Virtualization: Hot Tech or Hot Air?

Industry experts see dark clouds forming over virtualization. Its days as a stand-alone solution to data-center problems might be numbered, thanks to the even newer and more buzzworthy cloud-computing trend.

Floating on cloud nine
Cloud computing platforms like Amazon.com's (Nasdaq: AMZN) EC2, Google's (Nasdaq: GOOG) App Engine, and the Sun (Nasdaq: JAVA) Grid all act like huge collections of powerful virtual machines. Developers can set up their applications on their own virtual platforms, then migrate those applications to EC2 or the Grid with readily available tools. Presto! The new software becomes available for the world to see.

Production servers are moving onto these clouds and out of smaller corporate data centers, which some observers think will reduce the addressable market for virtual server software from VMware (NYSE: VMW), Citrix Systems (Nasdaq: CTXS), and Microsoft (Nasdaq: MSFT). Cloud operators like Amazon win in that scenario, as do regular old IT managers. The losers? Virtualization experts.

But there's fallacy in that reasoning: Even in this scenario, there's still a virtual server running in most cases. It just moved to somebody else's hardware.

We have issues with that!
Two industry giants from very different backgrounds loathe cloud computing for various reasons. Larry Ellison, CEO of Oracle (Nasdaq: ORCL), doesn't like the term at all, implying that it's just a new marketing term for doing business on the Web. Funny how you never hear the term "Web 2.0" anymore, isn't it?

On the other extreme end of the software spectrum, open-source guru Richard Stallman thinks that you're giving away essential freedoms by handing the keys to your application to a faceless corporation somewhere. "If you use a proprietary program or somebody else's web server, you're defenseless," Stallman told the Guardian. "You're putty in the hands of whoever developed that software."

These are extreme words from some extreme dudes. One thinks there's nothing to this buzzword, and the other sees pure evil incarnate. The truth, of course, lies somewhere in between.

Debunking the knee-jerk reactions
I think Ellison's definition of the cloud is way too broad. This is a genuinely new and different way of managing enterprise computing needs, and it will create and destroy a few giants along the way. Nervous, Larry? Scale down your definition of the cloud, and you might be.

Stallman may think that Microsoft Windows makes you a defenseless victim to the whims of its maker. If you can't run everything on free, open-source software, you might as well not bother to write or buy programs at all. It's a fundamentalist stance that has been criticized in both the corporate world and the open-source community. He's right only if you assume that companies like Amazon and Google are out to get you, no matter what the damage to their public reputations.

Final Foolish thoughts
All of this hoopla around cloud computing and virtualization boils down to one simple question: "What's in it for me?"

Consumers don't care. All they want is a stable, reliable, fast, and cheap experience when they interact with your software. Whether it runs on your server or on Amazon's is a moot point.

For IT managers, this dynamic duo is a winning combination. It's becoming obvious that cloud computing is the way to go for frugal technology managers who like to run their applications on a scalable platform with practically unlimited storage, layer upon layer of redundancy, and hardly any reason to ever have any system downtime. Doing that on Google's or Sun's platforms, rather than building and maintaining your own just makes sense. And wherever you go, it seems somebody already installed a virtual server.

So in the end, VMware and Microsoft will sell more virtual server software thanks to cloud computing -- not less.

How's that for a silver lining?