Seeking Alpha
Long only, growth
Profile| Send Message|
( followers)
As you evaluate the promise of networking and virtualization stocks the question of how virtualization takes shape could make all the difference. The fortunes of companies like VMware (NYSE:VMW), Cisco (NASDAQ:CSCO), Microsoft (NASDAQ:MSFT), HP (NYSE:HPQ) and others can fluctuate as their offerings appeal to IT buyers.
And the first wave of virtualization projects in many enterprises have had very little to do with the network. That is not necessarily an encouraging sign. Recently I asked the question of whether or not most of today's networks could even keep up with the new automated systems.
That is why a recent blog discussion between Arista's Gourlay, Cisco’s Sultan and myself, followed by a blog from F5’s MacVittie is interesting. It is filled with implications for the future of the network (vendors and careers) and the evolution of IT.
The surprising blog conversation is likely an artifact of the success and shape of stage one virtualization (or virtualization-lite). With virtualization-lite system pros convert their legacy servers into images inside commodity blade servers (populated with virtual servers) and IT shops see an immediate economic benefit in the form of increased server utilization, responsiveness/flexibility and energy savings. That is pretty compelling, yet renders the network somewhat irrelevant.
In the short term continued growth in servers (now virtual machines [VMs] instead of “tin-wrapped software”) means larger blade servers with higher densities of virtual machines inside them. Servers can be created virtually and moved (within VLANs) in seconds, much faster than the days it could take with legacy servers and the network processes.
The business case for this first stage is compelling and the initial savings can be used to fund even more virtualization projects.
Imagine an operator at a 40s era switchboard trying to keep up with a moving cellular caller throughout the day? Imagine the cost of populating enough switchboards to manually track callers? That is the essence of the challenge that virtualization poses to the network today. More change, more complexity and more endpoints will drive more pain into a network that is manually managed.
Mouse click to create a new virtual server then wait two days to assign an IP address, etc. I don’t think so.
This breakdown between system automation and network manual labor is the core of what has made the network largely irrelevant to the virtual machine that has replaced the traditional server. VM economics can be so compelling that the savings from a single project can fuel additional projects and additional savings.
That is why network vendors will be rushing to develop the connectivity intelligence required to dynamically link applications, endpoints and networks. There are not enough bodies to throw at that problem.
MacVittie’s point in her blog (mentioned earlier) was that VM density was becoming the “new measure of IT efficiency”. If that trend continues the network becomes only tactically relevant to the data center, a development that would please some vendors and be troublesome to others.
Unleashing VMotion
However, there is more than a glimmer of hope in the eyes of networking vendors and professionals, and it’s called VMotion. It’s the ability of that virtual machine to easily move across VLANs (including data centers thousands of miles apart) in pursuit of potentially massive operational savings and scalability.
While the VLAN container represents tactical VM flexibility (spinning up and moving servers within a confined area), VMotion represents strategic flexibility or the ability to quickly pursue the lowest cost options for delivering services (electricity, taxation, labor, etc.).
Rather than building a very expensive class A data center, cloud builders can build a global mesh of smaller ones and see both capex and opex (ongoing) savings. Local changes in rates or regulatory events could be addressed in minutes instead of years. That’s a pretty powerful promise.
As Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) and other cloud providers build massive facilities (typically in areas where electricity and real estate is inexpensive), enterprises could be very cost competitive by building meshes of smaller and less costly facilities continuously optimized for cost based on a global spread of expense options.
While networking vendors have been on the sidelines for the spread of virtualization-lite, they will be front and center as VMotion is unleashed. That level of dynamic movement will require new investments in automation and management, especially around addressing.
Like during the emergence of VoIP, the role of the network has been misunderstood (as blogged recently). Large scale VoIP projects grabbed the headlines as enterprises ultimately discovered the network impacts and made additional network investments. Virtualization will be no different as these blade servers continue to be populated with more VMs.
When the network vendors solve the VMotion challenge they will create a new dynamic in virtualization that could impact the fortunes of both virtualization and networking players. That work may be already underway, as a team of “network industry legends” convenes in early September at SRI under the title: Pipes and Clouds: The need for Infrastructure 2.0 (The Intercloud Challenge)”.
Networking vendors are also stepping up. Earlier this year Cisco announced their Unified Computing System with advanced networking capabilities. Startup Arista Networks joined the infrastructure 2.0 race recently with an impressive vEOS announcement:

"With vEOS, Arista and VMware customers will now be able to more easily manage their growing converged networking infrastructure and enable easier mobility of virtual machines," said Jayshree Ullal, president and CEO of Arista Networks. "Arista’s vEOS is fully compatible and capable of co-existing with the VMware vSphere™ 4 vNetwork Distributed Switch while providing consistent administrative experience to both the network and virtualization operator."

Clearly the network industry is waking up to the issue and figuring out how to take virtualization to the next level. At Infoblox we were already planning a webinar with Nemertes, Cisco and VMware executives for late September on virtualization and the future of the network, so the contrast between the blogs and these network industry announcements has set us up for an interesting session.
Disclosure: Long VMW
Source: Will Virtualization Undermine Network Equipment Vendors?