The wrong type of fee structure could hurt Microsoft’s Virtual Server

Virtual machines, a three-decade-old idea, are getting increased attention in the Wintel world. In April Microsoft Corp. chief executive Steve Ballmer promised the company will integrate hypervisor technology — a software layer allowing multiple operating systems to run side by side on a single server — with its Longhorn server operating system. Getting Microsoft to clarify what it meant by integration is like pulling teeth, but this hypervisor is the next generation of what Microsoft now calls Virtual Server and it will have at least “very deep links” into the server OS, in the words of Derick Wong, senior product manager for security management at Microsoft Canada Co.
Virtual Server lets multiple operating systems — the same or different versions of Windows, or even, as of April, Linux — run together on one server. This means a single piece of hardware supports multiple applications that would otherwise need their own servers, Wong says. It also comes in handy for testing and development, and virtual machine images are a convenient way to provide disaster recovery capabilities because they can be installed and brought up fast.
Though Microsoft has offered Virtual Server and a related Virtual PC product for only a couple of years, virtual machines are not new. One of IBM’s several mainframe operating systems way back in the 1970s and 1980s was called VM, which stood for Virtual Machine. Nor did Microsoft invent the idea of applying them to Windows — others, notably VMWare Inc., got there first. VMWare has offered PC virtualization for about seven years.
But the concept is gathering steam. Dan Kusnetzky, analyst at International Data Corp. in Framingham, Mass., says the virtual-machine software market stood at US$330 million worldwide at the end of 2004 and will grow at 15.5 per cent annually through 2009 — “roughly three times the growth of operating system software.”
Xen, an open-source hypervisor, is gaining popularity in the Linux world and both Novell Inc. and Red Hat Inc. have incorporated it.
Why? It’s a way to run multiple environments on one machine — even a client PC, as can be done for instance with VMWare Workstation, which is popular with developers and those who want to run more than one operating system on a single PC, says Raghu Raghuram, VMWare’s senior director of strategy and market development. It’s a way to consolidate onto fewer, larger servers.
There are a few questions. Kusnetzky hopes whatever Microsoft does with virtualization in Longhorn is compatible with what customers already use — if not, the company will hurt itself, he says. And licensing could be a major stumbling block. Today, says Kusnetzky, Microsoft policy appears to require customers to pay full license fees for Windows on every virtual machine they run, even if it runs only for a short time. “This is a thorny issue that Microsoft still has not publicly addressed,” he says. Failing to address it, he warns, could strangle the technology’s growth.