1) In my presentation on server virtualization on Monday, before I started, I asked the audience how many of them considered private cloud computing to be a core strategy of theirs. 75% raised their hands (I expected maybe one-third). Clearly, everyone has a different idea of what private cloud computing means (or doesn’t), but the fact that so many people have glommed onto the term is very interesting.

I described the three most common things that were being described as private clouds:

• IT defending its turf: Shared services that were being re-labelled as private clouds (but without a self-service interface, or much automation at all)
• Vendors defending their products: Old products being re-labelled as private clouds in a box (I described most of these as “lipstick on a pig”)
• Advanced server virtualization deployments: Although few have a true self-service interface, the intention is certainly there

2) My one-on-ones shifted heavily from virtualization toward cloud computing and private cloud computing. I had 18 one-on-ones that discussed server virtualization, and 26 that discussed cloud and private cloud.

3) Several one-on-ones were very interesting: one company with more than 5,000 VMs heading toward 10,000; maybe a dozen that were focused entirely on taking their leading-edge virtualization infrastructure into private cloud; three companies considering discussions with Terremark on possibly licensing their service interface and usage metering software (they know VMware will probably deliver something in a year, but don’t want to wait); several users wondering what Microsoft’s virtualization strategy was, and especially whether they were focused on private cloud computing as a next step; one that questioned VMware’s vendor maturity with respect to customer relationships (felt that Microsoft did an excellent job with TAMs and so forth to truly work with the customer as a trusted advisor – while VMware’s TAMs were more like communications conduits).

4) In my “debate” with analyst Eric Knipp (on the topic of public vs. private cloud computing), we took a vote at the beginning and end of the session to test audience opinions on the subject. At the beginning, about 15% felt that public cloud computing would “win” (the question was intentionally vague to let the attendee decide what “win” meant). About two-thirds though that private cloud computing would win. By the end of the debate, perhaps a few more thought public cloud would win, about 40% thought private cloud, and about 40% voted otherwise (which included a hybrid model). I suppose the surprise to me (yet again – do I never learn?) was the overall momentum in the concept of private cloud.

The challenge with private cloud computing, of course, is to dispel the vendor hype and the IT protectionism that is hiding there, and to ensure the concept is being used in the right way – as a stepping-stone to public cloud, based on a timing window, the lack of a mature public cloud alternative and a good business case to invest internally.

Gartner analysts spend tremendous time and effort preparing for this conference. Presentations are due to our editing and multimedia departments weeks in advance, but for some reason, IT doesn’t stop, so there are very few analysts who turn in their work on time. Personally, I always make changes as late as the day of the presentation – that’s just a little more real-world.

I love these conferences. During the year, I spend a large percentage of my time on the phone with clients (600 or so calls this year?). I also visit with clients face-to-face throughout the year (I think I visited with perhaps a hundred this year). However, nothing compares with the density of client conversations that take place at Symposium.

For me, Symposium is about four days of constant client interaction. This year, I’ll deliver two presentations (one on cloud and private cloud computing, one on virtualization), a debate (is private cloud real?), a client roundtable, about 40 one-on-ones, two breakfasts with clients, two lunches with clients, a dinner with one client, and another dinner with a few dozen key CIOs. History says, all remaining open time will disappear as soon as I arrive. This will be solid 7am to 10pm client discussions.

I know they come to get advice from us, but we come to hear about their issues.

There is no better way to measure the pulse of IT users. Every interaction is a specific issue that a decision-maker needs to solve. I’m put on the spot, every thirty minutes or so. Sometimes, I can’t answer a question, but I can usually move them closer to an answer, or line up another Gartner analyst who can. But most of the time, there’s a two-way transfer that takes place – I give the client actionable advice based on 25 years of experience and thousands of real client interactions, and they give me a new and up-to-date real-world issue.

An analyst’s job is about being an expert who can help clients with actionable and strategic advice. But an analyst’s job is also about being a learning machine. There’s a tremendous amount of information out there, and it’s our job to find the important nuggets, filter out the chaff, find the patterns, and determine the actions that help our clients the most. And this is what makes the job interesting and keeps me on top of my game.

This year I’ll be active tweeting during the conference. Of course, nothing confidential about individual clients, but I’ll tweet about the pulse of the market and things that are coming up often (tombitt on Twitter, and I’ll hash my tweets with #GartnerSym).

And for those of you coming to the conference, I’ll see you there, and hope you get as much out of it as I do!

The midmarket is waking up. At Gartner, the number of midmarket clients who are just starting out with virtualization has been growing exponentially for the last year or so. We just completed a worldwide survey of nearly 1,500 companies with 100-999 employees. What you see is pretty compelling evidence that a market that nearly ignored server virtualization for years started to wake up about two years ago, and is rapidly becoming a dominant opportunity for vendors.

Furthermore, it’s clear that midmarket enterprises virtualize at a different rate than large enterprises. Large enterprises virtualize over a long period of time, at the rate of hardware replacement. Midmarket enterprises tend to virtualize as a part of a single project, or over a 1-2 year period. 

We predict that midmarket enterprises will have a higher percentage of servers virtualized by year-end 2010 than the global 500 – who have been virtualizing since 2001. That means 2009 and 2010 will be huge.

What does this mean? I think it means that VMware messed up, and effectively ignored the midmarket (especially in terms of entry price) until Microsoft came to the table. I think the price war is going to take a serious toll on vendors at the low-end. I think midmarket software vendors who have been able to ignore virtualization are going to have to make changes very quickly – in terms of support, but also pricing and licensing. I also think that we are going to have some pretty messed up midmarket enterprises – who virtualize too fast, use immature technology, lose some control of their environment, open new security gaps, etc.

Gonna be a bumpy ride! 

Hey, there’s nothing wrong with saving money, but strategically, virtualization is not primarily about cost-cutting. Strategically, virtualization leads inexorably down a path toward flexible sourcing, and cloud computing.

Even our surveys show that organizations who are well on their way toward virtualization change their points of view – flexibility, agility, speed move to the top of the list.

What is virtualization doing to these people? There are at least five things that virtualization does to unlock the door to cloud computing, and push organizations faster in that direction:

1) Enables economies of scale: This is one way cloud providers squeeze their costs in order to make money. Enterprises can do it too!

2) Decouples users from implementation: It’s amazing to me how many business units are closet server huggers. They like to stipulate how their software is deployed. They like to know where the server is located. They don’t like to share! Virtualization forces the relationship to change from a specific implementation, to service level agreements. It also makes it possible to choose alternate sourcing – because if the customer relationship is services, IT can choose how the implementation is sourced.

3) Speed, flexibility, agility: Early adopters of cloud computing talk about how quickly they can get new servers online. Compared to the 4-6 weeks it takes an average IT shop to deploy a server, just about anything is faster. However, virtual machines can be deployed roughly 30 times faster. It doesn’t take a cloud to improve speed. And, of course, operational processes and management tools need to change to deal with speed. And speed changes business expectations and behavior – it changes culture.

4) Breaks software pricing and licensing: You can’t charge users for physical capacity when only a small portion of that is used. You can’t charge users for every potential server the software might be running on. You’ve got to charge and license based on some kind of usage model. Of course, you can charge whatever you want until users get smart, but change is inevitable.

5) Enables, motivates chargeback: When servers can be delivered in minutes rather than weeks, IT users ask for more – roughly two times as much, based on feedback from our clients. The natural barrier is gone. Unless there is a cost, a friction, associated with a server deployment, how do we make good business decisions? IT needs to focus more on usage accounting, and chargeback is growing as a mechanism to manage virtual capacity usage.

Economies of scale, shifting users to a services-oriented relationship, delivering much faster, forcing software prices to align with usage, charging business units based on usage. Sounds like cloud computing to me.

Virtualization, private cloud, cloud – that’s the natural evolution.

The thing is, most major IT vendors (not all) get this. Why do they care? The time to influence an enterprise’s cloud choices, software architectures, management architectures for the cloud, standards, are when organizations are virtualizing. So is cloud computing on your strategic plan? It may not be on yours, but it certainly is the plan the major virtualization vendors have for you! Be proactive, take charge of your own on-ramp to the cloud, or get taken!

Myth: There will be a “big switch”
Fact: There will be a slow migration (including development of private cloud services), the migration will take decades, and even then quite a bit of IT will stay in-house; in fact, most of the interesting stuff will be hybrid models, long-term.

The electricity analogy really doesn’t fit well. Unlike electricity distribution (using AC instead of on-premises DC), IT is evolving at an extremely rapid rate. The number of enterprises generating their own electricity in 1887 was miniscule compared to the number of enterprises generating their own IT today. Even so, the electricity grid did not take place over virtually overnight – it took more than two decades before centralized utilities produced more than half of the electrical production in the U.S.

In many ways, the invention of AC was like the invention of the Internet. So why hasn’t computing across the Internet replaced enterprise computing yet? In IT, the “distribution” mechanism has been in existence for more than a decade. What’s really changed are technologies that enable economies of scale and sharing. We should not ignore the fact that enterprises can gain some economies of scale themselves, internally, for example, through virtualization – and enterprises aren’t ignoring it. The evolution toward cloud computing is a multi-variable equation, and does not have an inevitable conversion of everything to cloud services.

Myth: Cloud computing is just an evolution of “fill in the blank”
Fact: Cloud computing did not appear out of nowhere. Some say it is just the next version of outsourcing. Some say the next version of the web. Some say the natural evolution of virtualization. I say it’s all the above. The web created the standards and connectivity needed to make cloud computing possible. But, economies of scale do not occur unless you have technologies at the back-end that enable efficient technology sharing – multitenant applications, virtual machines, parallel programming mechanisms, automation, etc. Sprinkle in a growing demand for speed in the marketplace, and the industrialization of IT (including increased commoditization of hardware and open source), and cloud computing – has been evolving for years. And still has a ways to go.

Myth: Only megaproviders will win
Fact: There are diminishing returns to economies of scale, there are many fragmented markets that have good enough scale for smaller providers, and innovation makes provider agility a critical offsetter to size. We’re not going to have a handful of megaproviders, we’re going to have thousands of providers, and it will be very Darwinian.

Myth: Cloud computing is about IT commoditization
Fact: While services offered in the cloud may be commoditizing, the usage of those services may not – new, innovative businesses, proprietary analysis of data in the cloud, etc. – new applications matter. In fact, innovative use of cloud computing services will be be a huge reason why IT does matter, and innovative use of IT will remain a critical business differentiator.

And be careful – cloud computing services are not always cheaper. Providers gotta make a living. Amazon’s recent introduction of Reserved Instances was both to help Amazon plan and manage capacity, and to lower the price to compare better when workloads are not dramatically elastic. There’s a reason that some startups born on Amazon created their own data centers as they got bigger and their businesses became more predictable.

At VMworld Europe 2009, Citrix made an important virtualization industry announcement – their XenServer package will carry no license price (just support). This package includes centralized management of distributed VMs, and live migration capability.

It isn’t everything you need to manage a virtual machine pool, but many smaller companies who might have avoided virtualization completely will do this, and add more management tools later. It will broaden the market.

More importantly, from an industry perspective: this puts pressure on VMware – not only from Citrix, but also probably from Microsoft. Why Microsoft? Because once a competitor in the market offers free functionality, Microsoft doesn’t need to worry about antitrust concerns, and can do it themselves. Think live migration and some management.

In addition, Citrix also has opportunity with cloud computing providers with this announcement. Xen is heavily used “in the cloud.” Citrix might be able to convince some of them to use XenServer as a base – and possibly sell Citrix management tools (Essentials) on top of that. The battle for cloud virtualization has begun.

Xen has been splintered in many distributions in the past few years – Citrix (XenSource), Virtual Iron, Novell, Red Hat, Oracle, Sun. Will Citrix be able to rally any of these together on XenServer? Now that could be interesting.

We spend a lot of time at Gartner looking ahead. But it’s also fun to look at what might have been…

• What if no one had developed an x86 hypervisor? How well would multi-core x86 processors be selling today?
• What if Microsoft had acquired VMware in 2001? Would they have snuffed it out (until something else like Xen came along), or used it to develop their own architecture sooner than Hyper-V in 2008?
• What if Microsoft had aggressively improved the ability to run multiple workloads on Windows (like Solaris containers)? What if Microsoft had acquired SWSoft (Virtuozzo) years ago?
• What if VMware had started giving away ESX Server for free in 2005? Sooner? Would they have been able to grow more business in small business – the market that Microsoft is winning today?
• What if IBM or HP had jumped into the Xen market in 2005? And built their own virtualization management suites, integrated with their broad management frameworks? What if either had acquired VMware in 2001?
• What if Intel had acquired VMware? Could they have used that to gain more control in the Microsoft/Intel relationship with the OEMs? Management tools?
• What if Microsoft had delivered Hyper-V two years earlier?
• What if Oracle, Sun, Novell and Red Hat had agreed to leverage Citrix XenServer instead of their own versions of Xen?
• What if VMware had acquired Opsware, or BladeLogic?
• What if VMware had acquired Citrix – before Citrix bought XenSource? Who would be Microsoft’s partner in the competition with VMware?
• What if Red Hat had acquired XenSource?
• What if Xen didn’t exist? Would Microsoft be able to embed and give away virtualization capability without raising new antitrust concerns?

I can go on and on – but it’s Friday night. Can you think of a few?

Cisco’s public blog recently announced an architectural approach they call “Unified Computing”. There’s been a lot of speculation about Cisco moving into the blade server business and so forth. I think Cisco just made clear that in their view the network may be at the center of IT, but “unifying” it with computing and storage is critical. Cisco is going to enter new markets. Maybe, better said, the lines between the technologies and the markets are getting fuzzier.

Gartner first talked about this in 2001 as Real-Time Infrastructure. IBM focused on “On Demand” which has been morphing over time but is still essentially a core part of their strategy. HP had Adaptive Enterprise (and Infrastructure) which shifted toward Adaptive Infrastructure and is still core to them today. Microsoft had Dynamic Systems Initiative, which became Dynamic IT – their vision behind the architecture for internal IT and for their cloud offering, the Azure Services Platform. VMware has Virtual Data Center Operating System and vCloud. And on and on.

I hear Harry Nilsson singing: “Everybody’s talking at me, I don’t hear a word they’re saying…”

Here are the words: unification, virtualization, cloud, adaptive, real-time, simplification.

We’ll see what Cisco delivers, but what is apparent is that the comfortable sandboxes in which different IT vendors sat are shattering. Those words demand that computing become a much more flexible, unified fabric. Unified to deliver on service levels. Services-oriented. Selling components is not the name of the game – making it all work together is.

What is also apparent is there are many vendor attempts to achieve this, and they all bring their current strengths and products to bear to unify a portion of the fabric. I believe Cisco’s announcement may be “one large step for a vendor, one small step for vendor-kind”. It is safe to say this will be big for Cisco – and big for unifying networking and computing – but it may not be a huge state of the art shift for the industry. It is good to see Cisco aggressively joining the club of vendors pushing the state of the art in infrastructure forward, however.

Finally, what is apparent is that we have to get over the religious argument about whether cloud computing can only be used to describe “what Amazon delivers” or mega-monstrous-external-service-providers, or unknown and unknowable computing capability in the ether. There is huge industry energy pushing in the direction that will make internal computing more real-time, on demand, adaptive, dynamic, unified. Cisco is undoubtedly a part of that push. What was custom will become packaged, and we will see a growth both in the numbers of cloud computing providers and in the number of organizations that feel they are building “private clouds” to be used only by their internal customers.

Where “the sun keeps shining through the pouring rain.”

It isn’t simply about saving money – although that does help create a business case. It’s about our inevitable cultural speed shift, and it’s driven by our kids.

When I was young, I wanted everything “now”. We all did. But we also learned that reality wasn’t quite so fast. We learned to adjust to the speed of the world. And we entered the workforce.

  It’s different with our kids. They also want everything “now”. The big, big difference is that they often get it. Want some music? Buy it, it’s downloaded, start listening. Want to know what others think about it? Just look at the feedback. Trying to remember that movie with that great line? Just Google it. Don’t like the answer it finds? There are thousands more. Trying to buy something online and the site is too slow? Go to another site. Done.

Two months ago a young local boy was killed in an accident on a Saturday night. Sunday morning the school had teachers contact parents to tell them there had been a death, and counseling would be available for students Monday morning. But before school, hundreds of students became members of a Facebook page memorializing the boy. Kids were sharing rumors and speculation on how the boy died, and counseling each other. The school system was operating at 1980s speed – far too slow.

A few weeks ago my daughter was accepted to her (and our!) first choice college. By the end of the day someone had set up a Facebook page for that school’s class of 2013, more than 200 kids had found it and were talking, my daughter started meeting other students, sharing their majors, talking about dorms. The same day!

Kids want everything now, but unlike my generation, they get it now. What’s important to remember, however, is these kids will become our employees, our business partners, our customers, and our bosses.

Go ahead and save money with virtualization. Use cloud computing for economies of scale and low-cost commodity services. But strategically, it will be about elasticity and speed.

I delivered the keynote at Gartner’s 27th annual Data Center Conference this week. Here are four major points I made. Later I’ll post some key take-aways from hours and hours of conversations – lots of great insights from conversations between our analysts and more than 1,800 attendees in a very busy week.

The future of infrastructure looks like cloud. Cloud is definitely being over-hyped in the marketplace, and isn’t popping into existence out of nothing. Gartner has been describing a vision for the future of infrastructure for more than seven years called “Real-Time Infrastructure”. Amazon’s EC2 and Microsoft’s Azure are examples of real-time infrastructures being delivered as external services. They are showing what can be done when standardization, virtualization and automation technologies are leveraged heavily, and internal IT organizations should learn from these examples. Cloud computing has a long way to go – but it is and will be evolving quickly. Evolve to behave more like a cloud provider – which will also prepare you to leverage cloud services when it makes sense.

Virtualization is a modernization catalyst. Virtualization is the hottest topic at the conference – but our key advice is to look beyond simple consolidation and cost savings. Virtualization can be the catalyst to drive many fundamental important changes in architectures, processes and cultures. Even if short-term attention needs to be given to cost-savings, make sure you build a foundation that can be leveraged in a few years. Virtualization “unlocks” cloud computing potential internally and externally.

Sourcing will become dynamic and granular. Traditional outsourcing and hosting is not dead, but it is dying. Economies of scale are replacing skills, and speed is replacing static contracts. IT needs to take the initiative in building dynamic sourcing teams – people who understand both IT and business, and can make sourcing decisions a project at a time, and dynamically based on changing workloads, priorities and costs. On the other hand, cloud computing portends a huge shift in small business IT. Cloud providers will offer a low barrier to entry and economies of scale that are too compelling to ignore. To service them, a new industry of service brokers will evolve.

The time to build a strategic plan is now. Infrastructure demands, an economy in turmoil, technologies for virtualization and automation, and the emergence of cloud computing are all happening too rapidly to simply stay in react-mode. Infrastructure strategic planning is not an option, it’s a requirement to navigate change and survive. Success stories are pointing the way. The gap between the strong and the weak is expanding – don’t be left behind.

More later.