KEY POINTS:
Last week's spectacularly successful Nasdaq float of a company called VMWare was the technology sector's biggest IPO since Google went public with much fanfare three years ago.
Investors snapped up about US$1 billion of VMWare shares and the excitement associated with the float brought back memories of the euphoria associated with the Google IPO.
VMWare's shares leapt about 75 per cent on listing, a sign of the market's enthusiasm for the "virtualisation" technology the company specialises in.
Virtualisation, according to Wikipedia, is "a technique for hiding the physical characteristics of computing resources from the way in which other systems, applications, or end users interact with those resources".
This can include, the entry says, "making multiple physical resources (such as storage devices or servers) appear as a single logical resource".
The reason this is hot technology has to do with IT departments' growing interest in making more efficient use of their computing power and, indirectly, the green trend that is sweeping through the technology sector.
Sticking a heap of servers in a room has traditionally been a pretty inefficient way of clumping together computer power because each machine would typically operate at only 10 to 20 per cent of its capacity.
"Virtualising" such a setup, however, enables full processing power to be extracted from each server, meaning a company's data centre can be reduced to a fifth of its previous size without a reduction in performance.
Computer farms are ravenous users of electricity, not only to power the banks of servers but also because of the substantial air conditioning systems required to keep them from overheating. So any solution to cutting the monthly power bill is enthusiastically welcomed by a sweating IT manager.
Hardware and software vendors are also keen to cash in on the growing green sentiment by promoting their latest devices and solutions are about being more power efficient and therefore less carbon-generating than the other guy's technology.
VMWare is a market leader in the virtualisation space (the VM in its name stands for "virtual machine") and the company is expected to turn over US$1.2 billion this year with one analyst expecting its sales to top US$3 billion by 2010.
No one is happier about VMWare's meteoric success and ongoing growth prospects than its majority owner, global storage and software giant EMC. EMC paid US$625 million to acquire VMWare in 2004.
Last week's float, through which it spun off 10 per cent of the business, values VMWare at more than US$19 billion.
New Zealand companies are jumping on the virtualisation band wagon with as much, if not more, gusto than their counterparts overseas.
An example of how virtualisation is having an impact locally can be found at Albany internet service provider and data centre operator Maxnet. The ISP is building a virtual technology platform around an upgrade of more than 50 new Dell servers.
"At the moment we're maintaining so many different servers, so many different platforms.
"To be able to combine it into a single infrastructure and increase our up-time, reduce our operating costs, it's just a huge advantage to us," says Derek Gaeth, Maxnet's network operations manager.
"We're combining five racks of equipment down into one - that's a huge reduction in floor space costs for us."
Those costs include buying literally "millions of kilowatt hours" of electricity a year to power the data centre, Gaeth says.
To put that into context, a typical family home might churn through 10,000kw hours of power over a year.
Dell's New Zealand country manager Derek Leitch describes virtualisation as "probably the highest-impact transformational technology to hit the market in the last decade".
Leitch says "server sprawl" - the costly problem of data centres getting larger and larger, and the costs associated with that growth - has been a major issue globally for the IT industry.
Leitch warns, however, that switching to a virtualised environment is not the panacea against all evil for IT departments. It can be a complex process of change which requires thought, planning, knowledgeable business partners and of course money.
He says while larger corporates are generally enthusiastic about the potential of virtualisation, and have begun the transformation process, smaller businesses have been slower on the uptake.
With a vested interest in encouraging more virtualisation, Dell will no doubt be doing its part to change that by pushing the message of virtualisation's benefits to its smaller customers.
