In a week when stock markets all over the world were jittery and volatile due to sub-prime mortgage woes in the US, a Silicon Valley company's initial public offering (IPO) on Wall Street rose above the general uncertainty to surge 76% higher on its debut. As of now, shares of VMware, a leader in virtualization technology, has gone up 140% from its initial price and is looking like one of the best IPOs of the year.
VM who? It would not be an exaggeration to assert that most people have not heard anything about this technology firm specializing in the fast growing field of virtualization. Yet, comparing its recent IPO, only one other technology firm has made such a spectacular debut in recent years - search giant Google. This IPO has certainly thrown a giant spotlight on a burgeoning technology that has so far been confined to the cold, controlled stability of the server farms and mostly unheralded in the media till now.
According to a Forrester research report, virtualization technology is one of the latest bandwagons that American enterprises are jumping into, with adoption rates among firms increasing by 11% over the past two years. It is a field where VMware dominates with around 85% of the market and the company is expected to post more than US$1 billion in sales for the year. With a largely untapped market brimming with potential, it is no surprise that analysts are so optimistic about VMware's future. So what's the fuss about virtualization anyway?
In computing terms, the general idea of virtualization is the abstraction of computer resources such that their physical characteristics are hidden from how end-users, including applications and other systems interact with these resources. A simple everyday example: if you have ever partitioned your hard drive, then you have probably done a bit of 'virtualization', since the act of creating two 'virtual' drives (as seen by the PC) from one physical hard drive fits this rather broad definition. Generally, there are a couple of popular virtualization technologies, from storage to network and server virtualization. The key to all of them is disguising the true nature of the underlying computer resources with an extra layer of software (the hypervisor) that generates the illusion (or to use a movie analogy, the environment in the Matrix is a form of virtualization).
With computer hardware progressing more or less along Moore's law, we have seen a tremendous increase in computing power. More processors, ever increasing memory caches and the resultant fall in hardware prices have made virtualization a more attractive and viable option. Both AMD and Intel also come with hardware support for virtualization in their recent architectures (Intel VT and AMD's Pacifica), reflecting this emerging trend.
Since it's founding in 1998, VMware has been at the forefront of desktop and server virtualization for the x86 platform, arguably reviving the dormant virtualization scene with a host of solutions, catering to the large enterprise and even individuals like power users/developers. There are many compelling reasons for businesses to dip into virtualization. Firstly there is the reduction of infrastructure costs; instead of getting a physical server custom built and preloaded for a certain application, businesses can run the required operating system and application on existing servers using virtualization software.
Consolidating all the physical computing resources of a company with virtualization allows for more efficient allocation of resources, thereby increasing utilization rates. Meanwhile, as the IT infrastructure is not tied to the software or operating system, changing to another OS or application when the need arises is easier than before, leading to increased responsiveness. System migrations and backups are also simplified since virtual machines can be transferred with lesser downtime compared to physical hardware and entire software setup.
Finally, remote management and security of enterprise desktops are improved if they exist in a virtual sandbox that can be closely monitored and controlled. As you can tell by now, virtualization can bring a slew of benefits for large companies with extensive IT infrastructure.
But that's not all. One week before it made its dizzying debut on Wall Street, the company officially launched its first virtualization software for the Intel Mac platform after a prolonged beta - VMware Fusion.