Four Minute Mile

Can Microsoft Survive Virtualization?

Can Microsoft survive the rise of virtualization?  It's hard to say, but virtualization represents yet another threat to Microsoft's over-whelming market position in the computer operating system market. 

Admittedly, the list of threats to Microsoft's crown jewels has been long and no threat has yet undermined the Windows franchise.  The bone yard of companies that have launched credible threats at various levels includes but is not limited to Netscape, Red Hat, Apple, Liberate (thin client), Java (Cross platform apps), IBM OS/2 WARP and others.

What is this new threat?  Companies like VMWare and Xensource / Citrix in OS virtualization and Thinstall and Xenocode in application virtualization have pioneered a new set of technologies that threaten to do to Windows what Windows did to DOS.  Say what?  Well, you remember when DOS was the operating system and all of the applications were written for DOS.  Then, Windows came along.  Windows was basically an application written for DOS.  Windows was so new, cool and easy to use that pretty soon, applications were written for Windows not DOS.

I'll focus mainly on OS Virtualization...

Fast forward 20 years.  Windows is the most widely used operating system and, consequently, when a developer writes a new application, it almost always starts out on the Windows Platform.   Virtualization (e.g., VMWare ESX Server) replaces Windows as the Server OS (in a data-center example) and allows the operator to run applications in any combination of operating system "containers" on top of ESX (in this case, the guest OS is almost like another "window"). 

If this technology catches on in the data-center (and it appears that it has), eventually ESX could be the most prevalent server platform and the guest OS becomes a runtime environment for the application.  And, so, application vendors may begin to choose their development OS based on technology advantages rather than market share (because ESX is the anchor tenant and individual guest OS's become runtime containers with less intrinsic value).  So, in the future, a software company like SAP could possibly design a new product native to ESX (like the proposed BEA Liquid VM), or virtually on top of ESX using FreeBSD or Red Hat or Windows or any other operating system they choose, or via virtual appliance format (see my overview of appliance-based software delivery for more).  In a virtual world, the data-center owner may not really care.

So, for Microsoft to really suffer an erosion of market power in the operating system market, a non-Microsoft VM product would need to gain significant market share, then application vendors would need to feel released from OS specific development constraints.  And, then, they'd have to choose non-windows guest OS alternatives as their development platform.  This could take years if ever.

But, to play devil's advocate, why might application vendors do that?  Because non-windows OS's may be cheap or free, higher performance, more reliable, customizable etc.  Nonetheless, it's a chicken and egg problem.  Application vendors won't be truly free to choose until ESX or some other platform gains a large market share.  And, data-center managers may be slow to standardize on a VM until there are significant application advantages.  Or until VM environments are so easy to manage that it makes sense to run them even when most apps are still on Windows.

As Virtual Platforms become more and more prevalent, the level of network and systems management complexity grows.  For example, historically one physical server meant one OS.  In a virtual world, one physical server might be running many different OS's and applications -- so, for a systems administrator, there's more to manage. 

Systems management, therefore, could be a significant enabler for rapid proliferation of virtual OS environments.  As the leading systems management appliance vendor, KACE has been working to deliver best-in-class support for virtual environments since our first product shipped in 2004.  In fact one of our very first customers has been using KBOX to manage over 2500 virtual servers for the past 3 years.  And, since then hundreds of customers have signed up to use KBOX to manage physical and virtual environments worldwide. 

We started with some simple features to enhance the management of guest OS environment to offer a viable alternative to server and PC management software. Today our products support guest OS management and inventory, VM Server and Guest provisioning as well as our newly announced and patent-pending vState Management Technology capability.  vState Management is an innovative new technology that allows you to keep virtual guest OS environments in sync on your network.  So, if you have 1000 virtual Windows XP machines in an R&D lab and you'd like to keep them all configured the same way, vState allows you to scan all machines and update the virtuals that drift from the gold master.  So, if 25 machines have an application or file that's not included in the gold master, then vState Management will remove them (or add them if the converse is true).  This can add to the overall stability and reliability of the machines as they remain homogeneous and, at the same time, save a ton of time by eliminating the need to completely re-image those machines. By doing so, we are providing an alternative to PC management software to save systems management professionals time and money.

Can Microsoft Survive Virtualization?  I wouldn't bet against them, but virtualization players like VMWare are off to a good start.  And, afterall, most monopolies or near-monopolies are swamped over time by innovation.  Whether Microsoft survives virtualization or not, it's clear that systems management will play an increasingly important role going forward as this new computing paradigm takes hold.  And, of course, we're pleased at KACE to play a role in helping businesses and governments stay ahead of this new systems management challenge, as well as creating some learning materials for helping you understand the alternatives to PC managment software. 

To learn more about what we're doing in the area of virtualization and systems management visit our recent press release or visit our page on virtualization and KBOX technology.

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Additionally, I asked a colleague to give me some feedback on this post before pushing it out and he sent me links to two interesting articles on this topic that I had not seen before:

• "The Future of VIrtualization and What That Means for CIOs" in Information Week
• "Could Virtual Systems Replace Windows" in PC World

On-Shoring?

This blog entry was inspired by a well-written article by Denise Dubie of Network World called "Study: Could Onshoring Become the New Offshoring?"

Any college economics professor will tell you that -- at a macroeconomic level -- the workforce responds to changing circumstances by reallocating its resources to maximize its outcome.  So, for example, if a manufacturing facility shuts down in one city then, over time, the local people will rebound by finding new opportunities in new locations or with new employers.  Or, if better jobs are available in a new field or geography, workers tend to find ways to fill these new jobs even at great personal cost.

This has proven out many times on a large scale.  For example, the migration of farmworkers to the West Coast during the Dust Bowl of the 1930s (chronicled by Steinbeck in The Grapes of Wrath).  Or, the migration of gold-seekers during the Gold Rush in California during the 1840s and 1850s.

Similarly, there's been a lot of hype around global outsourcing whereby engineering and IT jobs are moved to lower cost providers off-shore (e.g., India, China).  In Silicon Valley, the place I call home, many have said that outsourcing to India-based entities will severely drain the economy of high tech jobs.  Indeed, most firms today outsource some of their engineering or QA activities to firms offshore.  However, an interesting phenomenon called "On-Shoring" has grown up alongside the traditional off-shore, outsource model.

Denise paints an interesting picture in her Network World article -- that talented IT and engineering resources are able to serve remote clients from lower cost domestic locations.   

We've seen this at KACE.  At our company, we have most of our core engineering resources in the US focused on developing innovative new products.  We supplement those resources with some off-shore QA resources.  However, importantly, we've seen a trend whereby we've attracted some very talented engineering resources in the US to work on KBOX technology as full-time KACE employees from remote domestic locations (e.g., Boston, Tuscon, Detroit) as opposed to our corporate headquarters in Mountain View.   

I attribute this to a variety of factors including economic factors such as affordable housing, as well as to social factors such as access to strong public school systems, as well as to the general availability of technology that make remote work efficient and economical.

The KBOX products that we sell within the Systems Management arena help support this growing de-centralized workforce.  As workers become more distributed (both domestically and globally) they still require high-performance computing and reliable systems -- and it's not economical to put an IT resource in close proximity to every end-user or every server.  So, KBOX appliance products enable systems administrators to remotely provision, inventory, update, patch, configure, secure and repair remote desktops and servers from anywhere. 

Thanks to KBOX, IT professionals and the machines they manage can enjoy a close working relationship from an administration standpoint even if they're worlds apart in the physical world.

Move Over SaaS, Make Room for AbSD

There’s a new kid in town sharing the spotlight with SaaS.  AbSD (Appliance-based Software Delivery) offers a similar, disruptive approach for delivering core business applications.  This new model of software delivery offers many of the same benefits as SaaS models and a few additional benefits that create an advantage for certain types of applications.

Rise of SaaS Originally Fueled by Mid-Market Buyers

SaaS application delivery models first emerged in the late 90’s.  And, by now, the story is well known.  The cost and complexity of installing traditional software-based enterprise applications had spiraled out of control.  Siebel, SAP, Oracle and others represented the old-guard approach.  Upstart organizations like Salesforce.com, Eloqua, NetSuite, LucidEra and others struck out at the very core of these models by offering hosted software models.   

The capabilities of these SaaS offerings remain substantially similar to their Client/Server predecessors.  CRM systems manage customer relationships whether delivered by SaaS or Client/Server.  A parallel statement could be made for ERP or BI offerings. 

Instead of offering new features in the traditional sense, SaaS models focused on ease-of-use, rapid time to deployment, centralized and automatic application maintenance and data backup.  In addition, most SaaS offerings price on a subscription basis which helps new customers avoid large upfront costs.

The benefits offered by SaaS hit a nerve with businesses that couldn’t afford or spend the time to deploy monolithic, traditional software systems.  The early growth came from mid-market companies and, over time, these mid-sized enterprises voted with their budgets on a large scale.  And, of course, now SaaS is widely accepted as the premiere software delivery model for companies of all sizes.

AbSD Finds Its Place Alongside SaaS

Appliance-based Software Delivery has crept on the scene over the last decade. The characteristics of an appliance-based software product include many of the same qualities found in SaaS:

• Easy installation and configuration
• Web-based interface
• Automatic application data feeds, maintenance, and upgrades
• Automatic data recovery and backup

In addition, AbSD offers several characteristics not found in SaaS:

• Dedicated hardware for a single application and customer
• Secure, on-premise deployment architecture
• Traditional upfront purchase or subscription license or hybrid

Early examples can be found in the consumer space.  TiVo, for example, is simply a Linux-based computer dedicated to the application of digital video recording.  The box is extremely easy to set-up, it’s easy to use and it mixes on premise capabilities with data feeds (i.e., programming guides) served up from a central location.  Moreover, there’s a mixed purchase model; some upfront fees with a modest on-going subscription.

In some cases, AbSD in-roads have come in direct competition with SaaS.  For example, SugarCRM offers a SugarCube appliance product that offers Salesforce.com-like functionality in a box.  That makes a lot of sense for some customers.  They can get a reliable, secure, on-premise solution at a cost that’s comparable or less than a comparable SaaS offering.

In other situations, AbSD has made inroads where SaaS doesn’t make sense because of security considerations or architectural reasons and, therefore, traditional software-only vendors remain entrenched.  Companies like KACE in systems management, Cast Iron Systems in application integration, and IronPort in messaging are proving that AbSD can be extremely attractive to customers for three key reasons:

1. Incumbent solutions are too difficult or time consuming to implement
2. Security concerns are too great to risk an off-premise SaaS solution
3. Alternatives are too expensive to purchase and implement

Bell Weather Adoption of AbSD within Mid-sized Enterprise

As it turns out, the mid-sized enterprise has proven to be fertile ground for this new paradigm once again.  The information technology staff within a typical mid-sized business wears many hats and, therefore, responds well to solutions that offer good business value with an emphasis on fast time to production, affordability and ease-of-use.

In the mid-sized segment, businesses have historically under invested in heavy-weight enterprise infrastructure.  Now, AbSD removes the time, cost, and complexity barrier.  And customers are buying it.  From where the customer sits, appliance means secure, reliable, all-in-one, automatically maintained and updated, and affordable – it’s all part of the appliance allure.

You know you’re getting through to the market when venture capitalists are beginning to see it.  When my phone rings, I’m hearing more potential investors saying things like “We’ve invested and won with SaaS companies; now we see that appliance-based models offer the same value proposition and open up potential in segments unreachable by SaaS.”

Indeed, move over SaaS, make room for AbSD.

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For additional information on AbSD visit an interview with Marty Kacin, KACE CTO or view his recent webinar on the topic.

Creative Destruction

Joseph Schumpter popularized the notion of Creative Destruction with his 1942 book Capitalism, Socialism and Democracy.  His vision of Creative Destruction simply holds that "innovative entry by entrepreneurs is the force that sustains long-term economic growth even as it destroys the value of established companies that enjoy some degree of monopoly power. (source Wikipedia)"

So, innovative new companies and products that revolutionize distribution models or affordability measures or operational efficiency or ease-of-use or any other factor that renders old-school models obsolete may unseat established competitors in a marketplace.  Well-known examples include:

• Southwest Airlines changing the economics (both for customers and the operator) of short-haul air travel undermining the position of major air carriers
• Walmart using technology, efficient store operation and centralized purchasing power to unseat Sears, K-mart and other national and international retailers
• Amazon.com using the internet to eradicate local retailers and large-scale booksellers
• Salesforce.com used it's "no software" delivery model to interrupt the enterprise software daydreams of Oracle, IBM, Siebel and others
• iTunes and iPod using advanced industrial design and advanced web-delivery to at once eliminate the local music-seller and the fledgling Windows/MP3 industry

The point is that industries continually evolve and transform themselves.  New entrants can innovate in well-established industries to disadvantage large and powerful incumbant players.  In a nutshell, KACE has set out to apply the principles of Creative Destruction to unseat established players in systems management.  Companies such as Altiris, LANdesk, OpsWare, Microsoft SMS and others have become reliant on business models that are too expensive, encourage over-pricing, excessive professional services and deliver overly complicated product. 

Our vision at KACE is to save our customers an unprecedented amount of time and money in the area of systems management.  We've innovated by delivering an appliance-based product that eliminates the time, cost and complexity barrier of traditional systems management.  By using the latest technology and software design principles we've been able to reduce the deployment time of a full-featured systems management platform and reduce the man-power required to operate the system -- all at an affordable price -- "deploy in a day at a third the cost". 

Today, hundreds of customers manage hundreds of thousands of end-point computers and servers with KBOX appliance-based products.  Illustrating, yet again, that Creative Destruction is constantly at work delivering a winning combination of price and performance in the marketplace.

New Ground

I've met a lot of people who say they'd love to start a company if they only had an idea for something that hadn't been done before.  And some take this to an extreme.  For example, I've heard more than one person quote Charles Duell, US Patent Commissioner in 1899 who allegeldy said, "Everything that can be invented has been invented." (see this interesting article in USA Today on bogus quotations) With 20/20 hindsight it's clear that such a position was bogus then.  What's surprising now is that even today many people find it difficult to see opportunity when it's all around us.  In essence, they believe that everything worth doing has been done.

Sure, the mouse trap has been pretty reliable for a century or so.  And, the ten speed bicycle hasn't changed much since I was a kid.  Iced tea is iced tea; coffee is coffee; burgers are burgers; economy cars are economy cars; desktop PCs are PCs and so on.  Or are they?

I believe that you need to look beyond the obvious to understand the business value of breaking new ground.  If you bake business model, branding, design, market reach and other concepts into the mix, it's easy to see that innovation isn't so much about product per se, it's about a combination of factors that add up to value in the mind of the buyer.  After all...

• Starbucks didn't invent coffee
• McDonald's didn't invent the burger
• Honda didn't invent the automobile
• Nantucket Nectars didn't invent iced tea
• Dell didn't invent personal computers
• TiVo didn't invent video recording
• and so on

These are examples of companies that made it big but didn't really break totally new ground.  They innovated around a business model, a feature, a design concept, a distribution model or some other factor that made a big difference in value from the perspective of the customer.

It's easy to identify new parallel examples in today's technology business community.  Facebook, didn't invent the facebook, they revolutionized it.  You Tube didn't invent web-based video, they revolutionized.  In fact, Google didn't invent search or online advertising, they revolutionized it. 

And, there are less obvious emerging players as well.  I like the idea, for example, of N-Computing revolutionizing how we deliver computing power to our families, our schools and emerging nations.

Similarly, KACE is all about making a huge difference in the large, existing systems management market.  When we started this company in 2003, it was easy to see that incumbent players like Altiris, LANDesk, Microsoft SMS and others had missed a big opportunity to bring powerful systems management capabilities to the mainstream Fortune 100,000 companies that comprise the mid-sized enterprise market in the US.  In fact, at that time, no single vendor occupied the famed upper-right quardrant of the Gartner Magic Quadrant.

We have a market-driven approach to leading the market for systems management appliances.  Our vision includes delivering easy-to-use, comprehensive systems management appliances that install in about a day and cost about one third of software alternatives.  This value point is very compelling for systems administrators who wear many hats and face on-going resource constraints in the face of growing systems adminstration requirements. 

It's a new twist on an old problem... it's breaking New Ground.

Rob Meinhardt
CEO, KACE