As new vendors enter the x86 virtualization space, pioneer VMware, Inc. is moving on to the next frontier, cloud computing, said VMware President and Chief Executive Officer Diane Greene in her keynote address at the JP Morgan Technology Conference in Boston on May 21.

“The dream of cloud computing is fast becoming reality,” she said.

With cloud computing, workloads are assigned to connections, software and services, which are accessed over a network of servers and connections in various locations, collectively known as “the cloud.” Using a thin client or other access point, like an iPhone or laptop, users can access the cloud for resources on demand.

Greene told the event attendees that the evolution of virtualization begins with users deploying VMs for testing and development, then easing into server consolidations for production environments. The third phase is resource aggregation, with entire data centers being virtualized, followed by automation of all of those aggregated workloads. The final “liberation” phase is cloud computing, Greene said.

“We now have competition going after the first two phases of virtualization evolution with 1.0 products, but we are very much in the aggregate, automate and liberate phase,” Greene said.

Other vendors have their sights set on cloud computing as well. IBM Corp. and Google announced plans to promote cloud computing in October by investing over $20 million in the hardware, software and services at universities, and Reuters reported this week that Microsoft expects companies will abandon their own in-house computer systems and shift to cloud computing as a less expensive alternative.

While VMware moves towards cloud computing, the company is in the thick of the automation phase and has released a number of virtualization automation products recently, including VMware Site Recovery Manager for Disaster Recovery, VMware Stage Manager and VMware Lifecycle Manager for lifecycle management and VMware Lab Manager, as well as product and service bundles.

The company is also focusing on desktop virtualization with Virtual Desktop Infrastructure and has introduced services and products to move that inititive forward.

“Desktop virtualization does require a major change in the infrastructure, so it could be 2011 before we see desktop virtualization adoption in the millions. We do have hosted desktop virtualization customers with large deployments…but [adoption] will happen at a measured pace,” Greene said. “I do think someday everyone’s desktop will run in a virtual machine, whether it be on PCs or MACs, thin clients or phones. With the advantages from a security, manageability and flexibility standpoint, it will become mainstream.”

The cost of desktop virtualization is a barrier to adoption, but Greene said the price per user of desktop virtualization will come down steadily over the next few years. It is in the $800 per user range today, she said.

Last month, SearchServerVirtualization.com blogger Eric Siebert discussed the cost benefits of virtualization, which stirred some discussion about the role these savings play in the larger scheme of server virtualization strategies.

It seems that the virtualization gospel of cost reduction has drawn criticism from some who see these claims as pie-in-the-sky deals, or at least not as awe-inspiring when compared with less apparent expenses. While Siebert focused on the savings created by decreased data center power consumption, his blog received this response on the Virtual Data Center blog:

I think that the core message behind Eric’s post is a good thing, but it’s missing the big picture. Thinking that saving on raw power is going to translate dollar-for-dollar into OpEx savings is short-sighted. Please do begin looking into power consumption as one of your data center cost metrics and as part of your overall virtualization strategy, but also factor in everything else that’s going to be required to complete this task. You may find that you save a ton of money within 12 months of converting, or you may find that savings is much less than you originally anticipated; just make sure you know that before hand and know what you’re getting into so you don’t promise your CIO $1M in savings only to spend $950k getting there.

While Siebert’s original comments were limited to the savings associated with a 10-to-15-cent reduction per kilowatt-hour (resulting in estimated savings of between $219,000 and $328,500 for this particular project), Siebert agrees that any enterprise virtualization project requires a financial investment up front. “ROI will occur over time,” according to Siebert, “and will be a big factor in offsetting the costs of the project.” But the Virtual Data Center blogger Alan Murphy insists that savings can be misleading, a virtual “red herring” that drives customers to adopt virtualization under the mistaken impression that the technology amounts to free money.

Decreased power consumption is not the only way to save on utilities. As Bridget Botelho reported a few weeks ago, utility companies now offer rebate incentives to data centers that adopt power-saving virtualization technologies. Apparently, though, few adopters have cashed in on these rebates because of some loopholes.

Other data center changes that accompany virtualization projects can also contribute to power-related savings. Jacinda Duffy, a network administrator at Ecom Atlantic Inc., tells us that when her organization virtualized its data center six months ago, it brought in a heating, ventilation and air conditioning (HVAC) company to diagnose the airflow in its server room. After determining that hot air from the ceiling actually flowed back into the server room on weekends, HVAC technicians redirected the ceiling airflow to alleviate the room’s cooling demands. As a result, the settings on the company’s cooling units’ thermostats were adjusted to a higher temperature. Finally, after having consolidated its servers, Ecom Atlantic decided to space them out to allow for a more efficient airflow between servers. While it has only been a few months with the room’s new layout, Duffy anticipates some “significant savings in the near future.”

If you are cultivating your own green data center savings, we’d like to hear about your experience. Feel free to drop us a line and let us know how you are doing it.