Virtually infinite potential

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This article appeared in the 15th October, 2007 issue of CRN magazine.

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Virtually infinite potential
FAR FROM BEING THE SOLE province of large enterprise, the headline grabbing growth of virtualisation technologies may benefit small and medium-businesses even more than the enterprise customers already lining up for them.

It’s still early days in terms of customer education, but as word spreads about the potential benefits of server and even desktop virtualisation, resellers will be called upon once more to deliver solutions that allow customers to do more with the hardware they already have, or reduce future server purchases in favour of virtualised machines.

Less server sales may not be as bad as it sounds. David Blackman ANZ Channel Sales Director, says VMware is currently on an SMB reseller recruitment drive. He says the easiest way to sign up as a partner is to register with the click through agreement on the company’s website. Once they are registered resellers can access the seven online training modules they must complete to become an entry level partner – a VMware Sales Professional.

Blackman says the world of virtualisation has come a long way in the past couple of years. The company’s third generation tools make implementation far less complicated than you might expect. In fact, “the concept is more complicated than the implementation,” he assures.

“We think the SMB market will take off once they understand virtualisation and realise that it is not all that difficult. Resellers will find that once they get their toe in the water, there’s no barrier to success,” said Blackman.

It could be that one of the keys to selling virtualisation to small business is to not call it that. Often small and even medium-sized businesses leave their IT in the hands of their trusted partners and so long as the reseller can demonstrate a better solution, probably at a lower cost, the customer doesn’t want or need to understand how it is done.

While much of the media attention surrounding virtualisation has focused at the early adopting enterprise users, proportionally small business users could stand to benefit even more if they use the technology to implement solutions like Disaster Recovery, which are just not economical using
physical hardware.

Blackman tells of one small business with 30 staff that recently bought six new servers to run database, email, Intranet and so on, each on a different server. Had they elected for a virtualised solution he says, they could have bought just three servers run multiple applications on them and used one as a Disaster Recovery machine so that they not only reduced their hardware cost, but gained a better, more resilient solution.

The trick for resellers will be making money in this environment. But with server margins already wafer thin, the concept of making money from services is not new to anybody. These sorts of virtualised solutions will mean lower revenues, but higher margins will help offset that loss, says Blackman, who insists it’s not all bad news on the revenue front.

Resellers can recover that lost income through selling bigger, better solutions rather than smaller one’s.

The disaster recovery server is one example, but Storage Area Networks (SANs) are another. A good virtualisation deployment needs a good storage network so you can move server images around and so on. Selling that solution adds back to the top line revenue figure and makes for a better customer solution.

Better still, consider not selling servers at all. Blackman points out how virtualisation is opening up the hosting market. One VMware customer is Web hosting outfit SmartyHost which earlier this year launched Vigabyte a virtual server service. Anoosh Manzoori, Managing Director of Vigabyte says it took his company nearly three hard years of development to put together the Vigabyte utility computing solution.

Based on Sun hardware and HDS storage, Vigabyte is housed in the Optus data centre and controlled with Vigabyte’s sPanel Web console environment. This makes it easy to adjust CPU, storage, RAM or bandwidth instantly, says Manzoori.

Resellers, who can re-badge the service if they like, can add a margin on top of Vigabyte’s wholesale pricing. He’s already signed up over 500 resellers. “It’s a no-brainier for resellers,” says Manzoori. “They have no worries about capacity and no need to set-up and mange data centre equipment.”

The virtualised Vigabyte takes care of all the Disaster recovery and has backup as an option. For $60 setup and $49 a month you can get a virtual Windows/RedHat server with 256MB RAM, 40GB storage and 10GB of data transfer with no single point of failure.

But the real advantage is the flexibility -- no need for capacity planning -- you can create virtual machines on the fly, manage your virtual infrastructure in the point and click console and add or subtract capacity on a monthly basis. Normally buying a server you have to buy more capacity than you need now to accommodate the life of the server and then continue to pay for it even if your business is seasonal. But regardless of whether your business is seasonal or not, most server platforms are under-utilised.

Blackman estimates that to date less than 10 per cent of the world’s servers are virtualised. VMware is hoping this will treble or at least double over the next couple of years. If Windows uses 5 to 10 per cent of the computing capacity of the hardware it runs on, that’s a significant amount of number crunching power ready to be accessed and we haven’t even started on virtualising the desktop.

VIRTUAL LAND GRAB
VMware might be getting all the press with its stellar entrance onto the New York Stock exchange, but its far from the only player in this space. There are a large number of small virtualisation players and some larger one’s too. Citrix recently spent US$500 million acquiring virtualisation company XenSource and is working with Microsoft which has also acknowledged the importance of virtualisation. The vendor is already offering some free tools and plans to offer server virtualisation as a post-launch update to Windows Server 2008.

With less than a US$1 billion in annual revenues, VMware is a minnow compared to Microsoft. Acquired by storage vendor EMC in 1998, VMware made big news in August when its IPO thrust the company into the limelight as its stock price nearly tripled on debut. VMware is now 87 per cent owned by EMC with Intel and Cisco among the minority owners.


Support for SMBs
Ingram Micro is embracing the trend of virtualisation

STUART ELLIS, ENTERPRISE business manager for Ingram Micro, describes what he sees as a general commoditisation of complex technologies over the past few years, during which technology solutions like virtualisation are being driven down into the mid-market and SMB space. Ellis said vendors see distribution as the route to market, but as they are complex technologies they need to be represented and supported to the wider solution provider market.

To support this push, Ingram Micro established a specialist solutions division about 15 months ago – though there was a 15 month period before, which Ellis describes as an “embryonic” stage. In that time Ingram Micro skilled up its staffing levels and set up a specialised organisational infrastructure which provides the level of appropriate support needed for this technology.

Virtualisation has become an industry unto itself, suggests Ellis, with some 1600 companies involved with solutions and a significant take up by users. Ellis notes that back in 1996 only two percent of the world’s servers were virtualised, but the growth is accelerating and by the end of 2010 that figure is expected to be 15 percent.

“We have seen virtualisation accepted in the wider application and atypical consolidation markets with business continuity, migration, disaster recovery and many other facets of IT lending themselves to virtualisation,”
explained Ellis.

Widespread acceptance will become even more prevalent as the x86 world moves to embedded hypervisors which bring virtualisation right into the box.

IBM, for example, recently announced a ‘Virtualisation-Ready’ System x Server the x3950 M2 – based on Intel quad-core technology and IBM’s X-Architecture technology. The new system will be ready for virtualisation right out of the box. There’s no software setup and installation time, the server will boot off an internal USB interface and software is pre-loaded on a 4GB USB flash storage device with virtualisation running on the bare metal.

“So this gives us a completely different slant on how we might take it to market, what our add-on up-sell might look like, what our marketing might look like,” said Ellis.

Ingram Micro is starting to see enquiries pick up through tier two and tier three partners. These are resellers who are squarely in the mid-market SMB space and looking to companies like IBM for consolidation solutions and
buying VMware or other technology and tools around virtualisation.

Ellis claims there is a spawning of tools from other vendors which address migration, backup, management of data, management of virtual assets and the virtual desktop. As enterprise business manager, he is responsible for the technology direction and for deciding what vendors and technology Ingram Micro “might seek to engage where we think it is appropriate”, suggesting we will see a “number of announcements based on our reconnaissance” of the recent VMware conference in the US.

Written by Adam Gosling
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