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Virtualization: The Server-Eating Monster
Pundits say virtualization is transforming IT
October 9, 2007
2 Min Read
Virtualization is eroding server sales and changing the fundamental state of data centers worldwide, according to recent reports.
Research firm Infiniti Research claimed in a statement today that virtualization has slowed server spending by a factor of five in some industry segments.
Rahul Agarwal, co-founder of Infiniti Research, says in a prepared statement:
According to research in 2006 data centers worldwide housed about 29 million servers, having grown at 15% a year since 2000. By units, server shipments grew 5.9% in 2006 according to IDC, but our analysis of current server shipments and virtualization adoption levels suggests that this growth is going to slow to only 2% in 2008. By 2009 it will actually go into a sustained decline to reach about 24.5 million by 2014... Our view is that to offset this volume pressure, hardware vendors will be forced to improve unit margins by building in virtualization capability, memory and I/O interfaces in the hardware. Our research also appears to indicate that some vendors may push thin client sales as desktop virtualization proliferates.
Analysts from Goldman Sachs see virtualization as the "single biggest disruptor in the datacenter over the next few years... with positive and negative implications across software, hardware, and semiconductors." In a report to investors issued today, the analysts talk about virtualization's ongoing impact:
Virtualization vendors may encroach on areas like systems and storage management, hurting incumbents, CA, BMC, and Symantec. Dell, the dominant participant in lower-end PC servers, which are being consolidated, could see its server unit growth capped. Longer term, there could be a deflationary impact on software pricing, as fewer licenses per physical server may be needed, and HBA unit growth, margin, and pricing.
Based on a recent CIO survey conducted by Goldman Sachs, the analysts predict that on the PC server side, virtualization is reaching an inflection point: "We estimate that virtualization will penetrate on average 4-5 points more of the market each year, cannibalizing about 30% of the total new PC server market by 2011."We're likely to see more reports like these in the coming months, as virtualization continues to gain ground. It will be interesting to see whether the predictions fall short -- or exceed expectations.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.
BMC Software Inc. (NYSE: BMC)
CA Inc. (NYSE: CA)
Dell Inc. (Nasdaq: DELL)
Infiniti Research Ltd.
Symantec Corp.
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