How Will the Economy Impact Virtualization?

Yes the markets a mess and we seem to be going down a giant rabbit hole of indeterminate proportions. The cascading volatility of global economic markets aided and abetted by real-time communications has been a speculative issue explored by economists for years along with the productivity puzzle that Alan Greenspan used to be preoccupied with from time to time.

I would suggest however that the issue is no longer speculative: it seems clear that the global financial underpinnings that were hammered out in Bretton Woods in 1945 to create the World Bank and the International Monetary Fund can’t keep up with the runaway freight train that is IT-fostered globalization. Somehow a new structure will have to be put in place so the next few months are going to be fascinating to watch.

Those of us who work in IT of course are busily trying to figure out the impact of all this on the virtualization market. But let’s start with IT in general. As Herb Torrens recently reported, a survey released from Forrester Research says 43 percent of companies reduced budgets this year. As Torrens reports “Financial services in North America were the hardest hit, with 49 percent reporting IT cutbacks.” This certainly brings up some questions about hosted desktop virtualization which many think will be the next big wave of market growth since it depends heavily on this sector as well as health care (i.e. highly regulated industries).

Another interesting data point from the Forrester report is that “about 43 percent of firms interviewed said they are increasing their efforts in infrastructure outsourcing, and 45 percent will use more application outsourcing.“ The extent to which this same impulse will give the cloud computing juggernaut even more momentum (is that possible?) is worth considering. My sense is that it will.

Finally, VMware is spending over 20 percent on R&D which is a very healthy number. The company also has some very ambitious plans to develop what appears to be the first release of the putative next generation data center with VDC-OS. It's going to be interesting to watch this develop but let’s hope that the dismal climate doesn’t affect the more promising aspects of the forward march of technology progress on virtualization.

Posted by Tom Valovic on 10/19/2008 at 12:49 PM