IDC: Virtualization Shipments Strong in Second Quarter

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According to IDC's Worldwide Quarterly Server Virtualization Tracker, worldwide virtualization license shipments in the second quarter of 2008 increased 53 percent year over year, compared to a 72 percent year-over-year increase the previous quarter. The x86 server market led the way with 60 percent year-over-year growth followed by the EPIC server market with 18 percent growth. Worldwide CISC and RISC server virtualization licenses declined 15 percent and 7 percent year over year, respectively.

"Quarterly totals of x86 server virtualization licenses continue to experience healthy growth, although the growth rates have slowed over the last four quarters. The modest decline in growth rates indicates that the market is showing early signs of maturation," said Brett Waldman, research analyst for System Software at IDC. "Based on our conversations with end users, IDC believes that the high-volume consolidation opportunities-the low hanging fruit in the x86 server virtualization market-is starting to dry up. This is, in turn, resulting in smaller deals overall."

"The virtualization platform providers are going to have to adapt their go-to-market strategies to this ever-changing dynamic, as new growth opportunities open up around new deployment of virtualized servers not specifically targeted at consolidation, and at new customer segments such as midsized companies," Waldman added.

Worldwide new server shipments virtualized increased 52 percent year over year in the second quarter, compared to 70 percent growth in 1Q08.

Worldwide virtualization software revenue grew 15 percent year over year in 2Q08, compared to 32 percent growth in the first quarter of 2008. The growth in virtualization software revenue primarily came from the x86 server market, which grew 39 percent year over year. EPIC virtualization software revenue also increased year over year, albeit at a slower pace of 9 percent.

Vendor Standings

Hewlett-Packard held onto its number-one spot for worldwide new server shipments virtualized with 34 percent market share and 52 percent year-over-year growth. This growth was driven by a solid performance in sales of Intel-based processors. Dell solidified its position as the number 2 vendor with its market share growing from 25 percent in the first quarter of this year to 29 percent in the second quarter, powered by 110 percent year-over-year growth. Dell's strong performance was driven by solid growth of Intel-based processors and a very strong performance from AMD-based sales. IBM remained in the third position with 16 percent market share. IBM achieved 32 percent year-over-year growth driven by a solid performance from its Power Systems servers. This was the first quarter in the last year in which IBM saw positive growth in its new RISC-based server shipments virtualized.

x86 Virtualization License Market Standings, by Virtualization Platform

VMware grew its x86 server virtualization software business 27 percent year over year and maintained the number-one position in the market with 78 percent revenue share in the second quarter of 2008. When looking at new x86 virtualization licenses, VMware continues to hold on to its strong position in the x86 market with a combined market share of VMware ESX and VMware Server at 44 percent. However, in its first quarter of general availability Microsoft Hyper-V delivered a strong showing, and when combined with Virtual Server 2005, Microsoft's market share is 23 percent of new shipments.

IDC's Server Virtualization Taxonomy

Virtualization licenses represents the amount of virtualization platform shipments for a given vendor in a given quarter. New server shipments virtualized maps the amount of virtualization platforms shipments that are sold directly by the hardware vendors. Virtualized server revenue represents the hardware revenue of new server shipments virtualized. Virtualization software revenue represents the software revenue associated with virtualization platform sales.

IDC's Worldwide Quarterly Server Virtualization Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly virtualization license shipments, new server shipments virtualized, virtualized server revenue and virtualization software revenue, segmented by region, cpu type, vendor, form factor, sockets, virtualization platform, and primary guest operating system. For more information, contact Hoang Nguyen at 508-935-4718 or This email address is being protected from spambots. You need JavaScript enabled to view it..

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, a leading technology media, research, and events company. Learn more about IDC by visiting www.idc.com.

According to IDC's Worldwide Quarterly Server Virtualization Tracker, worldwide virtualization license shipments in the second quarter of 2008 increased 53 percent year over year, compared to a 72 percent year-over-year increase the previous quarter. The x86 server market led the way with 60 percent year-over-year growth followed by the EPIC server market with 18 percent growth. Worldwide CISC and RISC server virtualization licenses declined 15 percent and 7 percent year over year, respectively.

"Quarterly totals of x86 server virtualization licenses continue to experience healthy growth, although the growth rates have slowed over the last four quarters. The modest decline in growth rates indicates that the market is showing early signs of maturation," said Brett Waldman, research analyst for System Software at IDC. "Based on our conversations with end users, IDC believes that the high-volume consolidation opportunities-the low hanging fruit in the x86 server virtualization market-is starting to dry up. This is, in turn, resulting in smaller deals overall."

"The virtualization platform providers are going to have to adapt their go-to-market strategies to this ever-changing dynamic, as new growth opportunities open up around new deployment of virtualized servers not specifically targeted at consolidation, and at new customer segments such as midsized companies," Waldman added.

Worldwide new server shipments virtualized increased 52 percent year over year in the second quarter, compared to 70 percent growth in 1Q08.

Worldwide virtualization software revenue grew 15 percent year over year in 2Q08, compared to 32 percent growth in the first quarter of 2008. The growth in virtualization software revenue primarily came from the x86 server market, which grew 39 percent year over year. EPIC virtualization software revenue also increased year over year, albeit at a slower pace of 9 percent.

Vendor Standings

Hewlett-Packard held onto its number-one spot for worldwide new server shipments virtualized with 34 percent market share and 52 percent year-over-year growth. This growth was driven by a solid performance in sales of Intel-based processors. Dell solidified its position as the number 2 vendor with its market share growing from 25 percent in the first quarter of this year to 29 percent in the second quarter, powered by 110 percent year-over-year growth. Dell's strong performance was driven by solid growth of Intel-based processors and a very strong performance from AMD-based sales. IBM remained in the third position with 16 percent market share. IBM achieved 32 percent year-over-year growth driven by a solid performance from its Power Systems servers. This was the first quarter in the last year in which IBM saw positive growth in its new RISC-based server shipments virtualized.

x86 Virtualization License Market Standings, by Virtualization Platform

VMware grew its x86 server virtualization software business 27 percent year over year and maintained the number-one position in the market with 78 percent revenue share in the second quarter of 2008. When looking at new x86 virtualization licenses, VMware continues to hold on to its strong position in the x86 market with a combined market share of VMware ESX and VMware Server at 44 percent. However, in its first quarter of general availability Microsoft Hyper-V delivered a strong showing, and when combined with Virtual Server 2005, Microsoft's market share is 23 percent of new shipments.

IDC's Server Virtualization Taxonomy

Virtualization licenses represents the amount of virtualization platform shipments for a given vendor in a given quarter. New server shipments virtualized maps the amount of virtualization platforms shipments that are sold directly by the hardware vendors. Virtualized server revenue represents the hardware revenue of new server shipments virtualized. Virtualization software revenue represents the software revenue associated with virtualization platform sales.

IDC's Worldwide Quarterly Server Virtualization Tracker is a quantitative tool for analyzing the global server market on a quarterly basis. The Tracker includes quarterly virtualization license shipments, new server shipments virtualized, virtualized server revenue and virtualization software revenue, segmented by region, cpu type, vendor, form factor, sockets, virtualization platform, and primary guest operating system. For more information, contact Hoang Nguyen at 508-935-4718 or This email address is being protected from spambots. You need JavaScript enabled to view it..

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, a leading technology media, research, and events company. Learn more about IDC by visiting www.idc.com.

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