Server Virtualization Hits Inflection Point as Number of Virtual Machines to Exceed Physical Systems in 2009, Says IDC

LONDON – May 14, 2009 – A recent study from IDC investigating the adoption of virtualization in Europe again confirmed that this technology is significantly impacting the server market, and even more so the way datacenters are and will be built and managed. The research showed that the number of server systems shipped with a virtualization platform on top has increased by 26.5% 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 with IDC European Systems and Infrastructure Solutions. "In 2008, approximately 18.3% of all servers shipped in Western Europe were virtualized, against 14.6% in 2007, and we expect the percentage to grow to almost 21% 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% higher than physical server shipments. In 2013, the ratio between virtual and physical server shipments will be 3:2. 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% 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, European Enterprise Servers. "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. We see hardware vendors realigning their global strategy in order to be able to generate revenue in alternative ways once virtualization will start impacting server refreshment volumes."

"Along with the well-known benefits, virtualization presents potential challenges to IT administrators. 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. "The set up of operative procedures for virtualized environments requires an integration within the existing legacy infrastructure, which most of the times comprises midrange and mainframe pools. Also, in many cases new practices will have to be put in place, responding to the increasing overlap in the internal areas of responsibility of the IT staff, as storage, server, and network administrators will need to cooperate more closely to tackle interconnected issues."

The study, Western Europe Server Virtualization Forecast and Analysis, 2007-2013, IDC #GE06R9), focuses on 16 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom). The research is based on data from the latest IDC EMEA Quarterly Server Tracker and Forecast, along with input from IDC surveys on virtualization conducted in the region over the last few years. It includes details by geography, organization size, and CPU type.

To purchase this document, please contact your local IDC office, or visit www.idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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