Wider Virtualization Moves Into the Network

Emerging technology that replaces a network's hardware with software may help companies lower their IT costs and potentially provide a platform for new products and sources of revenue.

The transformation under way in the network is an extension of virtualization, which began a generation ago with mainframes and started to have a big impact on servers about a decade ago. That process has been meaningful for businesses from the very start, and CIOs expect that the significance of network virtualization will be just as big.

"Server virtualization was so impactful and led to more cloud computing. Networking people will tell you that network virtualization will be even bigger," American Airlines. CIO Maya Leibman said. IT leaders at companies such as American, Royal Dutch Shell and Mazda North America say they are beginning to explore, and in some cases implement, virtual networks within their own premises.

Telecom providers are rolling out wide area virtual networks, which will have even broader consequences. AT&T said in May that it planned to deploy the first of its virtual network products to big companies by June.

"Now you are talking about going beyond your data center," Leibman said. "Some will ask, why do you even need servers at all? The network can be the backbone of everything that happens in technology. Costs, speed to market and paradigms will be changed."