The entire IT industry is on an unmistakable path to virtualization with certain segments adopting it faster than others (e.g. financial sector, hosting companies, etc.) Server virtualization is still the primary driver of virtualization although, in the last couple of years, VDI (virtual desktop infrastructure), which helps virtualize all client devices like desktops, laptops, tablets and smartphones has also shown remarkable growth. Storage virtualization is limited to the larger companies with vast amounts of storage although it will be an integral part of cloud delivery centers as well as integrated/converged data centers. These trends will make virtualization a growth market for several years.
While large companies are adopting virtualization on their in-house infrastructure, only certain SMBs are likely to adopt in-house virtualization. Most will be delivered virtualized solutions (especially VDI) via virtual infrastructures by hosters.
The largest share of Virtualization adoption by SMBs comes from North America, however, Asia/Pacific is the place to be. Asia/Pacific right now shows two distinct trends. On one hand, we see a number of smaller companies adopting in-house IT infrastructures. On the other hand, businesses with somewhat larger IT needs have started to adopt virtualization and the trend is expected to gain momentum in the near future. Armed with latest information about latest technologies and driven by rapid business growth (and corresponding growth of their IT infrastructures), Asia/Pacific businesses have shown a high openness towards, and willingness to adopt virtualization. In many cases, virtualization is an integral part of the discussions while designing and implementing new IT infrastructures among Asia/Pacific businesses.
The growth rate of Virtualization in Asia/Pacific is a little over 28 percent from 2010.
Virtualization reaching the Consumer Market
Virtualization is already being used by consumers and small businesses widely. The most common example of this is Parallels, which allows consumers to run Windows operating systems on their Apple machines. (Other vendors also have comparable products to help consumers run multiple OS’ on their machines.
Microsoft has also made virtual machines integral to its Windows 7 OS that allows users to run their Windows XP applications on their new Windows 7 operating systems.
In the near term, this trend of using multiple OS’ on a single machine will accelerate. Further down the road, it is entirely possible that increasing reliance on cloud-delivered services may reduce the users' need for on-site virtualization. But that is still further down the road and the exact trend is still an open question.
Market Leader in Virtualization
VMware is still the dominant leader with over two-thirds to three-fourths of the market for server virtualization. What contributed to its leadership position is that it has the benefit of an early start, a broad range of supporting products for managing virtual environments, a strong channel and partnerships with most leading vendors for the resale of its products.
Challenging VMware's Market Dominance
VMware has three major advantages: its portfolio of products, ecosystem to implement and support VMware's environments and brand recognition. Any competitor who hopes to compete with VMware head on will need to at least match VMware's strengths in these areas. Citrix is gaining traction, especially with its VDI initiatives. Microsoft has the potential to compete with VMware but will need to focus more. Other competitors are still in early phases and unlikely to pose a major threat to VMware in the short term.
Various attempts at open source solutions that would reduce or potentially eliminate the reliance on the underlying virtualization platform are still in very initial stages. Theoretically, adoption of open solutions will avoid a vendor lock-in by customers as they would be able to move applications easily. Even if the efforts take off, it'll take a few years to have any material impact on VMware's dominance. A greater source of threat for VMware is competition from other vendors like Citrix, Microsoft and other smaller vendors (including potentially Oracle).
VCE's vision of integrated data centers needs to be supplemented by tangible products for its eventual success. It might take some time before such integrated data centers are designed and developed and gain customer acceptance. However, short-term ups and downs aside, the industry will move towards such integrated products coming from various vendors (e.g. HP's converged infrastructure). These integrated modular data centers will make it much easier for companies to install them and reduce their costs for designing, installing and maintaining these data centers.
Tavishi Agrawal
Techaisle
Techaisle Blog
The World is Flat (© Thomas L. Friedman) and so has become IT, especially for SMBs. With a Flat world, rises an opportunity for SMBs to employ workers who are globally distributed, travel and telecommute. With a Flat world comes Flat IT. And the IT vendors are missing the dialogue with their SMB customers- some vendors more than others. They are also missing a new understanding of SMB IT adoption cycle.
But we are getting ahead of ourselves. Let us first understand the world of Flat IT.
Waves have Evaporated to Form Clouds
Analyst firms typically use words such as IT waves or eras in describing SMB IT adoption - client/server wave, networking wave, Internet wave, etc. There is nothing wrong with this wave theory except now that there are no more waves left, all water is evaporating to form clouds. But some analysts still continue with that philosophy and call the coming wave as mobility wave. These do not do any good to either a vendor or the end-customer. Mobility started with notebooks & Wi-Fi. An SMB does not buy IT considering the wave, it does not even think whether the wave is waxing or waning. A typical SMB buys IT because it needs IT and the SMB with the help of channel partners becomes smart enough to understand what IT to buy to make itself more efficient, productive and profitable.
Waves were relevant more than a decade ago when technology products were evolving in piecemeal basis. Today all technologies are available at the same time and its adoption among SMBs is dependent upon the business plan.
Building Block IT
Enter the building blocks. SMBs started off their journey into IT by unknowingly using simple building block concepts. Their first purchase was always a PC which served as the foundational block. When they added employees and file sharing became important, they built a network and added a server – the next block stacked up on the foundational block. When they reached a certain size they added more servers, the third and subsequent blocks became applications such as CRM, ERP and Line of business. All of these blocks could not be added without the existence of the previous block. Very soon when an SMB reached a mid-market level of operation, the blocks were neatly stacked one on top of another. And when the blocks became vertically unstable, they brought in external experts such as consulting organizations to help manage these blocks and possibly break them into small chunks that could be easily maintained. SMBs looked for Enablement.
IT vendors thrived. Dell concentrated on the foundational block, Cisco connected the blocks, HP played with all block layers while IBM refocused to the top layers. Vendors like Microsoft, SAP and Oracle provided the layers that enabled the blocks.
The process of an SMB growth and its relative steps to absorb IT were steady and predictable. Some SMBs stacked the blocks faster than others but steps to get to the top of the block were always same. It was also dependent upon the financial capacity of an SMB to the extent that those with large dollars available for investment built the blocks faster not necessarily having the same end-results as SMBs with limited investment capabilities and which moved slower. Call it cutting edge versus laggards, but such nomenclature also never proved that the cutting edge SMBs were more efficient or profitable than the laggards. IT vendors and channels made money as they exploited the IT imbalance among various SMBs creating a race to reach the top of building blocks as fast as possible.
Flat IT
Enter Flat IT. Cloud, mobility, virtualization, and managed services have effectively toppled the blocks down in one fell sweep and have laid everything flat on the table. SMBs are now automatically empowered but they do not know it yet, because nobody has told them so directly. The concept of cutting edge and laggard has been torn apart because
it carries little meaning as SMBs now have a rich menu of solutions available that can be plugged into in a very short time. Now it is not a race to the top, but how can an SMB reach its full potential in the shortest period of time.
In a Flat world, with Flat IT, similar technology is now available across all countries and gap between developing and developed worlds is narrowing. In some of the emerging markets, IT is not only Flat but leapfrogging technologies as building blocks are not fully present. Where converged infrastructure is becoming a possibility, Cloud services will
be delivered via wireless.
Next week we will discuss how SMB IT has become Time & Size Agnostic and how the SMBs of today are transforming themselves.
Anurag Agrawal
Techaisle
It is a well-known fact that every new platform or major shift in technology requires a killer app. For PCs it was largely basic productivity apps such as word processing and spreadsheets and presentation software. While platforms have changed, these basic productivity apps maintain their killer app status.
Office 365 from Microsoft is a single suite that takes the popular, dominant Office applications and puts them in the Cloud. You can read the CNET review here. We believe this is a boon for SMBs. Over the years, these productivity apps have become very expensive as their capabilities have expanded. Even so, SMBs depend on these to such an extent that they bite the bullet and purchase these for every person in the office. With Office 365, SMBs can now shift that capital expense into the operating expense category, paying $6/month per user (for SMBs with fewer than 25 employees) for the suite of Office applications. These apps are not full featured online replicas of their desktop based kin. They offer limited functionality but the 80-20 rule applies here. The majority of functions most people need are in fact available. Even if an SMB does not shift all of its employees to Office 365, they can still save money by shifting part of their workforce that does not require the full featured desktop versions. In other words, why buy a Lexus when a Corolla will do.
One aspect that can be problematic for SMBs considering using Office 365 is that it forces a firm to move their domain to Microsoft or its partner hosting the solution. But companies that have already invested in a website will need the help of a Microsoft partner to make Office 365 work for the organization without having to move the domain. And this is where Microsoft faces its largest stumbling block. For small companies, Microsoft does not have the infrastructure to support potentially millions of small businesses who may not have a partner or may not want to engage a partner. This begs us to question whether Microsoft is really committed to real small business. All signs point towards Microsoft focusing their efforts on gaining larger small businesses where they win more seats per deal. Really small businesses are the subject of a “breadth” marketing strategy which basically means that Microsoft will rely exclusively on partners or on the savvy of the small business owners themselves to sign up for and properly configure Office 365 services.
Some of the recent surveys conducted by Techaisle with Channel Partners shows that channels will begin reselling Office 365 although reluctantly. The first mover channels would be the ones that currently offer BPOS, Hosted Exchange, and Hosted SharePoint. These channel partners could be service providers or smaller VARs who are the trusted advisors to the very small businesses typically less than 25 employees.
Office 365 is a great idea and is a good first attempt from Microsoft. But a good product must be backed by the right support systems. This is particularly important when products are being provided as a service. It changes the fundamental nature of Microsoft’s conversation with its customers. It is not software anymore. It is a service.
Abhijeet Rane
Techaisle
- Lack of control
- Complexity in development and usage
- Muddled TCO
- Intricacies in Data Integration
- Expensive implementation
- Dependency on Consultants
- Too many Vendors providing niche solutions
Historically, these are the very reasons that gave rise to thin-client computing which quickly transformed its nomenclature to Desktop Virtualization. Again the promise of lower TCO, “access anytime, anywhere”, centralized computing with de-centralized user capabilities, disaster recovery and standardization is still struggling to make a definitive statement for SMBs.
Similar signs are already becoming visible in the Cloud Computing arena. The beneficiaries of this complexity will be three different types of entities:
- Those that provide consulting to SMBs prior to Cloud Computing Implementation
- Those that provide consulting and data integration across clouds post cloud implementation for SMBs
- Those that have a stack of offerings providing not only cloud solutions but also seamless data exchange capabilities for SMBs
Anurag Agrawal
Techaisle
