Virtualization services market $11.7 billion by 2011
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Blog: VMware and its competitors are helping to drive demand in market expected to more than double its current level in four years, according to an IDC report.
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(InfoWorld) - Sales growth for x86 servers slowed in the fourth quarter of 2006 as buyers adopted virtualization technology and waited for quad-core processors, according to a Gartner report released Thursday. Hewlett-PackardÂ sold the most servers, but IBM collected the most money for them in 2006, the report said. Worldwide server shipments in the full year 2006 grew by 8.9 percent to 8.2 million units, but revenue grew only 2 percent to $52.7 billion, compared with 2005, according to Gartner. HP led the competition in server shipments, sending 2.2 million units out the door, up 8 percent from 2005. But IBM took the top spot on revenue with $16.9 billion, up 1.7 percent from the previous year. Shipments of x86 servers, the most widely deployed server platform, slowed in the fourth quarter, which held down full-year totals, said Gartner analyst Jeffrey Hewitt. The growth was "slower ... than we have seen in most recent years," Hewitt said in a prepared statement. "Most of that slowdown seems to be attributable to a lengthening of the sales cycle due to the anticipated introduction of quad-core x86 processors, with some lesser impact from x86 server virtualization." Virtualization software increases the utilization rate for servers, so a company could buy fewer servers than without virtualization. The report also showed continued strength for Sun, which posted a 15.4 percent gain in server revenue in 2006 to $5.7 billion. Sun also increased its revenue market share to 10.8 percent, replacing DellÂ (10.3 percent) in the number three spot. IBM led with 32.2 percent of the market, followed by HP at 28.2 percent. While Sun was the only vendor to report double-digit revenue growth, it shipped just 368,000 units, about one-seventh the number of units that market leader HP shipped.
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Server virtualization may be enterprise computing's latest technology, but a recent survey of corporate IT buyers shows that near-term adoption may not match the hype.
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Showing just how hot the virtualization market has become, Intel has taken a minority stake in VMware, now owned by enterprise storage company EMC. Intel is investing $218.5 million for 2.5 percent of all outstanding VMware common stock, and will gain control of one board seat.
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The new machines support service oriented architecture and virtualization.
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(InfoWorld) - Virtual Iron and XenSource both are introducing new virtualization software to undercut on price the dominant player in the field, VMware. On Monday, Virtual Iron is set to start offering Version 3.1 of its enterprise-class virtualization platform for a license price of $499 per socket, which is less than 20 percent of the $2,875 per socket price for a comparable VMware license, according to Virtual Iron. Virtual Iron argues that VMware's pricing is a barrier to more widespread adoption of virtualization in data centers, citing IDC research that only 6 percent of data center operators deploy any type of virtualization. Also Monday, XenSource introduced new and upgraded virtualization products, also at sub-$1,000 prices. Both XenSource and Virtual Iron build their proprietary products on top of the open-source Xen platform for virtualization hypervisors. A hypervisor is technology that makes it possible for one computer to run multiple operating systems at the same time. VMware's products are not based on open source. Virtualization refers to software and other system management tools that are used to better utilize servers. Virtualization makes it possible for one physical server to run multiple applications simultaneously. Advanced virtualization features include tools to seamlessly move computing workloads from one physical server to another, set up infrastructure and test new software. Revenue at VMware, a wholly owned subsidiary of storage vendor EMC, grew 86 percent in EMC's fiscal third quarter to $188.5 million. If that pace keeps up, VMware's annualized revenue would be $750 million, VMware said. Virtual Iron and XenSource intend to slow that pace. "We are taking a very aggressive stand on pricing," said Mike Grandinetti, chief marketing officer for Virtual Iron. The Charlotte Observer newspaper in North Carolina uses Virtual Iron. It took 45 minutes to run a particular job on its legacy Unix-based servers, said Geoff Shorter, the Observer's IT infrastructure manager. VMware completed the same job in 11 to 13 minutes, but so did the less expensive Virtual Iron. The license for the high-end VMware product costs $5,750 to run on a dual-socket server, Shorter said. Virtual Iron's license is $499 per socket, so the total cost for a dual-socket machine license would be $998. Pricing for XenSource's XenEnterprise starts at for $488 for an annual subscription license for a dual-socket server or $750 for a perpetual license. XenServer for Windows, introduced Monday, sells for $99 per dual-socket server, per year. It has fewer features than XenEnterprise. "Our intention is to dramatically shift the landscape under VMware," said Simon Crosby, XenSource's chief technology officer. Virtualization is following a classic economic model of an early mover dominating a market and charging a premium, soon followed by challengers competing on price, said Gordon Haff, principal IT advisor at Illuminata Inc., a technology research company. Haff said enterprises that have deployed VMware are seeing a positive return on their investment despite the price and he doesn't think price alone is keeping enterprises from adopting virtualization. "Even if virtualization software were free, it wouldn't become ubiquitous because of the complexity of the implementation," he said.
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India&#39;s IT services market is forecast to grow to $10.73 billion by 2011, at a five-year compound annual growth rate of 23.2 percent, as outsourcing emerges as a more favored option for companies in India, according to research firm Gartner.As companies are finding it more difficult to hire and retain staff in their IT departments, they are looking at external service providers as an option, hoping to also cut down costs, and better manage growth in the process, Gartner said Tuesday.Indian user companies compete for staff with Indian outsourcing companies and Indian operations of multinational companies, which hire new staff by the thousands each quarter.Staff attrition is however not the key reason why companies are outsourcing, said Arun Gupta, chief technology officer, at Shopper&#39;s Stop, a top Indian retail chain. Driving outsourcing in India is a growing demand for new technologies and applications. Shopper&#39;s Stop has six IT projects in progress with another 12 projects planned for the next six to 12 months.Rather than creating and managing a large IT organization in house, the company is working with service partners to support its 45 IT staff, Gupta said. Some of the functions it outsources are network maintenance, desktop and server maintenance, monitoring enterprise resource planning (ERP) applications, and software development, he added.A number of large banks and telecommunications service providers are already outsourcing key IT operations, though the key winners so far have been multinational services companies. Many Indian outsourcing companies had neglected the Indian market in favor of exports, according to a survey last year by Gartner. But that may be changing as the&#160;weakening dollar puts pressure on rupee&#160;realization from exports.IBM,&#160;Tata Consultancy Services (TCS), and Wipro together accounted for 26.1 per cent of IT services vendor market share in India last year, according to Gartner. IBM was the top vendor, with 11.2 per cent market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.However, the Indian IT services market is still fragmented, with the majority of the market being serviced by smaller local players that account for close to 40 per cent of the IT services market, according to Gartner.&quot;We have looked at smaller players for very small and specific jobs, but for larger jobs, running into a number of years, and which require a variety of skills, we look at large Indian companies or multinational services companies,&quot; Gupta said.The key segments of the Indian IT services market are hardware maintenance and support, software support, consulting, development and integration, IT management, and process management, Gartner said.
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After a 31% increase in the 4th quarter, the burgeoning WAN optimization market dipped 4% to $106 million worldwide in the 1st quarter of 2007, but is up 61% from a year ago, according to Infonetics Research's latest "Enterprise Routers &amp; WAN Optimization Appliances" report.
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(InfoWorld) - New numbers from Gartner show that computer server sales slowed in the third quarter, a trend the research company attributes to virtualization. Gartner's latest report on servers, released Tuesday, shows that worldwide sales grew by 4.4 percent, based on revenue, to just over $13 billion, and 9.1 percent by unit volume, to 2 billion servers. In the second quarter, sales rose 2.5 percent by revenue and 12.8 percent by unit volume. "We have seen double-digit growth in the past," said Jeff Hewitt, research director for Gartner. "Server sales are still growing, but because of virtualization, customers don't have to buy as many servers." Virtualization makes it possible to run more programs on one physical server, using more of its capacity and making it possible for a data center to handle more work with fewer servers. Among the server vendors, market share rankings remained the same in Gartner's numbers, which cover the three-month period ended Sept. 30, compared with previous quarters. IBM Corp. retained the market share lead, with 33.7 percent, based on a 7.4 percent revenue gain to $4.38 billion, from the third quarter of 2005. Hewlett-Packard Co. followed with 25.3 percent market share on a 6 percent decline in revenue to $3.29 billion. Dell Inc. ranked third with a 10.8 percent share on a 10.2 percent revenue gain to $1.41 billion. Sun Microsystems Inc. ranked fourth with a 10.1 percent share based on a 24.7 percent revenue gain to $1.31 billion. Fujitsu Computer Systems Corp. ranked fifth, with a 4.9 percent share on a 5.6 percent revenue gain to $634 million. Other vendors combined for a 15.3 percent share based on 6.5 percent revenue growth to $1.99 billion. Hewitt attributed Sun's resurgence to the introduction of new servers running the Opteron microprocessor from Advanced Micro Devices Inc., which has emerged as a strong competitor to the processors from Intel Corp. In sales based on unit volume, HP led the way with a 26.5 percent share based on 7.2 percent growth to 540,609 units; Dell ranked second with a 22.5 percent share on 10.5 percent growth to 459,950; IBM third with 16.3 percent share on 7.7 percent growth to 332,777; Sun Microsystems fourth with a 4.1 percent share on a 6.4 percent growth to 83,018 units; and Fujitsu fifth with a 3.2 percent, based on a decline of 5.9 percent to 65,171. Other server brands collectively reported 27.5 percent share on growth of 13.4 percent to 560,913 units.
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Blade server market to be worth $11bn by 2010 The blade server market will be worth $11bn worldwide by 2010, according to IBM, with SMEs being a particularly fruitful market.â¦
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Diane Greene, president of VMware, said she wonders how effective an operating systems-based approach to virtualization can be.
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U.S. spending on Web advertising and Internet access expected to increase by double digits through 2011.
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SAN FRANCISCO (CBS.MW) -- Microsoft said Thursday that its fiscal first-quarter net income rose 11 percent from a year earlier as client software sales, server revenue and Xbox sales all rose.
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VMware is the early leader in a fast-growing market for virtual-machine software, putting it on a collision course with Microsoft.
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Low-end servers saw the most growth -- 11% year over year -- while growth in midrange server market came in at under 1%, researcher IDC said.
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There's little question that more and more storage and computing will move out into the cloud over time. The question--well, one of them anyway--is where the economic scale points lie.
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(InfoWorld) - Intel said Monday it plans to buy a $218.5 million stake in the software firm VMware, bolstering the companies' existing agreement to run VMware's virtualization software on Intel's processors. Intel has been selling chips since November 2005 with specialized technology that allows enterprise IT managers to use a VMware application that treats each hardware platform as multiple "virtual" platforms. The companies also cooperate on their marketing and product development strategies. The chip giant will make the purchase through its investment arm, Intel Capital, subject to approval by U.S. antitrust regulators. The purchase will be part ofÂ an IPO, in which VMware plans to sell 10 percent of the company. VMware has not set a date for that sale, but it is expected to happen in the second half of 2007. In addition to purchasing stock, Intel will also gain the power to appoint one of its executives to the VMware board of directors. However, Intel will still hold a minority stake in the company with just 2.5 percent of VMware stock, according to an IPO registration form filed Monday by VMware with the U.S. Securities and Exchange Commission. The majority of VMware stock -- 89 percent -- will be held by EMC, the enterprise data storage company that acquired VMware in January 2004. That investment has paid off well as VMware has grown quickly. VMware revenue rose 82 percent last year, from $387.1 million in 2005 to $703.9 million in 2006. VMware says that growth rate will continueÂ as currently just a small fraction of existing servers and business desktop and notebook PCs use virtualization software. At the same time, many companies use only a portion of their computing power because the latest multicore processors have allowed their processing power to grow faster than workloads. To solve that problem, businesses can use virtualization software to separate the operating system and application software from the underlying hardware. That allows them to combine multiple servers, storage, and networking units into pools of capacity they can allocate to wherever it is needed most, VMware said in the SEC form. Coming so close to VMware's stock offering, Intel's investment is likely to generate greater demand for the new stock, and for the virtualization industry in general, one analyst said. "Intel likes to know it has a more personal stake instead of waiting for market forces to advance the application of virtualization software," said Richard Doherty, research director at The Envisioneering Group. "It's not like that money was gathering dust on their shelf, but Intel's venture arm tends to trigger others to invest in an industry sector too." The purchase also underlines a growing problem for software firms that have historically charged their licensing fees per processor, Doherty said. In this age of quad-core chips and virtualized server networks, that model could spell trouble for enterprise software providers, who could see their customers doing more work with fewer seats of software. By taking a stake in VMware, Intel is indicating that it sees virtualization firms claiming some of that revenue. Also on Monday, VMware launched Lab Manager 2.5, a new version of its lab automation software. IT organizations use the application to efficiently manage their software development and testing labs, save money on IT management and deliver new software applications to market sooner, the company said. In a separate announcement, Borland Software said it would integrate Lab Manager 2.5 with its Lifecycle Quality Management application, SilkCentral Test Manager 2007. Together, those applications will allow software developers to test their applications across multiple configurations using virtual platforms, instead of having to own many separate, physical test labs, Borland said.