Server V continues to shift towards paid hypervisors

FRAMINGHAM, USA: According to IDC's Worldwide Quarterly Server Virtualization Tracker, 16.5 percent of all new servers shipped in the second quarter of 2009 (2Q09) were virtualized, an increase from 14.5 percent in 2Q08.

However, actual shipments decreased 21.0 percent year-over-year to 246,000 physical servers in 2Q09 as customers continue to limit spending on new server hardware relative to last year. Similarly, worldwide virtualization software revenue declined 18.7 percent year-over-year in 2Q09 to $344 million.

Virtualization licenses did grow quarter over quarter in 2Q09. The server virtualization market continues to shift towards the use of paid hypervisors, with paid virtualization software now running on 60.8 percent of all new server hardware shipments virtualized in 2Q09, an increase over 57.2 percent in 2Q08.

Matt Eastwood, group vice president, Enterprise Platforms, IDC, said: In the second quarter, IDC observed a number of signs indicating that stability is beginning to take hold in the worldwide server market. The worldwide server installed base has aged significantly and virtual machine densities on these systems have increased sharply over the past year."

"As a result, the market is poised for the beginning of a significant infrastructure refresh cycle in the months ahead. IDC believes that virtualization will be a cornerstone technology as medium and large enterprise organizations around the globe accelerate the need for more dynamic and converged infrastructure designed to support the business needs of the next economic cycle," Eastwood added.

Server Virtualization Maturity Signals Changing Behaviors and Buying Intentions

Michelle Bailey, research vice president, Datacenter Trends, IDC, said: "Server virtualization has forever changed how customers manage their datacenters. Virtualization First' is now the default approach for new server deployments at most enterprise IT organizations and is quickly becoming the foundational platform for cloud computing initiatives among service providers."

"Additionally, growth in emerging regions is accelerating as the economic downturn limits the ability of organizations to raise capital. The next phase in virtualization will require a reinvention of IT policies and procedures and continued adoption of automation tools will be key as virtual machine densities rise and customers find themselves facing virtual server sprawl issues," Bailey adds.

Overall New Server Shipments Virtualized Market Standings, by Vendor

Hewlett-Packard held onto the number one spot for worldwide new server shipments virtualized with 36 percent market share. HP's shipments declined 18 percent year-over-year in 2Q09 but grew one percent sequentially. These results were driven primarily by its x86 Proliant server business.

Dell continues to distance itself from the remainder of the field as the number two vendor with its market share growing nine percent over 1Q09. Dell’s relatively strong performance was driven by growth of Intel-based x86 servers in a weak market.

IBM remained in the third position with 15 percent market share. IBM achieved 14 percent sequential growth driven by a solid performance from its converged System p and x86-based servers.

x86 Virtualization License Market Standings, by Virtualization Platform

VMware continues to hold the number one (VMware ESX) and number two (VMware Server) virtualization platforms despite revenues declining 22 percent year-over-year. This was slightly more than the decline of 21 percent in total x86 virtualization licenses.

Microsoft saw its virtualization license shipments decline 16 percent year-over-year, due to the continued depreciation of Virtual Server 2005. However, Hyper-V showed a sharp increase of 54 percent, one year after its official launch and entrenching itself into fourth place while it cannibalizes itself into the number three position, past virtual server 2005.

Parallels Virtuozzo rounds out the top five with license shipments declining 36 percent year-over-year. Citrix XenServer showed the largest increase, growing 108 percent year-over-year due to the company changing its business model and offering the product for free with certain management functionality.

It's a bold seeding strategy that will see market share gains, but will take some time, if ever, to monetize.

Brett Waldman, research analyst, System Software, IDC, said: "Despite economic worries, we are seeing the continued increase of paid virtualization platforms, as it now accounts for more than 60 percent of all x86 virtualization license shipments."

"This is due to the maturation of virtualization deployments and the need for greater control with higher quality, fine grained management tools as IT departments continue to strive towards internal cloud computing environments," Waldman said.