Aug 28, 2007

Virtualization and the business aspects behind it

It seems like software virtualization has been gaining more popularity recently. With companies like VMWare going public with their stock a push for virtualization is imminent.

From a technical perspective and project execution virtualization is great. It provides the mechanism for shorter turnarounds on project setup, deployment, and removal. This allows project managers to incorporate more slack time into a project's schedule, which in the end results into more time spent on the actual project and more value for the customer. As a step further, the open source community has released a set of pre-built virtual machines that are available to the general public. At the other hand, virtualization at the engineering level provides easy ways to re-configure an environment (including hardware), restore a system to a given state, or simply back-up or clone a system. The ability to do so helps engineers spend less time on maintenance and focus more on the actual problems that are faced throughout the project, which is an incentive for better quality of work. But is virtualization really all that great?

Most commercial software products and services today are distributed under a license in the form of a product key or as a subscription. Both business models are fairly simple. While subscription forces end customers to renew their access to the product or service via a short term license, the product key scenario usually asks end customers for a one time product activation that enables unlimited use of the product. How does virtualization applies to both models?

Among all of its nice uses, virtualization provides a mechanism for backing up or copying virtual machines. Unfortunately for software vendors, replicating virtual machines also replicates any installed software. As such, it is possible to use a single activated copy to suit the needs of multiple users simultaneously. In this scenario the impact of virtualization on the subscription based model is fairly limited. Businesses that have adopted such model should still see a constant stream of revenues with an occasional increase at the time of subscription renewals. This, however, doesn't seem to be the fate of single activation licensing.

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