Red Hat / Qumranet Deal Adds Fuel to the Virtualization Fire

|
 |  Includes: CTXS, HPQ, IBM, JAVA, MSFT, RHT, VMW
by: Dana Gardner

Open-source giant Red Hat (NYSE:RHT) has upped the ante in the PC desktop virtualization market with its acquisition of Qumranet, Inc. in a $107-million deal announced this week.

This acquisition clearly ups the ante in the race for Desktop Virtualization Infrastructure (VDI) solutions. I used to call VDI "desktop as a service (DaaS)," and still think that works pretty well. Anyway, the Red Hat purchase comes on the heels of HP's major virtualization push announced this week, which includes a large VDI component.

The Red Hat purchase of Sunnyvale, Calif.-based Qumranet's kernel-based virtual machine (KVM) platform and SolidICE VDI solution is targeted at enterprise customers seeking to cut the total cost of providing applications, web access and runtime features to the client edge.

The acquisition of Qumranet gives the Raleigh, N.C.-based Red Hat a more comprehensive portfolio of virtualization offerings, including:

  • An open-source operating system with built-in virtualization.
     
  • An embedded hypervisor that supports major operating systems.
     
  • A consistent management platform for both virtual and physical systems.
     
  • A cloud and grid management solution.
     
  • Advanced, high-speed inter-application messaging.
     
  • An integrated security infrastructure.

SolidICE debuted in April, just weeks before Citrix (NASDAQ:CTXS) unveiled its updated XenDesktop, putting Qumranet -- and now Red Hat -- head-to-head with Citrix and VMWare (NYSE:VMW) in the desktop virtualization arena. Microsoft (NASDAQ:MSFT) may well take its forthcoming

Hyper-V

in a VDI direction, but for now seems content on partnering with Citrix on VDI. Sun Microsystems (JAVA) should own this market, but opted to hand over Java to the world and buy a tape drive company instead.



SolidICE is a high-performance, scalable virtualization solution built specifically for desktops, and not, Red Hat says, as a retrofit from server virtualization (slap!). It is based on the Simple Protocol for Independent Computing Environments (SPICE) and enables a Windows or Linux desktop to run in a virtual machine hosted on a central server or datacenter.



Virtualization has been around for decades, mostly on mainframes. Its foray into the desktop market was originally hampered by reliability and security issues. However, recent technological advances have ramped up interest and given virtualization a new head of steam. Such vendors as HP (NYSE:HPQ)are seemingly confident that the performance issues are no longer an inhibitor, just as the economic drivers for virtualization (like energy conservation) are mounting fast.



Red Hat says that it doesn't expect the acquisition to contribute anything substantial to its bottom line in the fiscal year that ends February 29, 2009, but after that the company is looking at $20 million in added revenue the following year.



In a nutshell, Qumranet and VDI fit Red Hat to a "T" -- with the service and maintance of centralized server-based clients just gravy on the already robust Red Hat infrastructure support business. VDI allows Red Hat to take its model to the PC, without leaving the datacenter. And it allows the promulgation of Linux for the client OS in much more expedient fashion than taking on Redmond on the desktop.



As I told NewsFactor Network

, the market for VDI could be in store for a large growth spurt. VDI simply solves too many problems while providing very little disruption for end users to be ignored.



VDI, somewhat ironically, may also work well for market mover Microsoft as it seeks to slow the momentum to outright web-based and OSS/LAMP-supported applications and services for large businesses. Microsoft must realize that enterprises have had it with the high cost of maintaining and managing the traditional Windows OS in all its client-side permutations.



Not even a

$300 million ad campaign for Vista

can stop the addition and subtraction that spells this fact out. The math simply does not lie. Help desk costs to fix user config-type and malware issues are killing IT budgets.



Yet (just in time!) VDI allows Microsoft to keep the apps as Windows apps, retains the desktop OS license fees -- even if they are virtualized and server-based -- and VDI on Windows keeps developers and ISVs writing new and updating old apps to run on ... Windows. VDI allows converting client-server apps into Windows Server apps, without turning them into web apps.



Essentially, at the same time, virtualized and server-based VDI delivery of Windows apps and Windows desktop functionality allows enterprises to cut total costs, reuse aging desktop hardware, streamline updates and migrations, and slash security and privacy/control concerns (by maintaining management at the datacenter).



Help desks can actually be pared back, folks. Sorry, Ashish. Data can be kept safe on servers, not out in the strange world of lost hard drives and corporate espionage. Indeed, the U.S. Dept. of Defense (DoD) and other three-acronym spy agencies use VDI extensively. Nothing on the client but chips and dips. If you can do it there, you can do it anywhere.



Now, as Red Hat (and its partner IBM?) seek to enter the VDI space aggressively and perhaps add Linux as the spolier runtime, Microsoft will need to accelerate its VDI initiatives. I expect MSFT to become the leader in VDI (perhaps via major acquisitions), as a hedge against Google (NASDAQ:GOOG), Red Hat,

FOSS

, the web, compute clouds, Amazon (NASDAQ:AMZN), IBM (NYSE:IBM), and the far too high cost of traditional Windows clients.



Speaking of IBM, VDI offers Big Blue a way to play to all its global strengths -- infrastructure and services (

green IT

) -- while moving back into the client solutions (and end-to-end) value business in a potentially Big, Big, way. There's no reason why HP and IBM won't be huge beneficiaries of VDI, even as Microsoft makes it easier for them based on its own need to move quickly in this direction.



Here's a dark horse thought: If you can inject search- and web-based ads into web/SaaS apps, why could you not inject them into VDI-delivered apps? There could well be an additional business model of VDI-delivered desktops and apps supported by targeted ads. Telcos, cable providers, and service providers might (if the were smart) give away the PC/MID hardware, include the VDI/DaaS as part of triple-play connection or premium service fees, and monetize it all through relevant ads embedded intelligently in virtualized apps delivery. Nawwww!



Trust me, keep an eye on VDI, it has the potential to rock the IT market every way as much as Google/Yahoo/Amazon/SalesForce.com/SaaS -- only this trend hits the enterprise directly and fully. Incidentally, cloud computing as a private enterprise endeavor hugely supports the viability and economic rationale for VDI.



It's nice when IT megatrends align so well.