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IDC: Virtual Server Management Software Revenues to Reach $2.3 Billion in 2013 Thanks To Large-Scale Deployments

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The ramp up of large-scale virtual server implementations around the world will drive tremendous demand for a newly defined competitive market – virtual server management software – for distributed systems (principally Windows, Unix, and Linux platforms), according to new research from IDC.

IDC says the worldwide distributed virtual server management software market had revenues of $871 million in 2008 and will approach $2.3 billion in 2013; a compound annual growth rate (CAGR) of 21.3% over the forecast period.

Additional findings from IDC’s research include the following:

  • Many customers have not yet integrated virtual and physical resource management processes or aligned virtual server management activities with IT Infrastructure Library (ITIL).
  • Over the next five years, the distributed virtual server management software market will evolve and mature, creating significant opportunities for new competitors.
  • A strong spirit of “coopetition” will permeate this market over the next several years.

This study, Worldwide Distributed Virtual Server Management Software 2009-2013 Forecast: A First Look (IDC #217485), presents IDC’s preliminary top-down sizing of the worldwide distributed virtual server management software market in 2008 and a forecast of worldwide growth in this market for 2009-2013. This analysis is IDC’s first sizing and forecast for this emerging competitive market. Only top-line total market data is shown in this study. The study specifically excludes software related to mainframe, storage, network, or desktop virtualization management. Vendor market share data, as well as data for geographic regions, will be provided in subsequent IDC publications.

HP Takes Next Step To Support Future Growth

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HP today outlined the results of its three-year IT transformation and laid out the company’s IT strategy to support future growth for fiscal year 2009 and beyond.

As a result of the effort, HP has reduced its IT operating costs by approximately half; provided more reliable information for executives to make better business decisions; and, established a more simplified and dependable IT infrastructure that provides improved business continuity and supports the company’s future growth.

The initiative began shortly after Mott joined HP in July 2005. Starting in fiscal year 2009, the transformation will lower IT costs by more than $1 billion per year from fiscal year 2005 levels. This cost reduction is even more impressive considering HP added more than $25 billion in revenue during the three years since the transformation began.

The transformation focused on five major initiatives: next-generation global data centers, portfolio management, workforce effectiveness, building a world-class technology organization and a true enterprise data warehouse. Through aligning its entire global organization on these five initiatives, HP has reduced complexity and added significant capability and quality of service.

The HP IT organization now operates under a strategic framework in which teams are deployed to deliver more business innovation through a smaller number of global and common applications. These applications are running in the next-generation data centers, where the technology is constantly refreshed in modular-designed white space.

By creating global and common applications, HP IT is able to focus on new capabilities and devote 80 percent of IT employees to innovation that is aligned with business strategies and future growth opportunities.

Goldman Sachs Predicts IT Spending Downturn, Virtualization Uprise

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Goldman Sachs predicts IT spending will slip from 7 % growth to 5 % growth in 2008. Not a downturn of catastrophic proportions, but still bad news for the industry. On the upside, server virtualization and server consolidation were ranked No. 1 and No. 2, respectively, in terms of spending priorities for this and next year. No. 3 was cost-cutting in general, followed by grid computing and on-demand computing finishing the priorities list.

Expectations of budget growth remain down significantly on a year-over-year basis, with many CIOs limiting their purchases to projects with a high and fast ROI. We continue to believe that 2008 IT spending will decelerate to 5 percent from 7 percent in 2007….Demand for discretionary IT projects dropped to its lowest point in the history of our survey, with caution beginning to spread to the offshore providers. CIOs have emphasized to us that they are buying on a need versus want basis, are often downsizing deals to fit with current budget constraints…. In fact, contrary to general tightening in spending, purchases with an especially compelling ROI are being accelerated in the current environment.

[For more on the report, including graphics: The Open Road]

Gartner: Server Market Still Growing, Despite Virtualization

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Just recently, Gartner published a report showing that the server market did great during all of 2007, including the fourth quarter. Server shipments rose 11 % during the fourth quarter, while revenue rose almost 3 %.

The analyst firm has now proclaimed server sales and shipments also showed strong growth in the first quarter of this year compared to last year despite continued growth of the use of server virtualization technology. Jeffrey Hewitt, VP Research at Gartner said that certain factors are “masking” the impact of server virtualization.

“A lot of the growth in physical server sales is coming from an explosion in the use of certain applications such as Web servers, which often do not lend themselves to being virtualized. Also, server virtualization is still much more accepted in mature markets such as the US, Europe, and Australia, and less adopted in fast-growing markets such as China. Additionally, customers are not running server virtualization on old hardware. Customers are buying larger servers to host virtualization. This market is so hungry for more and more horsepower. Virtualization makes it easier to host more and faster applications.”

Gartner on Thursday said that a total of 2.3 million servers were sold in the first quarter, up about 7.6 percent over the 2.1 million shipped during the same quarter last year. Revenue growth was not as strong, however. Vendors sold $13.6 billion worth of servers during the quarter, up only 4.3 percent compared to the $13.0 billion in server sales last year, Gartner said.

HP was the world’s top server vendor during the first quarter of 2008, accounting for 30.1 percent of the total worldwide shipments. Fast growth in server shipments by Dell, which boasts a 22.7 percent market share, puts that company within striking range of the top position. Dell’s shipments grew 15.8 percent over last year compared to HP’s growth of 7.8 percent.

Worldwide RISC-based and Itanium- based server shipments slipped 8.4 percent compared to last year, with all top five vendors seeing a drop in sales. However, revenue for this class of servers grew 3.7 percent over last year, with all top five vendors seeing revenue growth except for Sun, which saw revenue drop as its Solaris Unix-based focus continues to shift more towards x86-based servers, Hewitt said.

Shipments of servers with the Linux OS grew the fastest year-over-year, up 13.9 percent compared to the 6.8 percent growth of shipments of servers with Windows, Hewitt said. However, the overall base of Linux-based servers is still only half that of Windows-based servers, so in terms of absolute numbers, Windows- based server shipments grew faster.

[Source: ChannelWeb]

Another Study Predicts Huge and Rapid Virtualization Market Growth

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Application Delivery Networking provider F5 Networks today released the results of another survey that shows the storage virtualization market is set to grow rapidly. The online study reveals the percentage of U.S. enterprises that use storage virtualization solutions will more than double from 21 % to 47 % in the next few years.

F5 Networks

The survey of 324 medium- and large-enterprise IT organizations in the U.S. and Europe was conducted in February and found that a primary driver for enterprise interest in storage virtualization is reduction in operating expense and capital investment. Underscoring their interest in reducing costs, respondents indicated that 20 % of IT labor is spent on storage-related activities such as provisioning, backup, and moving data.

“We continue to see enterprise storage requirements grow at a remarkable rate, particularly for file-based, unstructured data,” said Steve Bishop, CTO at VeriStor Systems. “As a solutions provider specializing in advanced data storage and virtualization architectures, VeriStor is constantly seeking ways to help our customers reduce storage costs, improve resource utilization, and simplify storage administration. Technologies such as F5’s Intelligent File Virtualization are key to enabling those types of solutions.”

Other findings from the survey included:

  • Respondents stressed the need for storage virtualization solutions to work with a heterogeneous storage infrastructure. Sixty-three percent of U.S. companies rated this as important or very important.
  • Respondents showed a strong interest in solutions that address file-based storage — with 80 percent of respondents who are planning to deploy storage virtualization confirming this as part of their plan.
  • Existing storage virtualization users reported high success rates. Eighty-six percent of all U.S. companies reported achieving at least one or more of their original goals.

For additional survey information and results, please download the PDF from the following location: www.f5.com/pdf/news/20080404-state-of-storage-virtualization.pdf.

[Source: press release]

Gartner: Virtualization Wave To Cause Huge Market Disruption And Consolidation Through 2012

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Gartner says virtualization will be the highest-impact trend changing infrastructure and operations through 2012.

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From the press release (emphasis ours):

“Virtualization will transform how IT is managed, what is bought, how it is deployed, how companies plan and how they are charged. As a result, virtualization is creating a new wave of competition among infrastructure vendors that will result in considerable market disruption and consolidation over the next few years.”

According to Gartner, the leading edge of this change is server virtualization, which promises to unlock much of the underutilized capacity of existing server architectures. Server virtualization is already having an impact on the server market; Gartner believes that virtualization reduced the x86 server market by 4 % in 2006. As hypervisor prices drop sharply and management costs decrease because of increased competition, virtualization will have a significantly larger impact, and Gartner analysts predict that more than 4 million virtual machines will be installed on x86 servers by 2009.

The use of PC virtualization is also set to increase rapidly. The number of virtualized PCs is expected to grow from less than 5 million in 2007 to 660 million by 2011. On the PC, the decoupling technology that breaks the close ties and dependencies between hardware and software occurs at two levels: between hardware and the operating system (machine virtualization) and between the operating system and applications (application virtualization).

Check out Gartner’s special report on virtualization, including a number of useful guides and a podcast with industry analyst Thomas Bittman.