On May 17, 2011, HP, IBM, Intel and Red Hat (as governing members) joined BMC Software, Eucalyptus Systems and Suse to announce the “Open Virtualization Alliance”, or OVA (which means “eggs” in Latin, right?). Their stated purposes include “increase overall awareness” of KVM, “accelerate the emergence of an ecosystem” around KVM, and so on.

Sure, the server virtualization market is in dire need of good competition, no doubt about that. In fact, it needed competition ten years ago.

So what’s wrong with open source? Nothing! Xen was introduced in 2003, a mere two years after VMware introduced ESX Server. Xen is widely used – especially by service providers (such as Amazon’s EC2). Citrix XenServer and Oracle VM are based on open source Xen. Wait a minute – this alliance isn’t about Xen, it’s about KVM, right?

That’s concern number one. I have no issues with KVM – except it’s very late to the market. What KVM is really, really good at is what was really interesting a few years ago, both to enterprises and service providers. What they aren’t so good at – ready-made and rich management and automation tools – is what customers need today (and service providers want to tap into an installed base of enterprise customers). So, “accelerating the emergence of an ecosystem” to me is a sad place to start today in a market that has been growing and evolving rapidly over the past ten years. Especially because this alliance helps to further fragment the open source response to VMware. Is VMware cheering this on?

No doubt, this little hypervisor concept has launched a huge trend toward infrastructure modernization, private and hybrid cloud computing. And HP and IBM have been somewhat on the outside looking in. Yes, they missed having a leadership role in a critical trend, and it is a dangerous one to miss, given it’s viral and mutating nature in all things infrastructure.

So, what do we make of OVA? Back to the egg reference – Mark Twain said “Noise proves nothing. Often a hen who has merely laid an egg cackles as if she laid an asteroid.”

Marketing and alliances and rhetorical use of “open” and “standard” all prove nothing. Let’s see some execution, some fire, some innovation. Show me a sense of urgency, some leadership. Not just about hypervisors and hypervisor ecosystems, and not just about catching up – but leaping ahead. Show me a rocket, and prove that there’s an asteroid out there.

I see three clear, broad opportunity areas for the channel with respect to cloud computing (I’m sure there are more):

(1) Assessments. Basic education. What is it, and what does it mean to a customer? What could leverage cloud computing, and what can’t? Where should an organization focus their cloud efforts? How do they get started? Private or public or both? The assessment helps put the channel partner into the decision-making process – rather than find themselves disintermediated and locked out.

(2) Transformation. Helping an organization (business and IT) change. Process change, management changes, organization and skills changes, culture, politics – this is a broad area, and one in which goes beyond the skill base of most VARs and resellers. Application re-design fits here, too. And designing private cloud with hybrid in mind. Technology changes are easy, it’s everything else that is very, very hard.

(3) Broker. Assessments and transformation are large areas of opportunity, but once complete, the channel is no longer needed – unless they take on a broker and aggregation role. Most companies leveraging cloud computing will have several – perhaps many – providers. The channel has the opportunity to aggregate those services, provide value-add integration and other services, provide insurance, deal with failures, monitor SLAs, be a single throat to choke. The white box for cloud providers. For private cloud, the channel can smooth the way to hybrid cloud computing, and remain the broker in the equation.

Is the channel ready for any of this? No way! Are the provider and vendor business relationships with the channel making this easy? No way (vendors/providers are completely unclear whether they want to own the customer relationship or not)! Will the midmarket be able to adopt cloud computing in large scale without the channel? I don’t believe so. Cloud is simply too hard, too paradigm-shifting, too “cloudy”.

Time to start rebooting. Or watch the rest of the channel re-invent themselves for cloud computing and leave the rest in the dust clouds.

Now let me preface this by saying as an analyst, I don’t cover client computing, or PCs or tablet computers. I’m writing this as Joe Knowledge Worker. Even so, I’m going to avoid using product brand names. I’m not promoting a specific product. But I am promoting a new way of getting things done.

I know I’m not the first to have this aha moment, and that’s a bit of a sore point with me. I still have a working 8080 system from the early 1970s. I bought IBM’s first PC when it came out. I bought IBM’s first laptop computer – the PC Convertible – in 1986 (and yes, still have it and it still works). I jumped on the Palm Pilot as soon as it was available. I consider myself an early adopter. When it comes to tablet computers, however, my son is the early adopter and the pioneer. He’s been using his tablet computer in high school for a year now, and trying to convince me that it would work for me, too. I didn’t see it then, but I do now.

I tried it, on two business trips. The first one, I pulled out the tablet computer and played a little with it. Still, I did most of my work on the laptop. Second trip, my laptop battery died on a flight. I wrote a complete research note on the tablet. Suddenly, work was getting done, and without a laptop.

I’m in love. I love the lo-ong battery life. I love the tactile user interface. I love the super-thin size and portability. These three are huge for a traveler.

There are trade-offs. A physical keyboard is helpful, but I’m finding that to be a non-issue, and possibly more of a rut than a need. A DVD player is nice to watch shows when away from home – but Netflix works just fine instead. A data warehouse on a hard disk is nice, but do I really need all of those files with me? Cloud storage works great when I’m connected – which is very often – and I have plenty of memory for offline files. Showing presentations? I have the adaptor, and it works perfectly.

I’m an inveterate planner and organizer. Spreadsheets and lists that used to live on my laptop don’t live there anymore. It’s all on the tablet. Frankly, at this point, there are only a few things that really require my laptop – and I’m working to reduce that, too.

So, I’m in Europe and away from the office for four days, and work has not stopped, and I’m not searching every airport for outlets to give my laptop a little more juice, and my backpack is extremely light (and probably unnecessary now), and I may actually do more “knowledge work” on my tablet computer on this trip than I would have with a laptop. And, of course, I’ve just posted my first blog entry from my tablet.

I’ve only had this device for about three weeks, but I suspect that bringing the laptop on trips will be the exception going forward. Not quite an early adopter – but I’m all in now.

At Gartner, we spend a lot of time trying to understand future scenarios, the likelihood of each, indicators that a scenario is likely to occur, impacts on our clients, and what our clients should do. We’ve studied the impact of virtualization on the server market since virtualization was first introduced <begin chest-thumping>and Gartner was the first firm to point out the negative ramifications of virtualization on server volumes<end chest-thumping>. But we’re getting to the moment of truth.

With the exception of the economic collapse in 2009, server volumes have been dependably growing for years. However, virtualization rates are hitting a point that the negative effect of virtualization on the server market are becoming unmistakable. Not in five years. Now.

2010 was a good year for servers – nearly 9 million were sold. My contention is that if virtualization didn’t exist, there would have been 13, or 14, or 15 million sold.

The engine of server market growth has been the growth of workloads. Since 2004, the compound annual growth rate (CAGR) in workloads has been about 16 percent. 2010 was certainly a much better year than that – but if you factor in the the volume decline in 2009, the growth in 2010 just exactly made up the difference.

If the workload CAGR remains steady, server volumes will start to decline in 2011, and we won’t see 2010’s volumes again in this decade.

The good thing – virtualization (and cloud computing) makes it easier and faster to deploy a workload, and that has a tendency to increase the workload CAGR. However, even accounting for faster workload growth, 2010 is either at or near the peak of server volumes for the next ten years.

However, if Moore’s Law is going to be driven by increasing amounts of cores, those cores are going to need VMs to leverage them. Multicore is going to drive higher virtualization densities, and even fewer servers.

What will it take to drive server volumes up? Low virtualization growth, high workload growth, low virtualization densities. A combination of factors that seems unlikely.

Bottom line – there are a number of realistic scenarios for server volumes in the next decade. Each scenario will drive different vendor behavior (and results), pricing, and end user strategies. But – anyone want to place a bet? I’m blogging it, so I’m placing mine right now.

• Whatever happened to the market where there were distinct servers, storage, and networks? Fabric is blurring that.
• What the heck is an operating system any more, and what does it matter when I have a virtual pool of distributed resources I need to use?
• Whatever happened to the boundary between consumer technology and enterprise technology? Consumerization of IT. And not just personal technology devices – some IT services are given away for free (and subsidized by advertising). Which leads to boundaries disappearing in business models.
• Whatever happened to the boundary between outsourcing and insourcing? Now we have cloud computing: public, private, hybrid, and every other variation. Looking for a black and white definition of cloud computing? A waste of time – it’s gray!
• What about ownership of intellectual property? Open source, community collaboration. Is it plagiarism if you add value to existing content? In a society of information, can you afford not to build on what’s already out there? What should 21st century students do?
• What about the boundary between trusted enterprise data and untrusted data? Can we really afford to ignore any business information that might be useful? Isn’t it about what we do with the data, rather than whether the data is 100% trusted and owned by the enterprise? The boundaries of data used for business intelligence have been blown completely down. For that matter, we are entering a period of data overload – some we can trust, some we partially trust, some that is impartial, some that is partial. Successful people and businesses will be able to find value in that data. Unsuccessful people and businesses will drown in the data, or hide from it.
• Whatever happened to the boundary between IT and the business? In some cases, being solidified in the form of services-orientation (e.g., cloud computing), in other cases, the boundary simply does not exist. How many business people can afford to be laggards in leveraging the latest IT capabilities? How many IT personnel can ignore business strategy?
• What about the boundary between applications and operations – and security, for that matter? It used to be that developers threw their creations over the wall for operations to run, with a kiss “good luck”. New applications are being written based on operational models, with automated deployment/operations/optimization in mind. Security is being captured as policy that moves with the application.

Virtualization. Consumerization. Cloud. Instant connections and collaboration. I could go on.

An overall IT megatrend today is a complete and utter blurring of boundaries – which we could handle conceptually, but it directly affects people and market competition. It’s a lot harder to re-skill, re-organize, and react to partners that become competitors and competitors that become partners and partners who are also competitors depending on the situation.

If there is one “skill” that is critical for an enterprise to have, and for individuals to have who use and/or help deliver IT capabilities (which, by the way, is everyone) – it’s “agility.” If you depend on the predictability of competition, and the predictability of a job category, you’re not gonna make it. You or your company will become noncompetitive faster than you can say “blur.”

To use Neil MacDonald’s perfect phrase, success requires “Embracing the Blur.”

(By the way, Neil has pointed out an interesting book by Stan Davis, called – not surprisingly – “Blur.” I need to take a look!)

While enterprises tend to have many (often hundreds, or even thousands) IT services that they provide, cloud providers tend to have only one, or a handful, but provided on huge scale. Standardization makes automation much easier, and certainly makes economies of large scale very attractive. But what happens when a “service” suffers a decline in demand? For an enterprise, diversification makes this much less of an issue – usually, a decline in one “service” will be made up by growth in another. The capital expense risk is real, but not huge. But what about a cloud provider that focuses on just that service?

Economies of fail.

Megaproviders in the cloud are not immune to economic declines, or changing demand. One of the benefits of cloud computing for end users is transferring their own capital risk to cloud providers. Doesn’t this sound an awful lot like the mortgage crisis in the U.S.?

For cloud providers to be successful, they must protect themselves. As much as possible they must find corollary markets for their services that are not directly related to their core service market – without abandoning the simplification and standardization that enables automation and economies of scale.

Potential customers of cloud providers should be very aware of a cloud provider’s business risk, and protect themselves. Cloud provider resiliency, market diversification and stability should be selection criteria. Remember: a provider cannot be too big to fail – in fact, some providers might become so big and so focused that failure is inevitable.

My first presentation at Symposium 2010 was “

I started the presentation with some fundamental changes in server virtualization since I presented a year ago.

1) Virtual machine penetration has increased 50% in the last year. We believe that nearly 30% of all workloads running on x86 architecture servers are now running on virtual machines.

2) Midsized enterprises rule. For the first time, the penetration of virtualization in midsized enterprises (100-999 employees) now exceeds that of the global 1000 (or it will before year-end). There has been a HUGE uptake in the last year. Also, unlike large enterprises, midsized enterprises tend to deploy all at once – with outside help.

3) Hyper-V is under-performing. Maybe my expectations were too high, but Hyper-V has not grabbed as much market share as I was predicting. I especially thought that Microsoft would be the big beneficiary of midmarket virtualization. Surveys show otherwise – VMware is doing pretty well there. Here’s a theory. Clients repeatedly told us that live migration was a big hole in Microsoft’s offering – even for midmarket customers (to reduce planned downtime managing the parent OS). Microsoft’s Hyper-V R2 (with live migration) came out 8/2009. Was that too late? Did the economy put pressure on midsized enterprises to virtualize early, before Hyper-V R2 was proven in the market? Or did VMware just have too much mindshare?

VMware’s competition is growing (especially Microsoft, Citrix and Oracle), but VMware is still capturing plenty of new customers.

4) Private clouds are the buzz. Every major vendor on the planet who sells infrastructure stuff has a private cloud story today. In the last year, the marketing, product announcements and acquisitions have been mind-numbing. Some of this is clearly cloudwashing (“old stuff, new name”), but we’ve seen a number of smart start-ups captured by big vendors, and important product rollouts (notably VMware’s vCloud Director). Now the question is – what will the market buy?

5) IaaS Providers Shifting to Commercial VMs. IaaS (infrastructure as a service) providers have focused on open source and internal technologies to deliver solutions at the lowest possible cost. But that’s changing. In the past year, there’s been a rapidly growing trend for IaaS providers to add support for major commercial VM formats – especially VMware, but also Hyper-V and XenServer. The reason? To create an easy on-ramp for enterprises. As enteprises virtualize (and in many cases, build private clouds), the IaaS providers know that they need to make interoperability, hybrid, overdrafting, migration as easy as possible. The question is whether that will require commercial offerings (such as VMware’s vCloud Datacenter Services, or Microsoft Dynamic Datacenter Alliance), or if conversion tools will be good enough. I tend to think that service providers better make the off-premises experience as identical to the on-premises experience as possible – and I’m not sure conversion will get them there.

Gartner’s Symposium this year is a blow-out – more than 7,500 attendees, and more than 1,600 CIOs. That means a very busy week of presentations and one-on-ones. As an analyst, what I always find interesting is “the buzz”. You get a real good sense of what’s hot based on one-on-one load, and one-on-one topics. I was one of a few analysts fully booked a few weeks before Symposium, so my topics are hot. The questions? Continued interest in virtualization, but shifting heavily to cloud computing, both private and public.

Because of presentations, roundtables and so forth, I only had 35 one-on-one slots available. 11 of those are on virtualization (mostly VMware and Microsoft). 9 are about cloud computing (mainly what’s ready, which services, which providers, customer experiences). 14 are about private cloud (how do I start, VMware’s vCloud, etc.).

The sense I get so far is the interest in cloud computing continues to grow, but there is more real activity and near-term spending on private cloud solutions. A lot of interest in VMware’s vCloud – but attendees want some proof first.

At the end of the week, I’ll summarize what I learned. Should be a great week!

Gartner’s official definition of cloud computing is “A style of computing where scalable and elastic IT-enabled capabilities are delivered as a service to customers using Internet technologies.” We also describe five defining attributes of cloud computing: service-based, scalable and elastic, shared, metered by use, uses Internet technologies. A key to cloud computing is an opaque boundary between the customer and the provider. Graphically, that looks like this:

When the customer does not see the implementation behind the boundary, and the provider doesn’t care who the customer is, you have a public cloud service. So what is private cloud?

Private cloud is “A form of cloud computing where service access is limited or the customer has some control/ownership of the service implementation.”

Graphically, that means that either the provider tunnels through that opaque boundary and limits service access (e.g., to a specific set of people, enterprise or enterprises), or the customer tunnels through that opaque boundary through ownership or control of the implementation (e.g., specifying implementation details, limiting hardware/software sharing). Note that control/ownership is not the same as setting service levels – these are specific to the implementation, and not even visible through the service.

The ultimate example would be enterprise IT, building a private cloud service used only by its enterprise. But there are many other examples, such as a virtual private cloud (the same as the example above, except replace ‘enterprise IT’ with ‘third-party provider’), and community clouds (the same as a virtual private cloud, except opened up to a specific and limited set of different enterprises).

Still “foggy”, or is it “clear”?

I’ve been looking for an excuse to use this cartoon – I finally found it!

I’m finishing a research note on some polls I took recently of data center executives, managers and decision-makers. Interesting results. Here’s a summary:

(1) The first poll was focused on the top three concerns that data center professionals have with public cloud computing. The weighted score for “Security and Privacy” was more than the score for the next three concerns combined. Sometimes, when it looks like a meteor, it is a meteor (see, I got the cartoon in here)!

(2) The next two polls focused on public cloud computing plans versus private cloud computing plans. Three-fourths said that they were or would be pursuing a private cloud computing strategy by 2012 (only 4% said they weren’t). Three-fourths said that they would invest more in private cloud computing than in public cloud computing through 2012. Hype plays a part here, but we continue to believe that IT organizations will spend more money on private than on public cloud computing through at least 2012.

(3) The final poll focused on challenges with private cloud computing. “Technology” was considered sixth out of seven challenges offered. “Management and Operational Processes” came in first, closely followed by “Funding/Chargeback Model.” Process, people and relationship changes will be bigger challenges with private cloud computing than technology.

Once again, thanks to Doug Savage for allowing me to use one of his cartoons (check out the others on his site).