of virtualization vendors, while remaining agnostic.
From Microsoft’s perspective, the partnership with HP also has immediate value: it allows Microsoft – at least on paper – to keep pace with VMware, by working with HP, a top OEM hardware vendor and services provider, which is no mean feat. Former Microsoft executive Paul Maritz who now runs VMware is intent on rejuvenating that company and he knows that the way to solidify and expand VMware’s influence is to increase its stake in management and applications. Just last week, VMware purchased Zimbra, the open source Email and collaboration unit of Yahoo for a rumored $100 million. Not coincidentally, Zimbra describes its Collaboration suite as the “next generation” Microsoft Exchange server.
Microsoft clearly felt the need to respond in kind.
The plethora of technology and partnership deals such the HP/Microsoft Application-to-Infrastructure pact, serve as a reminder of the intensity of the IT industry’s competitive landscape – particularly in burgeoning markets like virtualization and by extension, nascent markets like cloud computing. No vendor can afford to rest on its laurels. They must continue to upgrade their product and services offerings to keep pace with the competition.
Microsoft and VMware will continue to try and top one another, and HP is the beneficiary of this ongoing rivalry. Let’s hope the end users are also winners, too.

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ITIC 2009-2010 Global Virtualization Deployment Trends Survey Results

ITIC Reports & Surveys / By Laura DiDio

Server virtualization demand and deployments are strong and will remain so for the remainder of 2009 and through 2010, despite the ongoing economic downturn.

The results of the new, independent ITIC 2009 Global Server Virtualization Survey, which polled more than 700 corporations worldwide during May/June and August, reveal that server virtualization deployments have remained strong throughout the ongoing 2009 economic downturn. It also shows that the three market leaders Citrix, Microsoft and VMware, are consolidating their positions even as the virtualization arena itself consolidates through mergers, acquisitions and partnerships.

Microsoft in particular has made big year-over-year gains in deployments and market share. Thanks to the summer release of the new Hyper-V 2.0 with live migration capabilities the Redmond, Washington software firm has substantially closed the feature/performance gap between itself and VMware’s ESX Server. The technical advances of Hyper-V combined with the excellent conditions of Microsoft’s licensing program, make the company’s virtualization products very competitive and alluring. Three out of five — 59% of the survey respondents — indicated their intent to deploy Hyper-V 2.0 within the next 12 to 18 months.

Survey responses also show a groundswell of support for application and desktop virtualization deployments. These two market segments constitute a much smaller niche of deployments and installations compared to virtualized server environments. The survey results show that application virtualization (where Microsoft is the market leader) and desktop virtualization (in which Citrix is the market leader), are both poised for significant growth in the 2010 timeframe.

Another key survey revelation was that 40% of respondents, especially businesses with 500 or more end users, said they either have or plan to install virtualization products from multiple vendors. This will place more emphasis and importance on integration, interoperability, management and third-party add-on tools to support these more complex, heterogeneous virtualization environments.

Among the other key survey highlights:

The “Big Three,” Citrix, Microsoft and VMware, are bolstering their positions with a slew of new offerings and a plethora of partnerships due out in the 2009 summer and fall.
Partnerships and Alliances: The alliance between Citrix and Microsoft remains robust as these two firms believe that there’s strength in numbers, as they mount a challenge to server virtualization leader VMware’s continuing dominance.
Microsoft Hyper-V Closes the Gap: Microsoft made big year-over-year market share gains from 2008 to 2009. The survey data shows current Hyper-V usage at 32%; but 59% plan to adopt in next 12 to 18 months.
VMware remains the market leader in server virtualization with approximately 50% share among enterprise users; Microsoft follows with 26% share.
Microsoft is the current market leader in application virtualization with a 15% share; followed by Citrix with 11% and VMware with 7%. However, nearly two-thirds of businesses have not yet deployed application virtualization.
Citrix is the market leader in desktop virtualization with a 19% market share followed by Microsoft with 15% and VMware with 8%. But again, over 60% of corporations have not yet begun to virtualize their desktop environments.
Mergers and Acquisitions Raise Questions: There is confusion among the legacy Sun and Virtual Iron users as to what will happen to both the product lines and technical support in the wake of both firms’ acquisition by Oracle.
Apple Mac is a popular virtualization platform; nearly 30% of respondents said they use Mac hardware in conjunction with Windows operating systems to virtualize their server and desktop environments.
Parallels and VMware Fusion are the two leading Mac virtualization vendors with a near 50/50 split market share.
Time to Bargain: Despite budget cuts and reduced resources only a very small percentage of companies — 7% — have attempted to renegotiate their virtualization licensing contracts to get lower prices and better deals.
Server Virtualization Lowers TCO: Almost 50% of survey respondents reported that server virtualization lets them lower their total cost of ownership (TCO) and achieve faster return on investment (ROI); however, only 25% of businesses could quantify the actual monetary cost savings
Users Prefer Terra Firma Virtualization to Cloud: Users are moving slowly with respect to public cloud computing migrations, which are heavily dependent on virtualization technology. To date, only 14% of survey respondents said they will move their data to a virtualized public cloud within the next six-to-12 months.

This survey identifies the trends that propel or impede server, application and desktop virtualization deployments and to elucidate the timeframes in which corporations plan to virtualize their environments. ITIC advises all businesses, irrespective of size or vertical market to conduct due diligence to determine which virtualization solution or combination of products best meets their technical and business needs in advance of any migration. And in light of the ongoing economic downturn, businesses are well advised to negotiate hard with their vendors for the best deals and to ensure that the appropriate IT managers receive the necessary training and certification to ensure a smooth, trouble-free virtualization upgrade. This will enable the business to lower TCO, accelerate ROI and minimize and mitigate risk to an acceptable level.

ITIC 2009-2010 Global Virtualization Deployment Trends Survey Results Read More »