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Virtualization Meets Midmarket and Goes BOOM!

by Tom Bittman  |  August 26, 2009  |  5 Comments

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! 

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Category: virtualization  

Tags: microsoft  virtualization  vmware  

Thomas J. Bittman
VP Distinguished Analyst
20 years at Gartner
31 years IT industry

Thomas Bittman is a vice president and distinguished analyst with Gartner Research. Mr. Bittman has led the industry in areas such as private cloud computing and virtualization. Mr. Bittman invented the term "real-time infrastructure," which has been adopted by major vendors and many… Read Full Bio

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  4. Mid-market enterprises have taken time to integrate virtualisation into their infrastructure for a couple of reasons; cost plays a massive part and they often take their lead from larger ones to iron out problems and find best practices first before committing. I visit many mid size organisations and they all have Virtualisation in house but only for testing and trialing, ready to avoid the problems seen in early versions and therefore eliminate time wasted and added cost associated with this.

    A classic example of this is the shift from SBC to VDI. Large organisations have been doing this for some time but only recently have mid size really started to take this seriously. They know they need it, they know it makes perfect sense but they have been holding off due to the added network requirements and costs needed to make it work correctly, and have been waiting for the Big Brothers to find the “Best Fit” solution and the “Solution Stack” that works.

    But it seems they are almost “Changing tactics”. Because they know the core infrastructure is going to be virtualized VERY soon, they see now is the time for moving forward with this, and are looking to implement virtual as opposed to physical network offerings, like accelerators, to reduce network costs so that they can preserve more money now and not have to play catch up 2 years down the line. This also has the double advantage of creating a good reason and extra cash to help fund the core server infrastructure.

    I agree the time for the big bang is soon, but I reckon there have been a lot of lessons learned over the last few years and if they do the research and are careful to not run before they can walk the whole shift does have a chance of happening smoothly.

  5. Neil MacDonald says:

    By the way, this is consistent with the survey results we published earlier this year that found nearly 40% of midsize businesses indicated they would like to have 100% of their servers virtualized within three years; and 70% believe they can have 100% of their servers virtualized within five years. We discuss the details and implications of this for Gartner clients in this research note:

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