Search
Adly Lakhdar

The rise, commoditization, and integration of virtualization into the private cloud

March 24, 2025

This is the first installment in a four-part series exploring the evolution of the intelligent private cloud. From the foundation provided through virtualization to AI-driven automation, each blog post will examine a critical aspect of building a modern, efficient, and scalable private cloud infrastructure.

Virtualization: The foundation of private and hybrid cloud

Virtualization has been a cornerstone of IT infrastructure for decades, evolving from a call for greater mainframe efficiency in the 1960s to the x86-based hypervisors of the 2000s that enabled more scalable and flexible workloads. Initially, businesses relied on costly, inflexible bare-metal servers to handle their computing needs, but virtualization transformed IT infrastructure by allowing multiple virtual machines (VMs) to run on a single system, optimizing resources and paving the way for public cloud adoption.

By the 2000s, companies like VMware, Red Hat, and IBM helped accelerate virtualization adoption, enabling resource sharing, multi-tenancy, and on-demand services to set the stage for cloud computing. As a result, businesses moved many workloads to the public cloud, taking advantage of the ease and flexibility of Infrastructure-as-a-Service. But while public cloud services offer greater flexibility, they also introduce cost unpredictability and security concerns, leading enterprises to invest in private clouds for better control. Private clouds allow them to replicate the cloud experience while maintaining governance and compliance.

I remember the early days of cloud adoption when developers in my team started bypassing IT to spin up workloads in the public cloud. It was called shadow IT. It was fast and easy but also introduced risks — uncontrolled spending, security blind spots, and compliance challenges. To regain control, we built our first private cloud, mimicking the public cloud experience but with enterprise-grade governance. It was a turning point. The lessons learned from that transition shaped my understanding of how virtualization and other private cloud technologies must work together to balance agility with control.

Virtualization and commoditization

Today, virtualization remains essential, supporting modern hybrid cloud strategies where VMs and containers coexist. More than just a tool for efficiency, virtualization is the backbone of private cloud architectures, ensuring scalability, security, and cost management.

Despite the rise of containerization, virtualization remains a $100 billion+ industry, proving its enduring value.

Server Virtualization Software Global Market Report of 2025 from The Business Research Company

The cloud-first (private and public) shift that virtualization initiated has led to it no longer being considered a standalone product — it is now an assumed layer of infrastructure much like networking and storage. As enterprises transition to infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) models, virtualization remains the backbone for their self-service private cloud environments.

Open source as the standard, not an alternative

Virtualization was once considered a premium feature, but open-source innovation has commoditized it. Open-source technology now dominates the private cloud landscape. According to Gartner (2023), 70% of enterprises use open-source virtualization. Forrester (2023) agrees, stating that 80% of new virtualization deployments are open-source. As a result, proprietary virtualization markets are shrinking by 5-8% year-over-year (IDC). According to Gartner (2023), hybrid cloud adoption has reached 75%, driven by the adoption of open-source.

HPE uses an open-core business model where the core software is open-source, while the management plane, enterprise-grade indemnification, and support offered are proprietary. This is a business model adopted by many other companies, including IBM, Red Hat, HashiCorp, and Docker. HPE adopts this model for many of its products like HPE AI Essentials, HPE Ezmeral Unified Analytics, and HPE Ezmeral Container Platform.

Cost: Per-socket vs. per-core

Licensing costs have played a significant role in virtualization’s evolution. Traditional per-core pricing penalizes hardware advancements, while per-socket pricing ensures predictable costs and higher return on investment.

The Next Platform (2024) found that licensing costs can be reduced by 50% with single-socket, high-core CPUs. High-core CPUs also reduce power per virtual machine by more than 30%. IDC reports that per-core pricing increases costs exponentially as CPUs scale, making per-socket a preferred model.

Comparing per-core versus per-socket pricing models

Examining the layered infrastructure: Bare metal, virtual machines, containers, and orchestration

Let’s explore the HPE model a bit more, where open-core virtualization acts as a building block that bridges Linux kernel technologies with the HPE hybrid cloud orchestration platform. Modern cloud architectures leverage a layered approach where bare metal, virtual machines, and containers coexist. The mixture serves to accommodate many different types of workloads. Bare metal is well suited for high-performance computing, artificial intelligence, machine learning, and low-latency workloads. Virtual machines provide security, multi-tenancy, and flexibility. Containers enable cloud-native applications and DevOps agility.

It is worth noting that both virtualization and containerization share foundational similarities, leveraging the Linux kernel’s namespaces, cgroups, SELinux, AppArmor, iptables, systemd, and OverlayFS for isolation, security, and resource management. While virtualization relies on KVM (kernel module) with user-space QEMU, containerization uses Kubernetes, Docker, and Ceph in user space, built on the same Linux primitives.

Virtualization and containerization

This approach allows efficient resource allocation and high-density application hosting on high-density servers. These technologies have now been fully commoditized at the platform level, ensuring seamless integration into private cloud environments.

With HPE’s new virtualization solution, HPE VME (VM Essentials) is an open-core virtualization building block that simultaneously integrates with the bare-metal Linux OS and the HPE private cloud orchestration platform (through the HPE VM Essentials Manager), enabling seamless workload deployment from edge to cloud in a distributed enterprise. The HPE KVM-based VM Essentials enhances virtualization with enterprise-grade cluster management and capabilities such as high availability, live migration, distributed workload placement, integrated data protection, secure hardening, and external storage support.

HPE VM Essentials architecture

Next steps

This blog post is the first in a series that will take us on a journey from traditional virtualization to lean, cost-efficient, AI-driven infrastructure that scales; where open-source is the default at its core, efficiency is the priority, and artificial intelligence is the future.

My next post will explore orchestration as the engine of the modern cloud. Subsequent posts will cover observability and AI, leading to the intelligent and fully automated private cloud.

Related

Michael Mattsson

Management paradigms for virtual machines running on Kubernetes

Mar 12, 2025
Adly Lakhdar

Building the Intelligent Private Cloud with the Triple-O Loop

Apr 22, 2025

HPE Developer Newsletter

Stay in the loop.

Sign up for the HPE Developer Newsletter or visit the Newsletter Archive to see past content.

By clicking on “Subscribe Now”, I agree to HPE sending me personalized email communication about HPE and select HPE-Partner products, services, offers and events. I understand that my email address will be used in accordance with HPE Privacy Statement. You may unsubscribe from receiving HPE and HPE-Partner news and offers at any time by clicking on the Unsubscribe button at the bottom of the newsletter.

For more information on how HPE manages, uses, and protects your personal data please refer to HPE Privacy Statement.