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IT Virtualization Reaches Key Inflection Point

IDC investigated the adoption of IT virtualization in Europe and confirmed that this technology is significantly impacting the server market, and even more so the way that data centers will be built and managed.

The market study showed that the number of server systems shipped with a virtualization platform on top has increased by 26.5 percent in 2008 compared to 2007, reaching 358,000 units in the Western European countries.

"The accelerated adoption on the x86 side of the server market is making virtualization a crucial factor, changing the approach of suppliers and the deployment habits of customers throughout Europe," said Giorgio Nebuloni, research analyst at IDC.

"In 2008, approximately 18.3 percent of all servers shipped in Western Europe were virtualized, against 14.6 percent in 2007, and we expect the percentage to grow to almost 21 percent in 2010. More importantly, last year, and for the first time ever, the number of virtual machine (VM) shipments exceeded the number of physical servers shipped, topping 2 million units."

The drop in hardware spending will lead to a break point in 2009, as VM shipments will be more than 10 percent higher than physical server shipments. In 2013, the ratio between virtual and physical server shipments will be 3:2 on average.

In parallel, the number of logical machines (physical and virtual) shipped is expected to grow strongly, and IDC projects they will increase by 15.7 percent through 2013. This makes management tools more and more pivotal, as both virtual and physical servers have to be operated, monitored, and patched.

"We believe the current economic crisis to be increasingly intertwined with virtualization adoption, as the combined need to squeeze costs with the existing assets and the weak demand for new hardware are accelerating its technological impact within customer installed bases," said Nathaniel Martinez, program director at IDC.

The disruption is becoming visible on the supply side as well, as server design shifts toward virtualization friendly architectures in specific segments and new players enter the marketplace, attracted by the revenue potential linked with a fully virtualized x86 server stack.

"Along with the well-known benefits, virtualization presents potential challenges. Being so quick and straightforward, the deployment of virtual machines can generate sprawling environments, where IT managers lose visibility on the amount of VMs and on their actual utilization," said Nebuloni.

IDC says the set up of operative procedures for virtualized environments requires an integration within the existing legacy infrastructure. Also, in many cases new practices will have to be put in place, responding to the increasing overlap in the areas of responsibility of the IT staff.

This creates a market opportunity for managed and hosting service providers to evolve towards new and enhanced cloud service offerings.

In related news this week, Cisco Systems launched the Unified Service Delivery solution for broadband service providers. It's described as the pathway to cloud services.

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