IDEAS Insights

IDEAS Predictions for IT Industry in 2010

As in previous years, IDEAS analysts recently conferred to identify the key industry trends that are poised to play out in 2010. Following are IDEAS top 10 predictions for next year (see the December issue of Tech Trends Monthly, the IDEAS newsletter, for much more detail on each topic – or sign up for a free subscription here):

1. More mergers, acquisitions and alliances will occur. IDEAS expects to see some surprising moves, many of which will be opportunistic, but others due to strategic shifts in response to competitive realignments in the industry. Acquisitions could include hardware companies buying large system software companies, and more high-profile software companies buying hardware companies.

2. Demand for server systems will rebound. Server deployment will pick up in 2010 due to pent-up demand, and as customers take advantage of new technology to streamline their infrastructure. Companies that do not make their IT more efficient will find themselves at a competitive disadvantage. As the economy recovers, companies that optimize their business processes to maximize use of IT will gain an advantage over those that have concentrated only on cutting costs.

3. Green marketing hype will subside as the issue matures. Corporate executives will remain highly focused on environmental goals for the overall corporation, but for departmental-level IT managers, "efficient IT" will gradually replace "green computing" as a priority.

4. x86 servers will continue their drive into the datacenter. The sharp increase in performance of Intel's Nehalem processor will accelerate the use of x86 servers for hosting enterprise-level workloads, but x86 servers will not take on the same characteristics as the "big-iron" systems that traditionally made up the heart of datacenters. Instead, servers and storage systems will employ various forms of clustering software on inexpensive hardware to achieve scalability and reliability.

5. Server form factors will progress from towers and racks to integrated appliance-like systems. Integrated solutions that combine multiple layers of IT infrastructure, including servers, storage, networking, and software, will become increasingly appealing to organizations that have the need for next-generation datacenter capabilities, but lack the depth of personnel to manage complex new technology such as virtual infrastructure.

6. Server virtualization will converge with storage and network virtualization. I/O infrastructure virtualization, which applies virtualization functions to storage and networking infrastructure, will continue to evolve very rapidly throughout 2010, with high stakes for vendors to chart out positions in next-generation datacenter infrastructures.

7. System software will fragment, and heterogeneous virtualization management will become a requirement. As virtualization takes hold across the industry, the operating system will begin to lose its grip on IT as the center of the software universe. Users will apply virtualization to workloads that span multiple departments or business units, and as a result, virtualization management tools will have to support multiple virtualization platforms.

8. Organizations will build their own "secure" clouds. Despite continued fascination with the prospect of tapping into third-party computing infrastructures, the most pressing concern for the majority of users will be to virtualize as much as possible of their internal infrastructure into "secure" or "private" clouds.

9. Public clouds will draw startups, and some experimental use by larger organizations. Startups will use cloud-based services to minimize costs and accelerate time to market, and some small companies will move routine workloads to Software as a Service (SaaS) for cost savings. Mid-sized and large enterprise companies will experiment with third-party cloud services by temporarily deploying some production workloads on them.

10. IT administrator roles will take on a broader scope. With the rise of virtual infrastructure in next-generation datacenters, skill sets that traditionally fell into separate silos for servers, storage, software, and networking, will have to converge. Few people have such converged skills today, and those that do have them will become more valuable.

IT is about to get very complex as a result of consolidation and virtualization, and the very definition of a server and its components will undergo significant changes. Vendors who control parts of the IT stack today may not be the ones that control tomorrow's IT stack, and a huge battle will erupt for supplying the critical functions in new datacenters being rolled out. At the same time, IT managers will increasingly evaluate SaaS and outsourcing options for production workloads, ultimately promoting cloud computing to become one of their central business issues. 2010 will be the turning point in which organizations begin to confront some fundamental questions of where and how IT should be implemented.

We would like to hear your feedback on these projections. Please leave comments below, or to discuss any specific issue in more detail, we invite you to visit our Facebook discussion page, where there are separate threads for each of these topics.

Seam Between Applications & Operating System Becoming Key Target for Virtualization Management

rPath announced an update to its software release automation platform, introducing the ability to build system images based on Red Hat Enterprise Linux. The company also revealed a roadmap for extending its platform to take on additional functions related to IT automation, including infrastructure configuration and business service definitions, with the ultimate goal of providing complete back-end support for self-service provisioning and maintenance of business services.

The company is perhaps best known for its tools enabling the development and management of virtual appliances. With these tools, rPath enabled software developers to integrate their applications with operating system functions so that the entire package could be delivered to customers for deployment directly on virtual infrastructure. More recently, rPath focused on delivering provisioning solutions that could meet the broader needs of mainstream IT organizations.

The core of rPath's platform is rBuilder, a tool for packaging and deploying self-contained systems that can run on physical hardware or in virtual machines. The tool can inspect applications either at the level of binaries or source code, and determine its dependencies on all external software that it requires to run, using 40 different techniques to discover artifacts of particular dependencies. rBuilder collects all of these dependencies, at the level of individual files, in a complete system "manifest", from which it can automatically create a system that the application needs to run. rBuilder can use this manifest to deliver the system in a variety of formats, including an ISO for installation on the "bare metal" of a physical server, a virtual machine that can run on a hypervisor, or an image that can be deployed on a third-party cloud computing service.

Once rBuilder has captured the system manifest, administrators can apply version control at any level of the system, including the application, operating system, any software frameworks the application needs to run, and patches and updates. As a result, administrators gain precise control over the lifecycle for the entire system, with the ability to update and rollback the representation incrementally, while maintaining a complete history of the system's evolution.

rPath now plans to extend this approach from the scope of managing individual systems to tackling problems in the broader market for datacenter automation. First, rPath will extend its model to capture settings in a system's host environment, i.e. parameters for storage and networking functions, so that their configuration can be brought under rPath's version control as well. rPath will then allow administrators to put definitions for complete business services under version control, by hosting manifests not just for individual system instances, but for collections of instances needed to represent a logical business service.

To represent business services, rPath will maintain information about the relationships and dependencies between individual system instances in its version control repository. Eventually, rPath will extend its platform so that it can be used by decentralized constituents to provision and maintain their own services, allowing users to define policies that specify how systems are constructed and business services are assembled. rPath hopes that its platform will evolve into a complete back end that can support a variety of critical IT management activities, including service catalogs, portals, workflow, process definition, and chargeback. In this role, rPath’s platform would become the central repository of blueprints for how systems are constructed, with the fundamental responsibility of creating, provisioning, and maintaining systems over time.

The rise of virtualization, potentially followed by an industry shift towards cloud computing, clearly introduces new systems management requirements. The relative ease of creating virtual machines significantly increases the challenge of provisioning those virtual machines with software that makes them useful for production workloads. At the same time, users now have more variables than ever to consider for matching an application workload with the resources needed to host it. On the server side, a particular application or its users will dictate the installation of either Windows or one of several Linux distributions as the underlying operating system, all of which may draw on a steady stream of updates and patches. On the host side, the server could be deployed on one of several types of virtual machine hypervisors, or eventually on some third-party cloud computing service, all of which may introduce the need for configuration of virtual I/O infrastructure.

Sophisticated models for capturing all of these variables can become the foundation for powerful tools to help manage the complexity of increasingly virtualized datacenters, as can be seen in several other up-and-coming systems management platforms. For example, a key strength of Microsoft’s rapidly growing System Center management platform is its "knowledge-based" architecture, in which models based on criteria such as service availability, response time, necessary software, and patch levels are used to represent the desired end state of an environment. EMC recently acquired FastScale, which offers an approach similar to rPath’s for automatically assembling systems images based on application requirements. These capabilities will help to add credibility to EMC’s emerging Ionix systems management portfolio.

As virtualization shifts control of computing resources from operating systems to hypervisors, some speculation has arisen that pure virtual appliances, in which applications are coupled with trimmed-down Just Enough OS (JeOS) operating systems, could eventually become the preferred container for deploying and managing workloads on virtual infrastructure. In this vision, standard operating systems would no longer define how applications are deployed, or how computing resources are assigned to applications. Instead, the OS would be relegated to a secondary role, beholden to the requirements of applications. If such a management perspective gains critical mass, system administrators will gradually care less and less about managing the operating systems itself, but will focus instead on managing virtual infrastructure in a manner that best meets the needs of the application. A detailed mapping of the relationships between workloads, applications and lower-level resources will be essential for enabling this style of operation.

It is premature to declare the demise of the operating system as a strategic driver in the IT industry, and the virtual appliance/JeOS concept has yet to break out of niche use cases such as distributing trial versions of software. However, virtualization will clearly change the way that operating systems, including standard OS platforms such as Windows and the leading Linux distributions, are configured and installed. rPath has built a great deal of experience in understanding the relationship between applications and operating systems, and its tools will be a welcome addition in organizations that want to optimize their management processes for virtual infrastructure rather than operating systems details.

After HP’s Acquisition of 3Com, What’s Next for Storage and Network Virtualization?

Following HP's announcement last week that it would acquire 3Com, speculation has arisen that more acquisitions related to storage and networking could happen soon, possibly including HP's absorption of 3PAR or Pillar. Another leading network company, Brocade, issued a denial that it was for sale, which nonetheless raises questions about whether its products and technology would fit well into a larger company.

As the industry moves into the next stage of applying virtualization, going beyond basic use cases such as consolidation, users are focusing increasingly on the broader impact that virtualization will have across storage and network infrastructures. Especially in large organizations, system managers now seek to achieve some of the same benefits from virtualizing storage and networking resources that they gained with server virtualization. In particular, they would like to reconfigure storage and network infrastructures with the same flexibility as virtual machines. For example, just as virtual machines can be moved around a network with functions such as VMware vMotion or Hyper-V Live Migration, virtual storage can be transparently relocated from one physical storage device to another with tools such VMware Storage vMotion. Similarly, administrators expect to be able to dynamically reconfigure virtual networks independently of the physical network and storage connections, which are generally changed as little as possible to avoid burdening network and storage management personnel.

Some of the requirements for these capabilities must be handled at the level of server hardware. Indeed, I/O virtualization technologies such as HP Virtual Connect, IBM BladeCenter Open Fabric Manager, and Egenera PAN Manager enable flexible connections between servers and the physical topology of networks and storage. However, to fully integrate virtual machines into virtual networks spanning datacenters or enterprises, specific functions must be implemented within virtual machine hypervisors. For this reason, the integration of Cisco's Nexus 1000V virtual switch with VMware vSphere 4.0 represents an especially crucial link. The commonality between Cisco and VMware's virtual networking technology enables VMware-based virtual networks to be managed with the same tools used for managing Cisco-based physical networks, in a way that allows virtual networks to be flexibly reconfigured. A key strength of the Virtual Computing Environment (VCE) coalition between EMC, Cisco, and VMware is their ability to further optimize the hypervisor, virtualized storage, and virtualized networking as a single integrated stack. Coupled with Cisco's entry into the server market with its Unified Computing System (UCS), VCE's thrust deep into the heart of virtual infrastructure steps up the challenge for other major systems vendors to respond with a credible alternative for end-to-end virtual infrastructures spanning servers, storage, and networking.

HP's acquisition of 3Com, following its renewed focus on the HP ProCurve line of networking gear in the past year, clearly represents a dramatic first step towards adapting to the new realities of the IT systems business, in which Cisco has become a strategic competitor. HP has also quietly started promoting an industry standard for virtualized networking called Virtual Ethernet Port Aggregator (VEPA), which it hopes will be more palatable for adoption by multiple server vendors than the VN-Link technology underlying Cisco's Nexus 1000V switch and the vNetwork distributed switch in VMware vSphere 4.0. As the strategic importance of virtual switching has become clearer, some other alternatives have sprung up in the industry as well, including Open vSwitch, which is based on open source technology developed in part by Nicira Networks and is being promoted by Citrix for its XenServer hypervisor.

How would additional acquisitions then help HP to compete with Cisco and VCE? First, acquiring 3PAR does not appear to be necessary. HP already has a broad range of storage solutions, including Modular Smart Array (MSA), Enterprise Virtual Array (EVA), XP, X9000, ExDS9900, AiO (Proliant Storage Server), RISS, and Lefthand. It is not clear how 3PAR would fit into this lineup, unless some existing product family were phased out. Indeed, most of the big storage companies have now made their clustered storage technology acquisitions, leaving 3PAR to compete independently. At this stage, it is unlikely that any of the major vendors would want to acquire the company, except for an irresistible fire sale price. One possibility would be for 3PAR to be acquired by Rackable (now SGI), should it still have any money left after its acquisition of SGI. More far-fetched, 3PAR could be acquired by someone out of left field, such as a cloud service provider like Amazon, Salesforce.com, Google, or even Microsoft. Any of these companies could take advantage of 3PAR's technology to build out a cloud service infrastructure that requires vast amounts of high-performance storage.

Acquiring Brocade could be more strategically significant, either for HP or another vendor such as Cisco. From the perspective of storage customers, Brocade is far more relevant than 3Com, which does not make Storage Area Network (SAN) switches. Brocade is one of only two independent suppliers of enterprise-grade Fibre Channel (FC) switches, the other being Cisco, which entered the FC market relatively late. While Brocade insists it is not for sale, the company now faces a long-term strategic issue as its core market of FC solutions nears the end of its natural lifespan. FC technology is now 30 years old, and while it has been the SAN interface of choice for the last 10 years, it will soon enter the sunset phase when FCoE and/or Infiniband start taking off as expected. As a result, Brocade needs to break out with some major new innovation or be acquired, otherwise it will perish.

One key advantage for Brocade is its DCX Backbones technology, which enables true Storage Network Virtualization, whereby SAN switches themselves are transformed into hosting virtual networks. Cisco is targeting converged storage networking with Fibre Channel over Ethernet (FCoE), but its technology is optimized more for the virtualized Ethernet layer of the stack, and it does not have quite the same degree of storage virtualization functionality as DCX Backbones. Whichever company acquires Brocade and its DCX Backbones technology could gain a crucial edge in the pursuit of Storage Network Virtualization.

Integrating DCX Backbones with Nexus 1000V technology would put Cisco, and the VCE coalition, in an even stronger position than before to drive the agenda of virtual infrastructure and Storage Network Virtualization, since most of the major systems vendors now OEM Brocade's technology for their existing SAN products. Conversely, should HP proceed to acquire Brocade, it would significantly strengthen its defenses against Cisco's drive into the server market. At minimum, having another switch supplier in its fold would help HP establish VEPA as a standard for virtual switching. Further, integrating Brocade's technology with other elements of HP's virtual infrastructure such Virtual Connect would go far in enabling HP to propose an alternative to VCE for virtualizing everything outside of the hypervisor (regardless of which hypervisor is installed, i.e. VMware, Hyper-V, or XenServer). While there is no evidence at present that either Cisco or HP is about to make a move on Brocade, the control of that company's assets remains a critical variable for determining how virtual infrastructure will be adopted across the industry.

VMware's vSphere Pricing is Attractive at Entry, but Premium Looms at High End

VMware's new virtualization platform, vSphere 4, introduces some significant changes in the way the company prices and packages its software, compared to the previous version Virtual Infrastructure 3 (VI3). To determine the impact on of VMware's revised pricing on various classes of servers, IDEAS calculated the equivalent cost per processor for deploying VI3 and vSphere 4 on various hardware configurations (see details in the June edition of our Tech Trends Monthly newsletter). The analysis found that VMware's pricing for vSphere 4 will be attractive for entry users in SMB environments, but that VMware has increased its premium for users at the high-end who are likely to exploit its most advanced features.

vSphere 4 Standard, the entry version of VMware's virtualization platform for single servers, is clearly similar in features to VI3 Standard, and it is a lot cheaper in all three configurations. With vSphere 4 Standard, the two- and four-socket configurations are 47% cheaper than VI3 Standard, while the one-socket configuration is 73% cheaper. The new vSphere Essentials offerings (see datasheet) create a new entry price point for SMBs users with up to three servers. These users can obtain the same level of functionality as VMware's previous entry bundle, VI3 Foundation, for around one third of the cost.

At the high end, though, users will ultimately pay more to get the most advanced level of functionality. vSphere 4 Enterprise is priced the same as VI3 Enterprise at two- and four-socket configurations, and costs 50% less on one-socket configurations, while including many new features. However, VMware will discontinue vSphere 4 Enterprise after December 15, 2009, at which point users will have to buy vSphere 4 Enterprise Plus. vSphere 4 Enterprise Plus costs 21% more than vSphere 4 Enterprise, for which users get VMware's most advanced features, including VMware vNetwork Distributed Switch and VMware Host Profiles.

Further, some of VMware's new packages vary in terms of the number of cores per processor socket that they can be deployed on. While most versions of vSphere can be deployed on processors that contain up to six cores per socket, vSphere 4 Advanced and vSphere Enterprise Plus editions will be required for deployment on processors that contain up to 12 cores per socket. Most 4-socket servers today have 4 cores per socket, and Intel and AMD have each announced processors with 6 cores per socket. However, Intel has pre-announced processors with 8 cores per socket, which are expected in late 2009, while AMD has previewed processors with 12 cores per socket, and it is promising 16-core processors in the future. When systems with these processors become available, they will require the installation of vSphere Advanced or vSphere Enterprise Plus.

VMware's pricing has come under some pressure lately. Microsoft includes virtualization with its Windows Server 2008 operating system, and Citrix recently starting allowing use of its virtualization functions for free. With its vSphere pricing, VMware has clearly responded to these pressures. In an effort to blunt the appeal of bundled and low-cost alternatives, VMware has reduced the premium for users who may just be getting started with virtualization, and have limited funds to invest in virtual machine software. At the same time, VMware is betting that enterprise users who value VMware's high-end functions will not be as price-sensitive, and are willing to pay more to step up to the next level of VMware's vision for virtual infrastructure.

Scrutinizing Oracle's Words for the Future of Sun's Hardware Business

What does Oracle plan for Sun’s SPARC and x86 server lines? It seems easier to understand why Oracle, as a business software company, values Sun’s software assets. Java and Solaris are clearly important to the success of Oracle’s middleware and database products. However, during the call to announce Oracle's acquisition of Sun, Larry Ellison specifically highlighted integration of software and hardware as a competitive advantage offered by the combined Oracle/Sun. An article in the upcoming April issue of IDEAS Tech Trends Monthly, “Is Oracle Really Entering the Server Hardware Business?” explores our thoughts on what the future holds for Sun’s $8 billion hardware business.

By offering an end-to-end, vertically integrated platform including hardware and software, Oracle seeks to achieve a stronger bond with its customers, and higher profits. However, most of the major server vendors in the industry support Oracle’s database software to some extent, and if Oracle now promotes its own hardware platform based on Sun’s technology, other hardware vendors may become increasingly hesitant to encourage their customers to deploy Oracle’s software offerings, for fear of drawing their attention to Oracle’s competing hardware.

Oracle’s announcement FAQ indicated that “Oracle also intends to focus the server and storage businesses on our common enterprise customers”. Today, that set of customers clearly represents the users of Sun’s SPARC systems. By contrast, Sun’s x86 systems business overlaps much more with the business of Oracle’s key partners, including HP and Dell, and it represents less than 13% of Sun’s hardware business. Therefore, Oracle may be much more hesitant to promote these systems, and it will likely continue to encourage other x86 vendors to adopt the x86 versions of Solaris and OpenSolaris.

For twenty years, the IT industry has gravitated towards disaggregation, whereby enterprise IT solutions were typically assembled from collections of industry-standard components. Now, the industry is entering a phase in which the server side of IT infrastructure is increasingly delivered in proprietary, vertically integrated forms (of which cloud computing is perhaps the ultimate manifestation). Customers who deploy servers on their own premises expect solutions consisting of differentiated software that is integrated directly with the hardware platform. 

With the acquisition of Sun, Oracle expects to deliver such a solution at the high end, consisting of the Oracle database, SPARC hardware, and the Solaris operating system, which it can position as an end-to-end, integrated alternative to IBM’s mainframes with z/OS and DB2. For now, the margins at the upper levels of the server market will be most appealing to Oracle as it seeks new ways to expand its business. Sun’s assets targeting the lower end of the market, including its commodity x86 hardware and even the MySQL database, are not yet likely to represent a high priority for Oracle. Its ownership of these assets will serve defensive purposes in the short term, keeping them away from the hands of competitors.

Regardless of its ultimate plans for Sun’s server products, Oracle’s entry in the server market will change the balance of power in the IT industry, and it should not be taken lightly.