Microsoft’s Virtualization Endgame

Big companies often acquire small companies and their products for the underlying technologies, and Microsoft is no exception. The strategy is particularly effective when the target is one of a handful of players in a nascent product category. This was the case last summer when Microsoft acquired Softricity. And though few of us knew it at the time, this acquisition – above all others – could leave the most indelible mark on the Windows product roadmap.

Note: For my detailed take on the current crop of application virtualization solutions, check out my new product roundup at the Test Center: On the road to the virtual desktop.

To fully understand Softricity’s impact you need to roll back the clock to 1995. The Web was brand new, and a company named Netscape was giving Microsoft fits with its Navigator browser, and threatening to level the playing field through Web technologies. Microsoft, of course, fought back – first by matching Netscape’s moves, then later by embracing the Web in its own, semi-proprietary way through ActiveX and Windows Internet Information Services.

We all know how that story turned out. However, few realize how profoundly this rush to embrace the Web altered Microsoft’s DNA. Some of the more forward-looking company executives saw an unlooked for opportunity in the (soon to be) ubiquitous information superhighway. They imagined a world in which software was delivered much like a utility service, with subscribers instead of licensees. Already disenchanted with the upgrade treadmill and its unpredictable revenue streams, these executives envisioned doing away with shrink wrapped releases and the hassles of convincing customers to shell out their hard earned cash every 18 to 24 months. Utilities, they reasoned, don’t have to worry about meeting revenue projections, and Microsoft wanted to join the club.

Of course, the folks from Redmond weren’t the only ones to realize the potential advantages to what would become known as the “software as a service” model. Yet for all their enthusiasm, SaaS proponents were stymied by the limitations of technology. Early Web environments were simply too primitive to provide the kind of rich, interactive experience that users had grown to expect. This was especially true for the desktop where Microsoft had long established Office as the de facto standard.

Fast forward to today and the situation remains mostly unchanged. Microsoft is in the midst of another major upgrade cycle, and – just as in the past – Redmond is struggling to convince users to shell out for the company’s latest and greatest. To their credit, Microsoft executives have managed to minimize their risk over the years by ensuring that virtually every new PC sold ships with the company’s shiny new bits in place. However, this model still is subject to the whims of IT buyers, many of whom may balk at the idea of ripping and replacing their entire desktop stack just to use the new versions of Windows and Office.

To quote the title of one of Jack Nicholson’s least inspiring film performances: “Something’s Gotta Give.” With broadband internet access nearly ubiquitous throughout the developed world, the foundation is in place for delivering a truly rich application experience via a hosted, subscription model. And with its acquisition of Softricity and the company’s SoftGrid application streaming platform, Microsoft finally has the Internet-compatible distribution vehicle it’s been looking for – not to deliver a watered-down, “Web version” of its applications, but the real deal. Think full-blown Microsoft Office (or Dynamics, or any number of Microsoft Games), with all the bells and whistles, streamed seamlessly to your PC from a series of massive Microsoft server farms.

With SoftGrid, Microsoft has the technology portfolio to enable its SaaS endgame strategy. The first salvo was fired at the VMworld conference when Microsoft announced it was decoupling the SoftGrid Virtual Application runtime client from the back-end streaming server (see my review of SoftGrid 4.2 for more on this development). By doing so, Microsoft is positioning the SoftGrid environment as a distribution mechanism on par with its Virtual Hard Disk (VHD) format. Soon you’ll be able to “test drive” Office, et al, via this new, highly portable medium.

But test drives and demos are only the tip of the iceberg. Once Microsoft has successfully driven the SoftGrid format into the mainstream expect the company to slowly begin phasing out traditional delivery modes. That means no more Office CDs/DVDs with a thousand installed components – an MSI-wrapped SoftGrid OSD file is the future distribution model for virtually all of Microsoft’s non-server applications. It’s the perfect segue towards the “holy grail” of software development: Uninterrupted, subscriptions-based usage, i.e. utility computing.

Don’t expect the move to a hosted, subscriptions-based model to signal the end of Microsoft’s annoying anti-piracy technologies; the likes of the universally loathed Windows Genuine Advantage (WGA) will live on. As the folks over at Thinstall are happy to point out, SoftGrid is far from a secure distribution platform. In fact, once an application has been cached locally it’s almost trivially easy to isolate the bits and extract a working copy. For Microsoft to protect its intellectual property, it will need to employ some sort of validation logic beyond a simple subscriber login. However, the implementation will likely be more granular than the current WGA model, possibly woven into multiple components within the virtual image. Suffice to say that Microsoft won’t be releasing a hosted offering until it has worked out how to effectively secure it against piracy.

And what about third party software developers? Although Microsoft may make SoftGrid available as a Web-friendly distribution medium, it will no doubt keep details of its WGA-successor close to the vest. Thus developers will be faced with a choice: Deploy using a potentially insecure distribution platform, or seek out alternatives from the likes of Symantec and Thinstall. In fact, with Microsoft sure to sew up a sizable chunk of the market for enterprise deployment with SoftGrid, one of the more lucrative niches for competing technologies may be in the commercial distribution market. But no matter how you slice it, the future of Windows application deployment and on demand delivery belongs to application virtualization.