VMware’s vSphere4 Announcement: A Critical Perspective

1. Summary

VMware just announced a major refresh of its server virtualization product line, renamed vSphere4. VMware vSphere 4 aims to aggregate and manage large pools of infrastructure — processors, memory, storage and networking — as a seamless, flexible and dynamic operating environment.  As the company’s biggest announcement in almost three years, vSphere4 marks a big step forward and is focused on three objectives:

• Removing the barriers that slow the advance of virtualization into more performance-sensitive, business critical workloads such as SQL Server, Exchange or SAP.  For instance, we estimate that less than 5 percent of SAP production workloads running on x86 hardware are virtualized today, unlike test and development workloads, which are already widely virtualized. That explains the primary focus on increased performance and scalability.  Based on our primary research with customers and channel partners, we believe that virtualization may be reaching an inflection point over the next 12-18 months as far as adoption for more business critical production workloads is concerned.
• Increasing storage efficiency and energy efficiency, which should resonate in today’s environment where CFOs have a much more prominent role at the table in IT buying decisions.  In principle, this should lead to reduced capital and operating expenditures associated with VMware deployments.
• Automating resource management and simplifying operations. This is most relevant to large virtualized environments (50 physical servers and up).  While the new product capabilities are positioned to reduce the 70 percent of IT budgets being spent on keeping the lights on, frankly, they reinforces the functionality of other parts of the suite in mitigating the challenges created by wide-scale virtualization adoption, notably the proliferation of virtual machines.

VMware has captured the marketing zeitgeist by labeling its suite “the industry’s first operating system for building the internal cloud.”  Private clouds are, in fact, being adopted ahead of public clouds, and VMware is right that it will only be successful if it enables mainstream commercial workloads to be run in these clouds without requiring modifications to the applications. The company claims that “for hosting service providers, VMware vSphere 4 will enable a more economic and efficient path to delivering cloud services that are compatible with customers’ internal cloud infrastructures.” While VMware is by far the best-positioned vendor to enable these, and is building that stack from the bottom up, we would have liked to see more detail on what that top-to-bottom private cloud stack would look like.

As Gregory Smith of IT and telecommunications outsourcing firm T-Systems articulated at the April 2009 SAP Virtualization Week, a true private cloud provides infrastructure-as-a-service (IaaS) to enable end-to-end application services delivery. While virtualization provides the crucial foundation for IaaS, VMware is still assembling the top layers of the IaaS stack – such as the ability to charge internal departments based on their usage of IT resources. Moreover, vSphere 4 maxes out at 32 physical servers in a single logical resource pool, which represents the scale of a medium-sized puddle, not the large pool required for an enterprise cloud.  Clearly private clouds are still very immature today.  VMware could have used that opportunity though to provide customers with more clarity on which workloads should be put into private clouds first and what the barriers are for more critical workloads.

The company did not emphasize its previous aspirations of managing end-to-end application services delivery.  We expect VMware to ship an upgrade to its highly regarded AppSpeed application performance management product some time later in 2009.  However, it will only provide application-level intelligence for a limited number of workloads, including J2EE frameworks, .NET, SQL Server and a few others.  We believe VMware is leaving the application-level management to others because it did not want to compete head-on against Microsoft and the Big Four systems management vendors.  Moreover, most customers prefer to have their existing systems management tools span across and provide an integrated, single view into both physical and virtual infrastructures.

The company did not talk about its desktop virtualization product line, renamed View. Since View is based on the newly refreshed server virtualization infrastructure, we would expect to see a refresh toward the end of the year. For users accessing a desktop environment streamed from servers, the increased storage efficiency will help bring capex costs down toward those of traditional desktop environments.  Better presentation protocols, including the one coming from the joint work with Teradici, will bring Adobe Flash and other rich media support to end-users.  What’s not clear yet is when the client-side bare metal hypervisor that works in occasionally-connected environments will finally ship. However, many of the fifty VMware customers and channel partners we interviewed did say that, given VMware’s advantage in managing servers, their customers expect to use that same infrastructure to manage their desktops, when and if they start that migration.

Overall, we are impressed by the product announcement, with which VMware will further expand its already considerable lead over Microsoft and Citrix.  However, we suspect the company will face formidable challenges in transitioning its own sales force and particularly its channel partners toward a multi-disciplinary, solutions-led sale.