At this week’s VMworld, VMware unvieled something called its “Virtual Datacenter Operating System (VDC-OS).”

According to VMWare, the Virtual Datacenter OS enables users to “efficiently pool all types of hardware resources – servers, storage and network – into an aggregated on-premise cloud – and, when needed, safely federate workloads to external clouds for additional compute capacity.”

VMWare added that “datacenters running on the Virtual Datacenter OS are highly elastic, self-managing and self-healing. With the Virtual Datacenter OS from VMware, businesses large and small can benefit from the flexibility and the efficiency of the ‘lights-out’ datacenter.”

Sounds good, but what exactly does VMWare’s VD-OS bring that isn’t available from your traditional OS, be it Linux, Windows, or z/OS?  Don’t all the OSes have the mission of abstracting hardware and system resources into an aggregated service layer (”on-premise cloud”)?  Is VD-OS intended to sit on top of the multitude of OSes that may exist across an enterprise, or outright replace those OSes? As pointed out by Mary-Jo Foley, Some say VD-OS is a direct competitor to Microsoft Windows 2008 Server. However, Microsoft may be going after different types of clouds.

There’s certainly a good case that can be made for virtualization — both from a business and IT management sense. But it’s unclear what a virtual OS can bring to the table, othe than more confusion.

VMWare appears to be targeting environments that already have been vortualized to some extent. In a related post, Scott Lowe brings some clarity to the purpose of VD-OS, noting that “what VMware is working on is an OS for the virtual datacenter, not a virtual OS for the datacenter. The distinction is important. VDC-OS isn’t intended to be an OS for all aspects of the datacenter. It’s intended to be an OS for all aspects of the virtual datacenter.”

Dion Hinchcliffe, the leading proponent of Web Oriented Architecture (WOA), recently posted details about Amazon’s new Elastic Block Store (EBS), a cloud-based computing platform that ostensibly is targeted at fulfilling the roles of enteprise-class data centers.

While Amazon Web Services’ previous offerings — including Elastic Compute Cloud (EC2) for processing and message queuing, S3 for storage, and SimpleDB as a cloud database — enabled organizations to move functions out to the clouds, their capacity was limited, Dion observes. However, he adds, EBS “now makes it possible to have dozens, and potentially hundreds, of terabytes of readily-accessible persistent network storage in a traditional format of choice, particularly relational databases, all at commodity prices.”

Is this the direction of enterprise data centers? Will we see more of the nuts-and-bolts work and maintenance handled in the cloud? Some observers say yes.  Dion quotes Jeff Schneider, CEO of SOA firm MomentumSI, who stated that “we might just be ready to declare the ‘time of death’ for the enterprise data center.”

Dion said that it’s too soon to write off onsite data centers, and it may take at least two to five years before we start seeing wholesale movement of data centers to the cloud. “Enterprises are notoriously slow moving and risk averse when it comes to major IT changes,” he says, adding that “there will be a great deal of early skepticism from many quarters about such a strategic shifts, some of which will be valid and much of which will not be.”

He adds, however, that “it’s fairly clear that the classical multi-hundred thousand square foot proprietary data center is a dinosaur of another age, like mainframes are for most organizations today.”

It’s way too soon to declare the data center dead, a dinosaur, or even an anachronism. If anything, there has been an expansion of data centers in recent years, as organizations have increased their online capabilities.  In addition, organizations have made enormous investments in their legacy and Web infrastructures, and are not ready to throw it all out.

The mainframe-as-dinosaur analogy is not only a tired one, but also not the case, IBM has reported record sales of its System i series, which are geared to support the latest workloads, from open source to SOA.

Cloud computing has clearly become an important option for companies seeking low-cost processing power and application functionality. As Dion remarks, “the relentless forces of commoditization and competition are having their say as well and cloud computing offers up very substantial bottom-line returns. Throw in an economic downturn and a round of enterprise cost-cutting and the market and cloud computing seem ready to meet.”

The time has come for cloud computing, but its going to take time. Remember, there’s been a lot of outsourcing in the traditional sense as well — EDS and IBM Global Services have more than their share of data centers. Don’t close up that data center anytime soon.

A new piece in GlobalSpec’s Quality Control newsletter asks the unthinkable: “Is Outsourcing on the Way Out?”

The report cites a couple of trends — one, major outsourcing service centers such as India are running out of qualified people to handle outsourced engineering demands (see referenced article here). The other impact is coming from higher energy prices that are forcing companies to keep operations closer to home.

Another effect, not mentioned in the report, is the current relatively weak US dollar, which has made overseas services much pricier than local talents and services.

“Has the steam gone out of outsourcing?” the report asks.

A couple of thoughts here.  One, while the outsourcing market is shifting around, this is inevitable and natural as opportunities and entrepreneurial ventures open up in different regions. India siezed upon this trend a decade ago, offering low-cost code remediation shops, in which thousands of individuals manually scrutinized line after line of code in search of two-digit year fields. This was a quick and cheap way for companies to get up to speed witn Y2K. The momentum carried forward — and now India has a highly developed and educated workforce that, yes, seek higher salaries. On to China, Indonesia, Malaysia, and the beat goes on.

Another factor also not mentioned in the above piece which will really begin to weigh on the outsourcing market in a big way is data center and IT automation. Many of the route, manual processes that required a lot of people hours (such as was the case with Y2K code remediation) are increasingly being automated within today’s infrastructures.

However, outsourcing as a concept is strong and only getting stronger — not in the big-multimillion-dollar-projects-shipped-overseas sense of the word, but on a more atomic level.  Technology approaches such as service oriented architecture and Web 2.0 mean services and pieces of applications can be accessed or assembled from sources anywhere on the globe. In today’s flat, networked world, it doesn’t matter if a service is on a server in Baltimore or Bangladore.

Also, big outsourcers seem to be doing fine, so we need not start worrying about them.  In its latest quarterly report, IBM Global Business Services reported its revenues were up 18 percent; and had total services signings of $14.7 billion during the second quarter, up 12 percent over the previous year.