Virtualization Space Opens Up

Virtual PC 2007, a free download, is designed to work well with Microsoft's Windows Vista as both the host and guest operating system. The software works with both the 32-bit and 64-bit versions of Vista as the host operating system, as well as with Windows XP, and it supports hardware virtualization technology from Advanced Micro Devices and Intel.

Other contenders are likely to pop up along the way, as is typically the case with momentum-gaining emerging technologies. And as the worldwide market for x86 virtualization solutions heads for the estimated $1.8 billion mark in three years, there may be more room for new contenders, but the competition will be stiff.

VMware continues to dominate the market it created, boosting its revenue nearly 80 percent from $172 million in 2004 to $310 million in 2005. The company held about 55 percent share of the market in 2005, said IDC's Humphreys.

At the same time, Humphreys said, Linux is the fastest-growing platform for VM deployments. Linux accounted for about 40 percent of the dollars spent on VM software in 2005. Windows made up about 28 percent, with Unix and mainframe environments making up most of the rest. Other platforms, notably Xen, brought in about $15.6 million in 2005 and amounted to about 3 percent of the market.

Humphreys noted that the relatively high cost of VMware products has not restricted the company's market growth, since many companies are willing to pay top dollar for what they perceive as a blue-chip product.

VMware's Eschenbach said VMware's core proposition is value for money, driven by innovation. "Our price point seems to be validated by the total cost of ownership, which our customers find to be very favorable in a short space of time," he said.

Last year, the vendor unveiled VMware Infrastructure 3, which Eschenbach said ushered in a new era for data centers, allowing industry-standard infrastructure farms to be managed as a shared utility and dynamically allocated to different business units or projects.

VMware Infrastructure 3 allows new capacity to be added or removed without disruption based on business demand. Applications can be migrated automatically to available hardware resources. Hardware failures can be automatically overcome with minimal disruption, and business data can be protected with minimal impact to production SLAs (service-level agreements), according to the company.

In addition, the company touts another benefit: power savings. VMware estimates that for every workload moved from a physical environment to a virtual one, customers can save about $560 in electricity per year.

Just a few months ago, VMware launched a marketplace and certification program for virtual appliances, which are prebuilt, preconfigured and ready-to-run enterprise software applications packaged along with an operating system within VMs.

Broadening appeal

The virtualization market is being driven by widening uses of the technology, Humphreys said. "Companies are moving beyond using virtualization for test and development and server consolidation to high availability and disaster recovery," he said.

The expansion of the market and the new, get-tough positioning of Virtual Iron and XenSource give customers plenty of food for thought when they decide to buy a virtualization solution, McLaurin said.

Of course, as VMware, open-source vendors and others duke it out in the market, the big question on everybody's minds is: What will happen if Microsoft decides to seriously enter the virtualization market with free tools?

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Some market observers say they believe Microsoft could do to virtualization what it did to browsers with Internet Explorer. But then again, others point out, Microsoft hasn't won every battle, as attested by Apple's iPod music player.