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Virtualization Marketplace

by Geoff Keston

Copyright 2020, Faulkner Information
Services. All Rights Reserved.

Preview

The growing popularity of cloud services is boosting the
market for the virtualization technology they use. The quick ascent of
virtualization is pressuring several long-standing market leaders and
creating opportunities for others. Meanwhile, enterprise customers are
confronted with a range of new options for servers, storage,
applications, desktops, and network infrastructures.

Report Contents:

• Executive Summary
• Market Dynamics
• Market Leaders
• Market Trends
• Outlook
• Web Links
• Related
  Reports

Executive Summary

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Virtualization technology enables software to use hardware
more efficiently and flexibly.

Originally used mainly to enable physical servers to host many
instances of virtual servers, similar technology is now used for
networks, applications, servers, desktops, and storage. The approach is
widely used on corporate IT networks and is fundamental for how many
cloud services are designed and delivered.

The popularity of virtualization has had notable effects on
several market segments. In particular, it has caused Cisco and
Microsoft, whose
products were the foundation of a typical server and network
environment before the advent of virtualization, to quickly develop new
products. Microsoft has for the past few years been competing
directly and aggressively in the virtual server market against
leader VMware, and it is now the clear second-place competitor in the
field. Cisco has, more belatedly, released several products that use
software-defined networking. Other key players in the market are
Citrix, Dell EMC, Oracle, Red Hat, and the open source, Linux-based KVM.

The market is forecast to grow rapidly in the next few years,
but now that the technology has further matured and many major vendors
have made their moves, it is likely that there will be more stability
in the sector.

Market Dynamics

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Virtualization
has evolved from a specialized technology into a common
architecture. Confronted with these changes, organizations have been
forced to
update their technology plans. The use of virtualized technology has
become
a competitive advantage – even a necessity, in some cases – that cannot
be
ignored. These changes are being made not only by organizations
redesigning their internal networks but by telecommunications providers
revamping the infrastructure they use to deliver services.¹

Virtualization
has become widely used as an alternative for many
different technologies: servers, desktops, storage,
applications, data
centers, wired networks, and wireless networks. As a result, there
isn’t a single virtualization market, but a range of markets, with
somewhat different technologies and competitors. Each of these
markets has somewhat different dynamics, but there are some broad
themes common to them all: the continually growing and diversifying use
of cloud and mobile computing have fundamentally changed how people
access data and services and at the same time changed how IT
departments meet employee needs.

The
shift away from traditional technologies and toward virtual versions is
still in progress, and it is likely that both will continue to be used
extensively in hybrid models. The overall market is large and dominated
by a few leaders, but it is also varied and has room for many niche
providers. This makes purchasing decisions difficult for enterprises,
as there are many options to choose from and comparisons between them
are not always direct.

Market Leaders

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VMware remains the clear leader in the market, but other
players are chipping away at its lead. Most of this reduced share has
gone to Microsoft, but other companies have also been pushing hard into
the market, and the Kernel-based Virtual Machine (KVM), supported by
IBM, offers an open source alternative. The name VMware is still
synonymous with virtualization, however.

Cisco

Cisco has aggressively developed virtualization products and
built virtualization capabilities into its traditional hardware. It now
offers server, desktop, and network virtualization products. The
company’s virtualization offerings are most suited for networks that
are already Cisco-based, however, rather than for uses in which a
complete, independent virtualization suite is needed. Cisco is thus not
primarily a direct competitor to VMware and other leaders in the field.
Instead, its virtualization technology mainly aims to help the company
defend its position in the networking market.

Citrix

Citrix has gained standing and become a growing force in the
segment. The company offers server virtualization software, XenServer,
desktop software, XenDesktop, and application virtualization,
XenApp.

Over the past several years, the company has used acquisitions
to expand its virtualization portfolio:

• 2014 — Framehawk, which assists with delivering virtual
  applications and desktops to mobile platforms.
• 2015 — Storage virtualization company Sanbolic, which
  specializes in the field of software-defined storage.²
• 2017 — Unidesk, which offers software that helps with
  desktop virtualization.
• 2018 — Cedexis, which provides tools for software-defined
  applications.

Dell EMC

Following an acquisition that closed in 2016, Dell
now owns EMC, of which virtualization market leader VMware is a
subsidiary. Dell also offers a service through which it designs and
implements virtualized data centers for enterprises, using technology
not only from VMware but also from other vendors including Citrix and
Microsoft.

Dell is now working with VMware to integrate their
products and expand their portfolio. (See the discussion of VMware below.) For example, in 2019
the partnership released virtualization technology for software-defined
wide-area networking.³

KVM

KVM is an open source application designed for Linux. It
enables administrators to run several instances of virtual machines on
a single server. While it may not compete with the leading commercial
products as a means for running large-scale cloud applications, it
might make server virtualization technology available to a wider market
and could encourage additional development. And KVM is supported by a
strong community whose work includes an annual developers conference,
KVM Forum. IBM has also contributed substantially to KVM’s
open source development process.

Microsoft

Hyper-V, a virtualization hypervisor, is built into both Windows Server
and
Windows 10. It is a key component in Microsoft’s strategy to expand its
presence in the cloud market, a strategy that involves many other
tactics,
such as broadening its portfolio of Web-based services. The company’s
servers also include a feature called Remote Desktop Services, which
provides virtualized Windows applications to desktop and mobile
devices. The
inclusion of virtualization technology within the company’s operating
systems enables it to take advantage of its well-established customer
base while also offering new capabilities.⁴ In
2018, the company expanded its virtual desktop portfolio when it
bought FSLogix.⁵ The technology acquired from
FSLogix played a major role in the late 2019 release of Microsoft’s new
Windows Virtual Desktop, which offers cloud connectivity and remote
management for Microsoft end user systems.⁶

Microsoft has established itself as the clear runner-up to
VMware, and its
growth in the market has been steady. Further product development and
the
use of its industry power are likely to continue this growth. And in
2019, after long treating VMware purely as a rival, Microsoft agreed to
allow its competitor’s virtualization technology to work natively on its Azure cloud platform.⁷

Oracle

Oracle has worked aggressively to increase its share of the
virtualization
market. Its efforts have been boosted by acquisitions, the large user
community centered around its database, and its ability to bundle its
virtualization software with its many well-established products.

Oracle offers VM Server as well as two desktop virtualization
products: Secure Global Desktop provides virtual applications to remote
devices, and VM VirtualBox enables multiple copies of different
operating systems to be run on a single system.

RedHat

Red Hat has steadily expanded and enhanced its virtualization
product line, and it has moved into a more competitive
position.⁸ The latest version of the company’s
platform, Red Hat Virtualization 4.3, was released in December 2019.
The
platform enables Linux virtual servers to be created

VMware

VMware no longer has the virtualization market to itself, but
it remains the clear leader, both in terms of how widely its products
are used and in how influential its technology is. The company offers
virtualization products for servers, enterprise applications, and
desktops, and after its purchases of Nicira and DynamicOps,
for networks too. Over the past few years, VMware has expanded its
portfolio even further, releasing vCloud Air Virtual Private Cloud
OnDemand and the hybrid cloud offering VMware vCloud Air
Network. The company also offers Virtual SAN, a storage offering,
and Virtualization Management, for consolidated administration.

In 2016, Dell completed its acquisition of EMC, the storage
company
that owned a majority share of VMware, and VMware is now a Dell
subsidiary.
Dell EMC (as EMC is now called) is working
with VMware to offer integrated products, and more integration is
expected in the future.⁹ In 2019,
VMware acquired Pivotal, which offers a platform for creating
cloud-native apps.¹⁰ The Pivotal purchase may
push the company beyond virtualization into complementary technologies
that help in creating and maintaining software.

Market Trends

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With its close link to cloud computing, virtualization appears
to be not a mere trend but a long-term shift toward different
technology architectures than were used in the past. Years ago, there
was a well-established de facto design for corporate networks:
productivity applications were installed on Windows desktops,
enterprise applications were installed on Windows or UNIX servers, and
Cisco hardware connected the systems. But the boom in cloud computing –
which has been enabled by improvements in virtualization technology as
well as increased bandwidth and a growing preference for online
services – has eroded this model’s popularity. Microsoft and Cisco,
leaders in the technology that was the foundation of the older network
model, now often find themselves reacting to trends instead of setting
them. But the companies are fighting back and have realized
much success, and other companies can be expected to move aggressively
too, whether through internal development, acquisitions, or a
combination of both.

The results of this ongoing fight are hard to
predict. The varied ways in which virtualization concepts are
being put to use have already changed network-based technology and
services, and the developments in the marketplace over the past few
years indicate that these changes will continue. But with the
technology and marketplace having become more mature, the changes may
not be as dramatic and rapid as they once were.

Outlook

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Table 1 provides an overview of key market segments, their forecasted
growth, and the leaders in each.