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Gartner: Server Virtualization Reaches Saturation Point

Companies have more options for x86 server workloads than ever, including containers and cloud computing.

The virtualization industry has reached a tipping point, according to data from Gartner, Inc., and the company most likely to be affected is the most prominent vendor in the space: VMware.

Gartner reported Thursday that although the global x86 server virtualization market continues to grow at a solid rate, "new software licenses have declined for the first time since this market became mainstream more than a decade ago." In other words, fewer hypervisors are being installed on servers, a fact that affects VMware more than any other hypervisor maker, since it remains by far the largest. Gartner said the bulk of x86 server virtualization revenue now comes from maintenance, instead of increasing sales.

Market Maturity
Gartner reported that the use of server virtualization -- which involves abstracting the server OS software, like Windows Server, away from the underlying hardware -- is holding steady. But that news comes with a caveat: "It continues to be an important and heavily used technology for these businesses, but this market segment is approaching saturation."

Many organizations, according to Gartner, have server virtualization rates that exceed 75 percent, demonstrating the maturity of the market. New ways of handling x86 OS server workloads are gaining popularity, however, including cloud computing and containers. Containers perform similar functions to virtual machines (VMs), but are much lighter weight, enabling greater density of deployment in a traditional datacenter, as well as better efficiency for on-premises, hybrid or public cloud environments.

This is especially true for smaller shops, Gartner says: "… Organizations with smaller IT budgets expect a further decline in usage through to at least 2017. This is causing an overall decline in new spending for on-premises server virtualization."

Still the Big Dog
The x86 server virtualization market, as has been the case for many years, continues to be dominated by VMware, Gartner notes, followed by Microsoft, a strong second with its Hyper-V hypervisor. Identified as niche players were Citrix, which at one time tried to compete more directly with VMware and Microsoft, along with Oracle and Red Hat. Interestingly, they're joined in the market by "an explosion of vendors in the domestic China market," Gartner says.

Gartner also pointed out new challenges from software-defined infrastructure (SDI) and hyper-converged infrastructure products, which are giving companies more options than ever before for building out datacenters.

Not Breaking News
The report, although it may be most concerning to VMware given its reliance on revenue from its hypervisor, vSphere, is hardly news to the company. Various executives, including CEO Pat Gelsinger, have said for some time now that saturation of the x86 server virtualization space was inevitable, and the company has moved aggressively into multiple new areas, including SDI and end-user computing.

Microsoft has never relied on revenue from Hyper-V, which it began to give away shortly after the product's initial release. Its hypervisor was always just a pipe in its infrastructure plumbing, so the market saturation is unlikely to have any effect on its bottom line. It has faced saturation problems for years, of course, in the consumer Windows OS market, and has scrambled to find new avenues for growth; the major one is Azure, its public cloud platform.

About the Author

Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.

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