Virtualization - hyped or for real?

Everybody in the industry is talking about Virtualization and it's somewhat synonymously used along with VMWare perhaps dictated by the huge market share that VMware has over the virtual market. Some of the obvious benefits talked about (and not really proven) are:
- 50-60% of the hardware maintenance costs are from energy costs and cooling. So with virtualization of those big mammoth servers we can save a lot of money. But from WHEN?

- Buy a really expensive VMWare ESx server that will run each as ten to thirty machines and you get a whole lot of savings with minimal administrative tasks, hardware cloning, no need to install and uninstall operating systems, no need to ghost image and everything will work like you have ten machines for each machine you have now.

The questions on a typical CTO/IT admin's mind would be -
- Well what's the cost of the ESX server? Greater than 15K USD?
- Well, what do I do with all the smaller Sun, IBM and HP servers that I have and what about the data center space and maintenance that I pay a fee for? Can I cancel my contract with the data center hosting company and just have one big ESX in my local data center?

- Will ALL my applications run on virtual environments? Very few applications are actually certified on VM and even fewer actually leverage the VM specific APIs.

- There is no miracle cure for performance. With a plethora of Load balancing software being sold for 'Virtual environments' it is obvious that performance will be a trade off unless ofcourse you buy very expensive hardware.

So I think, Virtualization is a very good thing to happen to the industry with it's third level abstraction of operting system layer. However, it is good factor for cost savings if the systems are based on an incremental model and not on a replacement model. If you are planning to setup new labs, new product systems, new network assistance then Virtual systems is the way to do.

Just see the various VM software / Hypervisors bundled with branded hardware now and that will say how much research and optimization is in the works. Even humble desktops are bundled with hypervisors. Intel has VT for its x86 architectured systems, AMD has something similar to Xen, Microsoft has it's own VM server software and I'm sure the HPs and IBMs are doing the same.

Old wine in a new bottle? But if you are planning to buy new wine, better buy the new bottle :-D