Virtual Server Market Drivers

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Virtual Server
Market Drivers

by James G. Barr

Docid: 00011492

Publication Date: 1811

Report Type: MARKET

Preview

The virtual server market and its technology are rapidly maturing. The demand for this technology derives from IT’s need to do more with less
in times of tightened budgets as well as the tendency of both businesses
and consumers to prefer the online version of services. The bandwidth to
support high volumes of Internet traffic is widely available. With a
saturation point distantly in sight, growth in the virtual server market
has slowed for the first time in several years, but cloud technology
offers room for further expansion. To realize the benefits of virtual
servers, organizations must carefully plan for and manage them.

Executive Summary

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Virtual server technology combines a number of physical servers into one
machine or allows multiple simulated servers to run on a single physical
device. This helps to save power, space, and personnel costs, and makes
more efficient use of processing and storage resources.

Related Faulkner Reports

Virtual Computing Overview Tutorial

Virtual servers, as depicted in Figure 1, enable enterprises to:

Reduce the number of physical, or real, servers.
Lower server-related power and air conditioning costs.
Recover data center floor space normally allocated to server hardware.
Shorten the server data backup process.
Improve server reliability, availability, and serviceability.
Lessen the demand for IT support services.
Decrease the total cost of server ownership.
Achieve "sustainability" (or environmental) goals and mandates.

Figure 1. Examples of Virtual Servers

Source: TigerDirect

VMware has long dominated the virtual server market, particularly with
its x86 machines. Microsoft, with its large installed base, has attempted
to match VMware’ s product suite, and its free Hyper-V product
enabled it to grab a large share of the market. Nevertheless, VMware continues
as the market leader and has considerable user loyalty.

Driven by the need for efficiency and cost savings, the deployment of
blade servers, and the development of superior monitoring tools, server
virtualization has largely overcome early objections and is a reality for
most major corporations. Hypervisors (the software that controls and
operates virtual servers) have greatly increased the utility of virtual
servers; the market leader here is VMware with its ESXi, followed by
Microsoft’s Hyper-V.

Potential growth areas in the field include virtualization of desktops
and similar components besides servers; security; management tools for
virtualization; and in-house cloud virtualization. Developments
influencing the market include application containers like Docker and
cloud software platforms represented by OpenStack.

Market Dynamics

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The concept of the virtual server is not new; it has been a staple of
mainframe operations for years. A major breakthrough in 2006 propelled the
virtual server market toward strong growth, when instruction sets were
introduced into server virtualization at the hardware level. This allowed
the servers to operate without having to modify the supporting operating
system on x86-based systems. Today virtualization is popular and broadly
used.

IT departments are pressured to contain costs for computers but also for
data center space, air conditioning, and power. In addition, IT
departments are required to administer an increasing number of systems
with fewer people. Also, implementing new and upgraded software is
optimally assisted by a strong test environment, which can put a strain on
departments that lack such a facility. Virtual servers, in many cases, can
assist in adjusting to these facts by minimizing both hardware and
administrative costs. It must be noted, however, that virtualization
is by no means a panacea and must be carefully introduced into the
environment.

The rapid growth of cloud computing, which uses virtual server technology
to cost effectively deliver online services to many customers, is a major
market factor. Properly speaking, however, the use of virtual computing in
large computer farms like those of Amazon and Google is not a major part
of the virtualization market. Much more significantly, the goal of
controlling costs has compelled many enterprises to use cloud technology
on their own networks, sometimes using service delivery technology known
as in-house or “private clouds.” It is not clear yet whether sales to
cloud computing entities will offset a corresponding reduction of sales
for in-house virtualization devices. Cloud virtualization in external
sites is increasing, but on-site facilities still predominate.

Another factor in the virtualization market is the increasing performance
rate of multiple (dual and quad) core servers, coupled with the increasing
popularity of multiple (as opposed to dual) cores, even to the extent of
hundreds of cores. The development of blade servers significantly
helped drive the virtual server market. The leaders of this technology are
IBM and Hewlett Packard (HPE).

Blade servers are designed to hold multiple virtual servers; they are not
limited in size as are conventional servers, and frequently contain within
themselves power, cooling, network, and storage facilities that
traditionally have been located in separate units.

Market Trends

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Virtualization Leaders and Prominent Players

The market leaders for server virtualization are clear and will likely
remain so at least for the next few years, even as market shares and
positions change somewhat. VMware continues its significant lead,
followed by Microsoft. Many of VMware’s customers remain loyal despite the
strong inroads made by Microsoft in the market, led in particular by its
offering its Hyper-V product for free with Windows servers.

In addition to VMware (US) and Microsoft (US), other prominent players in the
global server virtualization market include:

Oracle Corporation (US)
Red Hat, Inc. (US)
Citrix Systems, Inc. (US)
Amazon.Com, Inc. (US)
Google Inc. (US)
Huawei Technologies Co. Ltd. (China)
Odin Inc. (US)
IBM (US)¹

From a geographic perspective, North America leads the server virtualization
market, followed by Europe.

According to Market Research Future, the Asia Pacific region, although ranked
third, is "emerging as the fastest growing market for server virtualization
[and] is poised to account for a substantial market share in the next six
years." The growth can be attributed to "rapidly advancing countries such as
China, Japan, and India, coupled with the improved economy that has [spurred]
industrialization across the region. [The] presence of major server
virtualization vendors … in the region, along with … increasing IT
infrastructure development is fueling the … market."²

Virtualization Technologies Have Found Acceptance

Initial concerns about virtualization have been largely overcome by the
accelerating pace of adaptation of the technology. It must be noted that not
only servers can be virtualized; personal computers, particularly desktop
machines, can be set up to run multiple operating systems on one computer, and
storage can also be virtualized.

The research group IDC expects that virtualization technology will
continue to see broader use outside of large datacenters, and that the use
of advanced tool sets and configurations will grow as the savings they
offer become apparent. Security concerns will continue to influence the
field, as examples of security breaches multiply. Peripheral products such
as application containers like Docker, and OpenStack cloud software
platforms, may have impacts the effects of which are still to be
determined.

Market Drivers for Virtual Servers

As observed by Market Research Future, there are three primary virtual server
market drivers:

Cloud Computing – "Although gradually,
businesses have started to move to cloud infrastructures and IaaS
(Infrastructure as a Service) products, relying completely on a
virtualized environment."
Complementary Technologies – For
example, OS container-based virtualization, software-defined data center
solutions, and hyper-converged integrated systems
On-Premise Developments – For example, the increasing adoption of
on-premise server virtualization software.³

Strategic Planning Implications

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Any move to a virtual server environment must begin with an examination
of the current server structure of the enterprise, with particular
attention to such issues as the rate at which servers are being added and
the nature of the applications run on the different physical servers.
There were initially reports of a drag on the virtualization market caused
by lack of confidence that mission critical applications can run
dependably on virtual servers. This growth area was a target of the major
virtualization vendors, with the result that it is no longer a significant
concern.

The company entering the virtual server environment must be certain to
set up a robust test environment before introducing virtualization into
production. An important use of the test environment is to ensure that the
applications currently running on separate physical servers will run on
the virtual server. This compatibility must not be taken for granted.
Still another use of the test environment is to verify performance claims
made by vendors. Particular attention should be paid to performance
issues.

A significant percent of downtime for servers in moving to virtualization can
be caused by the time it takes for transfer of data from one server to another.
Proper use of a test environment can minimize that downtime.

A frequently observed tendency in the changeover from individual physical
servers to virtual servers is to leave in place the servers that have been
replaced, thereby failing to achieve a return on the transition, since
licensing and maintenance costs continue. The disposition of physical
servers should be part of the transition plan.

Virtual servers require new skills on the part of operations staff,
including administration of the servers themselves. The quality of
management tools steadily increases, but the staff still requires training.

Virtual servers can be hosted within the enterprise or outsourced
(externally hosted), in which case security considerations must be taken
into account. Attempts to exploit vulnerabilities created by the virtual
server environment have taken place and may be expected to increase in the
next few years.

It must be understood that savings on software are not usually a result
of server virtualization. Costs for licensing and maintenance may not
change with virtualization. Other areas may actually turn out to be more
costly than initially expected, among them management tools, network
re-architecture, storage costs, and training.

Web Links

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References

¹ "Server Virtualization Market, By Servers (Hypervisors, Virtual
Private Servers), By Type (Para-Virtualization, OS-Level Virtualization), By
Deployment (Cloud, On-Premise), By Service (Consulting Service, Technology &
Integration) – Global Forecast 2023." Market Research Future. November 2018.

² Ibid.

³ Ibid.

About the Author

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James G. Barr is a leading business continuity analyst
and business writer with more than 30 years’ IT experience. A member of
"Who’s Who in Finance and Industry," Mr. Barr has designed,
developed, and deployed business continuity plans for a number of Fortune 500
firms. He is the author of several books, including How to Succeed in
Business BY Really Trying, a member of Faulkner’s Advisory Panel, and a
senior editor for Faulkner’s Security Management Practices. Mr.
Barr can be reached via e-mail at jgbarr@faulkner.com.

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