LinuxWorld: Virtualization, open source threaten proprietary models

Rising interest in virtualization could mean the decline of traditional software pricing plans. Meanwhile, virtualization leaders VMware and Microsoft are facing tough new competition from open source alternatives.

The rise of virtualization could signal the fall of traditional proprietary licensing models, where users pay for

software based on the hardware on which it's deployed, according to IT industry experts and a prominent speaker at this week's LinuxWorld Conference & Exposition in San Francisco.

Tools like virtual machines have clearly crossed the chasm and are being used by IT managers in a variety of environments.
Tony Iams,
vice president and senior analystIdeas International

Experts said virtualization, which lessens software's dependence on hardware by allowing it to run across multiple servers, according to memory requirements and other pre-determined priorities, is definitely on the radar screen of data center managers eager for simplicity. Its use is expected to spike upward dramatically in the coming year.

That spike, according to experts, may cause proprietary applications vendors to rethink their longstanding "per CPU" pricing plans. And they aren't the only ones with some strategizing to do.

Experts also predict that the behemoths of proprietary virtualization technology themselves -- VMware and Microsoft -- will face stiff competition in the coming year as viable and low-cost open source alternatives like Project Xen hit the mainstream.

"This whole server/CPU pricing mechanism, in the face of service-oriented architectures and grids and all this sort of stuff, is probably going to have to go away," said Ron Schmelzer, founder and senior analyst with ZapThink LLC in Waltham, Mass. "It becomes not only irrelevant but dangerous because, basically, if I want to have more reliability by having more services, then I have to pay more."

Why virtualization?

Analysts said virtualization's growing momentum is due mainly to rising awareness of its benefits, which promise to consolidate and maximize server resources, cut costs and simplify the management of today's increasingly complex data center environments.

"Tools like virtual machines have clearly crossed the chasm and are being used by IT managers in a variety of environments," Tony Iams, vice president and senior analyst with Ideas International Ltd. in Port Chester, N.Y., said in a recent interview. "Any IT manager that's in the industry today probably not only knows what a virtual machine is, but is probably using it in some capacity."

Iams, who led a session on virtualization at LinuxWorld, said software vendors have generally been slow to respond to the need for more flexible licensing policies that technologies like virtualization, multicore processing and grid computing present. One reason for that slow response may be reluctance to trade-in time-tested, hardware-dependent pricing models for less proven methods.

Experts point out that when Xen is combined with the upcoming Vanderpool processor technology from Intel Corp., it should also be possible to virtualize Windows workloads on top of Linux.
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"Virtualization introduces a demand for utility-based licensing where you're no longer paying for software based on the capabilities of the hardware," Iams explained. "Instead, you pay for the usage of that software, and that could vary widely depending on the resources you assign to the workload."

ZapThink's Schmelzer added that one possible alternative to hardware-based pricing would be charging for support rather than software, much like open source software providers. More likely-to-be-explored alternatives include charging transaction fees per user or introducing subscription-based rates, he said.

In the end, Iams suggested, the introduction of more flexibility in pricing policies could be a win for vendors in that it will open up more opportunities to apply software.

"It's very easy for vendors to succumb to the fear that they'll actually get less revenue, when in fact they could get more," he said. "If you have an application that scales to a grid, for example, now you're using a grid's worth of resources. If you had a way to track that, and license your software based on that, you could in fact get more revenue."

Virtualization vendors facing open source competition

VMware and Microsoft with its Virtual Server (VS) product are the longstanding leaders in virtualization technology. But the open source community is coming up with alternatives that should provide those two companies with some interesting competition heading into next year and beyond.

One such alternative already making headlines is Project Xen, which provides an open source virtual machine hipervisor that has thus far allowed Linux users to create multiple operating system instances and virtualize workloads.

Experts point out that when Xen is combined with the upcoming Vanderpool processor technology from Intel Corp., it should also be possible to virtualize Windows workloads on top of Linux. When that happens, VMware and Microsoft will be faced with a new, low-cost competitor.

"That is going to be a very powerful combination and we predict that the next 18 months or so are going to see a very heated battle," Iams said. "[It's] definitely going to create some very significant new opportunities for Linux and open source in terms of its ability to control and host workloads on an open source foundation in a virtualized way."

More from LinuxWorld:

Special Report: LinuxWorld San Francisco

Phillips puts best foot forward with grid computing

The larger trend

Schmelzer said he believes the rising interest in cost-lowering and resource-maximizing concepts like virtualization, SOAs, open source and grid computing are all part of a much larger trend in IT.

"Companies now are in this mindset where over time they want to see their IT budgets decrease, and I think that's a trend that many enterprise software companies are going to find very hard to deal with," he said. "I think a lot of companies, to be honest, will go out of business or be acquired."

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