On Friday, Alessandro blogged about a rumor that EMC might sell VMware to Intel. If that were to happen, how would Microsoft and Citrix (VMware's chief competitors) respond? And how would AMD (Intel's chief competitor) respond? Could this lead to a marriage/merger/alliance between Microsoft/Citrix and AMD?
Microsoft and Citrix both hate VMware. If VMware and Intel somehow hooked up (VMtel?), it would almost (almost) be natural for Microsoft / Citrix to hook up with AMD. This would most likely manifest itself as a deal between Citrix and AMD (AMDtrix?), with Microsoft "officially" staying out of it since they'd still need to play with VMtel for Windows licensing. But an AMDtrix deal could be done in the same way that Citrix bought XenSource, where Microsoft was not officially involved but off-the-record everyone thinks they were.
So how likely is a Citrix / AMD / union? It seems crazy at first. Really crazy. Neither company is big enough to buy the other. (Citrix's market cap is in the $6B range, and AMD's is in the $4B range.) But if VMware goes to Intel then you know that AMD would have to do something, and unless AMD is bought outright by someone huge (Cisco? IBM? hp?), they'd have to align / merge with a hardware virtualization vendor just to compete against VMtel. And besides Citrix, who else is out there? Microsoft? Too much antitrust risk. Parallels for Virtuozzo? Too OS-specific and not the right approach to leverage chip-level stuff. Qumranet with KVM? Maybe?, but they're Linux-based unproven in the enterprise. The best virtualization option for AMD would Citrix.
(By the way, if by some chance Citrix and AMD did form AMDtrix, then you can kiss "old Citrix" goodbye forever. There's already a lot of tension between the Windows app-focused Ft Lauderdale "Old Citrix" and the virtualization-focused Bay Area "New Citrix." New Citrix power in AMDtrix is probably fine enough, although the old school "been doing it since WinFrame" folks will be outraged.)
Why would Intel want VMware?
Let's take a step back. Isn't VMware all about server consolidation and increasing utilization of physical computing capacity? And doesn't Intel make gobs and gobs of money selling CPUs that average 20% utilization? Wouldn't this mean that Intel was against hardware virtualization? (And hp, Dell, and IBM for that matter?) On the surface that makes sense. Intel and the hardware vendors know they can't stop the virtualization machine, so they might as well try to make the most money they can on it.
Turns out they don't have to try too hard. As companies collapse and consolidate their huge inventory of servers onto a smaller number of virtualization host servers, they end up trading in a bunch of commodity no-margin servers for the big 2U and 4U servers with piles of storage, cache, cores, RAID, and redundancy. In other words, even though the actual dollar amount spent on servers decreases, I can guarantee the hardware vendors make more dollars in profit when outfitting a datacenter build for virtualization than one build for stacks and stacks of cheap 1U boxes.
So Intel could potentially increase their profit by selling fewer—yet higher margin—CPUs. But that still doesn't explain why they might want to own VMware.
Certainly there are probably some performance efficiencies to be gained by putting the hypervisor as close to the CPU silicon as possible. (And the ESXi and embedded Xen the server vendors today don't really count. While not 100% identical to the installed versions of ESX or Xen, today's "embedded" hypervisors are nothing more than the hypervisors booting off of flash media instead of a magnetic disk drive.
VMtel and AMDtrix could simplify the server vendors' product lineups too. Right now there is a two-by-two grid of options—each vendor offers both AMD and Intel chips, and each vendor offers both VMware and Citrix embedded hypervisor options. Would it really be that different if the AMD-based hardware only came with Citrix hypervisor, and the Intel hardware only came with the VMware option?
In his original rumor article, Alessandro wrote that EMC couldn't sell VMware until 2009. Maybe Citrix and AMD can beat them to the punch and get together this year? And maybe they could force the Intel / VMware rumor to be true? Or maybe this is all a great ruse by VMware and/or Intel to get Citrix and AMD together in a hasty way?
In addition to Intel wanting to be able to move the hypervisor as close to the silicon as possible, there's another, and potentially larger motivation. And that has to do with the whole cloud computing future. But really that's a topic that deserves its own article. Today's Monday. Citrix's Synergy conference starts tomorrow and will most likely fill our conversation for the rest of the week. So let's make a date for the following Tuesday (next Monday is a holiday in the US) to talk about how our current IT world that is Windows will evolve to "The Cloud," and why that will actually be relevant to everyone reading this.