A group of virtualization and cloud-computing experts gathered at MIT's Emerging Technology conference last week had good news and bad news for people who have committed large parts of their IT budgets and career ambitions to virtualization. The good news is that virtualization will become a critical part of an even larger part of most IT infrastructures as time goes on.

The bad news is that it will do so as part of a larger movement toward cloud computing and will, in large part, disappear as a separate discipline. It also makes the competition and snipesmanship between Microsoft and VMware more obviously counterproductive for both their own efforts and the interests of their customers.

"What virtualization has done is decouple all the software from the hardware in an enterprise," according to Mendel Rosenblum, associate professor of computer science and electrical engineering at Stanford, who spoke at the conference less than two weeks after resigning as chief scientist at VMware, which he co-founded in 1998 with his wife, former VMware CEO Diane Greene.

"Once you have things decoupled, people can provide you with a virtual appliance, rather than your having to build everything yourself, and you can think 'maybe I want to run this on someone else's machine, not necessarily one I own,'" Rosenblum says. "Here we're talking about the whole question of becoming comfortable with someone else running your software."

That's the kind of proposition that would have sounded phenomenally unattractive in the days when outsourcing meant selling a whole IT department to IBM, putting a contract-enforcement manager on the case and hoping for the best.

Now, between managed services, co-location services, software as a service, Web-based applications and Web-based storage, security, disaster recovery and other services, it's an unusual IT project, system or application that isn't considered a target for outsourcing at least once in a while.

"The cloud" to a certain extent is just an umbrella term to add some consistency and legitimacy to what might otherwise seem an undisciplined, confusing mass of functions, vendors and changes in the nature of what it means to be an IT provider.

Amazon, for example is a book store. But it's also a Block Store, or at least that's one of the services available through the Amazon Elastic Compute Cloud (EC2).

Amazon got so good at building highly reliable, dynamic data services to support its own business it only made sense to make that capability itself into a business, according to Werner Vogels, VP and CTO, Amazon.com, who spoke on the same cloud-computing panel as Rosenblum.