Day one saw its share price close at US$51, more than 75 per cent above its official offering price of $29 on the very day that the Dow Jones Industrial Average fell by more than 207 points. No mean feat!

Virtualisation software is designed to make a server behave as if it is multiple servers, improving utilisation and allowing IT managers to efficiently combine many computing resources on a single server.

And there is a lot of demand for and interest in this technology — including here in the Isle of Man. British Computer Society membership surveys consistently show that IT professionals here wish to learn more about virtualisation.

As a result, managing director of WMWare's competitor SWsoft Rob Lovall was invited to speak to the BCS about the company's virtualisation product Virtuozzo. It turned out to be one of the year's best-attended BCS events.

But why all the interest? At the most basic level, virtualisation software lets one computer or server do the work of many, which leads to significant cost savings, better IT management and the ability to respond to changes in business faster. So what's not to love?

Technology analysts at IDC say only 10 to 15 per cent of server capacity is typically utilised. Organisations often run only one application per server to avoid the risk of having problems with one application affecting the availability of another on the same server.

This 'one application-one server' approach means companies are not making the most of their resources.

And huge server racks are not cheap or easy to run. You have to keep them up 24/7 and that involves significant fixed costs for power consumption, cooling and facilities. Companies in some areas also endure problems with maintaining an adequate power supply which can severely affect their ability to deploy new applications and servers.

Then you have to consider the human resources challenges. The more complicated the IT infrastructure gets, the higher the level of specialised experience needed to manage it. You also have to consider the manpower required for manual server maintenance when things are running smoothly, not to mention what is required during unplanned downtime.

It just makes sense to run fewer servers if you can.
But virtualisation is not all that new. It was first introduced for some mainframe systems in the 1970s. Then it was effectively abandoned for the next 20 years when client-server applications and inexpensive x86 servers and desktops established the model of distributed computing, resulting in the challenges outlined above.

IDC estimates that less than one million of the 24.8 million x86 servers and less than five million of the 489.7 million business client PCs deployed worldwide are running virtualisation software. So, the opportunity for VMware, SWsoft and other virtualisation solutions providers is huge.

VMware's successful initial public offering is bound to bring benefits to all players. Investors will want to get in on the action now that virtualisation has proven to be a good bet. In fact, some say it goes some way to disproving venture capitalist's recent attitudes that enterprise software companies are too risky to invest in because of the high sales cost and protracted sales cycles.

But there is still one important fact to consider. Microsoft's Windows Server 2008 operating system, due in February, will include virtualisation capabilities. Its vast Windows customer base gives it a clear advantage.

Still, with every problem there is opportunity. Small guys often do very well — just ask the folks at aQuantive which was acquired by Microsoft earlier this year for $6 billion. Not a bad pay day really and no IPO required.


>>Sherrilynne Starkie is the managing partner of Strive Public Relations, a communications consultancy in the Isle of Man. She provides her views on business and technology each week in Tech Talk. Visit her business blog, Strive Notes for frequent updates.
www.strivepr.com