The 451 Group: Server Virtualization Is Transforming Datacenter Management, Creating a Key New Enterprise IT Battleground

December 14, 2006; 07:15 AM
The 451 Group believes that server virtualization is transforming datacenter management by breaking the one-to-one relationship between applications and (usually Windows) servers. This technology sits above the 'bare metal' and beneath the operating system, and 451 analysts believe that whoever dominates server virtualization will control this critical interface. The technology is becoming a major M&A driver as traditional hardware, operating system and management vendors scramble to accommodate it. These findings are contained in a report released today by New York-based The 451 Group, a technology-industry analyst company focused on the business of enterprise IT innovation.

"Server virtualization has become a key battleground among titans, as it breaks the interrelationship between operating system and hardware, leaving this critical interface up for grabs," said Rachel Chalmers, Senior Analyst for Enterprise Software at The 451 Group and lead author of the report.

Server virtualization and related technologies can lower capital, energy and labor costs in the datacenter by streamlining application development and by consolidating workloads into more efficient arrangements of hardware. The 451 Group expects that, over the next two years, this will result in increasingly ubiquitous virtualization. All major server operating systems will include 'bare metal' virtualization as a standard. All major server CPUs will include hardware assistance for virtualization.

The 451 Group has identified six broad subsectors that its analysts believe are emerging as possible avenues for consolidation through M&A (as companies attempt to position themselves for the virtualized datacenter of the future):

• Server virtualization itself
• VM management
• Datacenter automation/change and configuration management
• Process automation/run book automation
• Infrastructure repurposing/dynamic reprovisioning
• Application virtualization/application fabric.

"We've already seen $1.4bn in M&A activity related to server virtualization over the past four years, and we expect this trend to continue and grow," said Chalmers. "The tremendous importance of server virtualization to datacenter operations, combined with stagnant growth around traditional IT and enterprise management software, sets the stage for a lot more M&A over the next 12-18 months."

These findings come from a 451 Special Report titled 'V' for virtualization: transforming the datacenter, driving M&A.' This report was led by Rachel Chalmers, with support from Chris Noble, Director of Research; Dennis Callaghan, Analyst, Enterprise Software; Simon Robinson, Senior Analyst and Sector Head, Storage; John Abbott, Chief Analyst; and Steve Steinke, Senior Analyst, Networks. This 140-page report sets out to reach three goals: To describe the state of the art in server virtualization technology and to forecast its future; to analyze gaps in the portfolios of large vendors that 451 analysts believe are likely to make acquisitions around server virtualization; and to provide a taxonomy of smaller bootstrapped and venture-backed private companies that might make attractive targets.

Key Companies Covered

The report includes in-depth competitive assessments of the vendors focused on this space, including the following companies: Acronis, Altiris, Appistry, BladeLogic, BMC Software, CA Inc, Cassatt, CiRBA, Citrix Systems, DataSynapse, Egenera, EMC VMware, Enigmatec, Fusion Dynamic, Grid Systems, Hewlett-Packard, IBM, Leostream, Microsoft, Novell, Opalis Software, Opsware, Optena, Optinuity, Oracle, PlateSpin, Platform Computing, Propero, RealOps, Red Hat, Scalent Systems, Sun Microsystems, Surgient, SWsoft, Symantec, Terracotta, ToutVirtual, Trango Systems, United Devices, Virtual Iron Software, Vizioncore and XenSource.

Report Orders

To learn more about this report, or to discuss developing a client relationship with The 451 Group, contact Simon Carruthers, Vice President of Research Services, via phone at 212-505-3030 x-103, or via e-mail at: [email protected].

About 451 Special Reports

451 Special Reports provide a complete and comprehensive picture of emerging enterprise IT market segments – analyzing the technologies, the competitors, the marketplace opportunities and obstacles, and the implications for a variety of constituencies, including other vendor companies, the investment community and early-adopter IT end users.

About The 451 Group

The 451 Group is an independent technology-industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company – at vendor, investor, service-provider and end-user organizations – rely on 451 insight to support both strategic and tactical decision-making for competitive advantage.

The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, London and Boston. The company also operates Tier 1 Research – an independent division of The 451 Group, headquartered in Minneapolis – which analyzes the financial and industry implications of developments impacting public and private companies within the IT, communications and Internet sectors.

For additional information on The 451 Group or to apply for trial access to its services, go to: www.the451group.com