There’s a big change coming to the server virtualization market, and it has serious ramifications.
The midmarket is waking up. At Gartner, the number of midmarket clients who are just starting out with virtualization has been growing exponentially for the last year or so. We just completed a worldwide survey of nearly 1,500 companies with 100-999 employees. What you see is pretty compelling evidence that a market that nearly ignored server virtualization for years started to wake up about two years ago, and is rapidly becoming a dominant opportunity for vendors.
Furthermore, it’s clear that midmarket enterprises virtualize at a different rate than large enterprises. Large enterprises virtualize over a long period of time, at the rate of hardware replacement. Midmarket enterprises tend to virtualize as a part of a single project, or over a 1-2 year period.
We predict that midmarket enterprises will have a higher percentage of servers virtualized by year-end 2010 than the global 500 – who have been virtualizing since 2001. That means 2009 and 2010 will be huge.
What does this mean? I think it means that VMware messed up, and effectively ignored the midmarket (especially in terms of entry price) until Microsoft came to the table. I think the price war is going to take a serious toll on vendors at the low-end. I think midmarket software vendors who have been able to ignore virtualization are going to have to make changes very quickly – in terms of support, but also pricing and licensing. I also think that we are going to have some pretty messed up midmarket enterprises – who virtualize too fast, use immature technology, lose some control of their environment, open new security gaps, etc.
Gonna be a bumpy ride!