There is a lot of talk about cloud computing. The idea is simple: take a lot (hundreds, thousands) of inexpensive, Intel-based computers, put them into racks, connect to the network, and use them for different tasks which require a lot of computing power. There is a small problem here: computers without software are useless. And cloud computing requires specialized software. There is specialized software in huge data centers built by Yahoo! (YHOO), Google (GOOG), Amazon.com (AMZN) and by other companies. All this software is proprietary, you can't build your own data center with it.
Here comes VmWare. This company produces virtualization software. Initial idea was that you can build your specialized virtual machines inside of a real computer and then move them around if you need. But new product, vSphere 4, allows you to build a cloud. All cloud functions are here: you can rapidly build virtual machines, clone them, move data and whole virtual machines around.
If you asked me a month ago "what do I need to build a computer cloud?", my answer would be: hundreds of millions. You'd need huge resources to pay good programmers to develop your own cloud computing software, debug it, make it production ready and then support it. Not anymore. Now you can just install VmWare software. It will cost a bundle, but orders of magnitude less than cost of building your own.
I wanted to by VMW right after the forum. As usual in the last couple of months, waiting for a pullback just makes stock more expensive. I'm going to open position anyway in the next several days.
Full disclosure: at the time of publication author had a long position in GOOG and no positions in other companies mentioned. Positions can change any time.
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2 comments:
You make this sound soo simple:) So simple in fact, that I had to spoil this a little... In fact VmWare is not neccessery for cloud computing - they are just the best known proprietory hypervisor maker. There are now plenty of good open source hypervisors out (VirtualBox, KVM, Qemu, etc.) All of them are free, and they integrate better with linux, that is the major OS in these "clouds". And Amazon is not using VmWare for their cloud. And that is important because, they actually invented the whole cloud hysteria. They are THE major cloud platform - what they do reverberates though the industry, because they lead it in the cloud;). They have just open sourced it's core technologies (project eucalyptus if i remember...). That spells trouble for VmWare. There is nothing wrong with the company, and in fact it might continue to do good. The problem is that they might have just about peaked. Like Microsoft and like Google. Even MSFT and GOOG has more potential to reinvent themselves then VmWare. Virtualisation became popular by allowing to seperate unstable, insecure and crappy operating systems (think Windows) from each other, so that the services they provide wouldn't crash together - all at once. And provide some nice management options for some of the more stable systems, but still at HUGE performance penalty. Also, there are more and more serious reports about the performance problems that come with virtualisation starting to come in, whereas before it was mostly hype about how cool this is. It is in fact a very unwise thing - buy a huge powerful server, stuff it full of instances of slow virtual machines and then try to beat others on selling this stuff wholesale to remote clients. Like most legacy technology ideas, it's a race towards 0. Still it might take a some time while the market fully realizes it.
I am an IT specialist myself. And to my taste, VmWare sucks. It works. But you are right, it's mostly good to make many VMs run Windows, so Windows servers can run one important service each, without creating software interference problems. And I have no doubts that Linux is much better OS for everything, especially for cloud.
But remember, if 30 years "nobody got fired fot buying IBM", now it's "nobody gets fired for buying Microsoft". Because data centers around the world are drowning in Windows crap, they need some way to manage it. And VmWare is the answer IT managers understand.
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