Virtualization technology has long been seen as the core technology of cloud computing, and Infrastructure as a Service (IaaS) has been the cloud service with the widest scope of opportunity.
But so far, network operator clouds have focused on hosting services, which means the public face of their offerings is SaaS rather than a form of "virtualization hosting"—any offering that lets an enterprise "host" a virtual machine on a public platform.
This early history raises the question of what role virtualization will take in the carrier cloud infrastructure and how that role will develop over time. IaaS is a form of virtualization hosting, but some offerings are called "VM hosting," and some enterprises even believe that "dedicated hosting"—meaning buying a public server—qualifies as virtualization hosting.
As a form of hosting, cloud computing is a means of "renting" shared infrastructure to "tenants" who pay only for what they use and thus gain a financial advantage over permanent ownership of computing assets. But from the beginning, there has been a natural tension in the cloud between two competing value issues.
Any X-as-a-Service architecture is most valuable when it offers the most features and displaces the most cost. This suggests that SaaS would be the most valuable cloud service. But SaaS services are applications and therefore have a more narrow scope of value. For example, a sales management application can do only sales management. Lower-level services like Platform as a Service (PaaS) and IaaS have more uses and thus have a broader market.
So how do you balance these forces optimally for revenue and profit? For many operators, virtualization is the answer. A virtual machine is a kind of partition within a server, a logical container into which a "machine image" of operating system, middleware and application software can be loaded.