Services chewing up the bulk of virtualization spend not software

VMWare has 70 per cent of APAC market

Organisations deploying virtualization will spend three times more on services than software, according to a Springboard Research report released today.

The virtualization software and services market in Asia Pacific will grow at an estimated compound annual growth rate (CAGR) of 42 per cent to reach US$1.35 billion by 2010.

Virtualization services will grow to US$1 billion by 2010, making up the bulk of market spend.

More than 50 per cent of CIOs surveyed in Australia, China, India and Singapore planning to deploy virtualization solutions over the next 18-24 months said the main drivers were to address issues like low system capacity utilization, poor performance and other challenges associated with managing growing IT infrastructure.

Springboard Research vice president of software research, Michael Barnes, said virtualization, at least at the server level, is becoming an imperative and most companies will implement the technology at a server level in 2008.

"The complex nature of engagements with vendors while implementing virtualization solutions is a prime reason for services taking a larger share of the market," he said.

Barnes also believes there is a need for more customer education on the benefits of virtualization as the research revealed many organizations were unsure about how to approach deployment.

He said some CIOs view virtualization technologies as immature and feel that implementing it could introduce new management and security challenges.

"Virtualization is also primarily viewed from a technical perspective and most CIOs do not link virtualization to solving business problems," Barnes added.

Springboard Research senior analyst, Ravi Shekhar Pandey, said vendors need to share case studies that link virtualization with direct business benefits.

On the software side, Pandey said VMWare is the Asia Pacific virtualization market leader with an estimated 70 per cent market share.

This is followed by Microsoft, Parallels, Virtual Iron and XenSource who also have a significant presence.

Pandey said the virtualization services market is dominated by several key players including IBM, HP, Dell and Sun.

"Australia and Korea lead the virtualization marketplace in Asia Pacific due to their well-built infrastructure, while Taiwan, Hong Kong, China and India are high growth potential markets," he said.

"To tap the emerging opportunities in virtualization, system integrators across the region are making significant investments in people and skills development.

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