Virtualization is perhaps the hottest high-tech buzzword around these days. But what exactly is it -- and how does the whole concept affect your portfolio of tech investments? Let's find out.
We'll start with the basics. Virtualization, also known as virtual computing, is a way to turn one piece of computing hardware into several "virtual machines." A virtual machine is a computer program that emulates a physical computer system. You can run several virtual machines on a single real computer system, and the virtualization software will dole out memory, processor, and other hardware resources to each virtual machine as appropriate.
What's the point?
Dividing physical resources into logical, or virtual, packages helps you get a better return on that hardware investment. A typical enterprise-class server spends much of its time simply spewing excess heat into its surroundings. Many servers end up running the programs for which they were built less than 20% of the time, on average. So packing four or five server builds onto a single physical machine can bring new efficiencies into a data center.
The benefits of adding that virtualization layer are many:
- Squeeze more use out of your existing hardware.
- Reduce the floorspace and rackspace footprint of your computing environment.
- Lower your electrical power draws and air conditioning bills, for a double cost-savings whammy.
- Reallocate hardware resources as needed without having to send in a tech with a screwdriver.
- Super-easy disaster recovery -- just move the virtual disk image to a new virtual machine and turn it on.
- One virtual machine can run Microsoft
(NASDAQ:MSFT)Windows, while another rocks Ubuntu Linux, and another is powered by Sun Microsystems' (NASDAQ:JAVA)OpenSolaris -- all running side by side on the same physical machine.
And those are just the most obvious benefits. With all of these immediate and obvious advantages, it's no wonder that the IT industry has taken a shine to virtual computing. Virtualization saves time and money, and it's even a greener, more eco-friendly choice.
Any virtual computing discussion must start with VMware
And without virtual machines, you wouldn't see cloud computing services like Amazon.com's
The investing takeaway
Now that you know what the virtualization buzzword really means, and how the pieces of the puzzle fall together, there are many ways you can invest in this trendy concept.
For starters, you can buy into platform providers like VMware, Citrix, or Microsoft. As you've seen, VMware is the clear leader, and highly specialized on this particular software model. Citrix is the up-and-comer with a finger in many a pie, but it's somewhat unclear how the company intends to make money on its open-sourced property. And for Microsoft, this is but one of about a trillion software packages to consider; virtualization is hardly in a position to move Redmond's very big bottom-line needle.
Beyond that, you would do well to look for early and competent adopters of the virtual computing model. Amazon was early on the bandwagon and is steering it with considerable moxie. But feel free to look for others with inventive, new solutions built on virtual servers. And in the end, the entire IT sector stands to benefit from lower costs and higher efficiencies.
If you know of any great virtualization stocks beyond VMware and Amazon, feel free to let us know in the comments box below. It's a big market, and growing like foot-a-night kudzu vines.
Further virtual Foolishness:
VMware is a Motley Fool Rule Breakers selection. Amazon.com is a Motley Fool Stock Advisor pick. Intel and Microsoft are Motley Fool Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days.
Fool contributor Anders Bylund owns shares in AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.