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Microsoft's stance on virtual appliances could threaten its VHD format

Microsoft's restrictive stance toward competitor virtualization platforms could determine the popularity of the company's Virtual Hard Disk-formatted virtual machine.

Microsoft Corp. has extended most virtualization licensing benefits to platforms other than its own Virtual Server. An organization, for instance, can run up to four instances of Windows Server 2003 Enterprise Edition on VMware Inc's ESX Server by purchasing just one license. Microsoft's stance on virtual appliances, though, remains unclear. On one hand, Microsoft amended its licensing agreement this year so that Virtual Server is no longer required to activate a published Microsoft Virtual Hard Disk (VHD)-formatted virtual machine. On the other hand, Microsoft antivirus and activation mechanisms cause virtual machines to deactivate when they are run on other virtualization platforms. As virtual appliances proliferate, Microsoft's restrictions on competitor virtualization platforms may play a role in determining the popularity of Microsoft's VHD format.

The allure of virtual appliances
Increasingly, virtual appliances are going to become a preferred distribution model for both traditional software applications as well as for hardware appliances. Industry manufacturers such as Cisco Systems Inc., Citrix Systems Inc. and Check Point Software Technologies Ltd. have long sold hardware appliances designed to handle functions such as virtual private network, backup and firewall rather than simply distributing software applications for customers to install on standard x86 machines. The hardware appliance typically includes a slimmed-down version of the OS tailored to optimally manage just the specific application. This uses the computing resources more efficiently while improving reliability, simplifying troubleshooting and enhancing security. It requires less-frequent patching and eliminates problems resulting from customers' use of incompatible hardware or from incorrect installation of an application.

The downside to hardware appliances is that they are costly. They take up rack space and require power to operate and cool. They also result in more underutilized servers and in nonstandardized hardware in the data center. They have parts that can fail: That is, duplicate devices may be required in order to guarantee redundancy. At disaster recovery sites, further redundant devices may be required.

By repackaging a hardware appliance as a virtual appliance, manufacturers gain all the advantages of utilizing a specialized operating system in a controlled environment without requiring a dedicated hardware server. Deployment is simplified, costs are reduced and high availability is enabled without requiring duplicate hardware. The virtual appliance can even be replicated off-site for disaster recovery. Downloading, deploying, evaluating, and replacing virtual appliances is also much quicker and easier.

Increasingly, software manufacturers deliver applications as virtual appliances for the exact same reasons. By packaging, say, a database as a virtual appliance, a software manufacturer no longer needs to be concerned about which hardware, drivers and OS version the application is being installed on. The manufacturer's best practices are already incorporated into the virtual machine, ensuring that it is configured correctly. This approach reduces complexity and improves reliability. Manufacturers currently selling virtual appliances range from well-known industry leaders such as BEA Systems Inc. to hundreds of small firms that capitalize on virtual servers' enhanced functionality in terms of performance, reliability and security.

In a largely virtualized infrastructure, virtual appliances have further advantages; organizations, for example, can collapse more infrastructure services into a virtual infrastructure along with application servers. And virtual appliances relying on the network transport, such as firewalls, gain significant performance advantages by keeping connections inside of physical host servers using the virtual switch. In a virtual infrastructure, traffic no longer gets routed from the virtual infrastructure out to the physical network and back, thus reducing latency.

The virtual appliance format
VMware of Palo Alto, Calif., currently dominates the virtual appliance market with its Virtual Machine Disk Format (VMDK). Microsoft is taking a big gamble by not completely supporting the running of its VHD format on virtual machines within a VMware environment. VMware is the world's fastest-growing large software company in history – by a factor of two. The company will do well more than $1 billion in sales this year and shows no sign of slowing in terms of revenues, innovation and leadership. More than 10,000 attendees are expected at this year's VMworld conference in San Francisco (which is hosted by VMware), and VMware-centric organizations tend to be exceptionally enthusiastic about the platform.

If Microsoft continues its restrictive stance toward virtual appliances, it may compel some organizations to choose its virtualization platform over VMware. But it would also certainly push software manufacturers to go through the trouble and expense of rewriting their applications to use an open-systems-based operating system as part of a virtual appliance. Alternatively, by promoting Windows based virtual machines within all formats, Microsoft has an opportunity to transform the traditional operating system -- designed to support multiple disparate applications -- to the high-performing and secure open source environment of virtual appliances.

About the author: Steve Kaplan is CEO of AccessFlow Inc., a virtualization consulting firm in Sacramento, Calif.. Kaplan has also been a Microsoft MVP for Terminal Server since 2004. He can be reached at

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