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Virtual reality: Look at the market today

03/05/2009

As we have seen via announcements from the major virtualization vendors over the last year, the virtualization platform is becoming a zero-ticket item, and the focus of innovation is moving to the management layer above the platform. We’ve recently been trying to wrap our heads around the virtualization management market, and what an illuminating exercise it has been!

Right before I joined Longworth, I was an enterprise IT industry analyst at The 451 Group, where virtualization was one of my coverage areas. To be sure, virtualization is turning out to have a truly transformative effect on enterprise infrastructure for a number of reasons. As an IT industry analyst, I was part of the class that was shaping the narrative that would define future conversations in enterprise computing. The heady conversations I was part of had to do with management issues never before seen on the x86 platform before the advent of virtualization. It was important, however, not to lose sight of the fact that virtualization is only just entering mainstream adoption, with an average of 10-20% of business workloads now virtualized.

During recent conversations with virtualization customers of varying sizes, we’ve come to realize that among several small and medium businesses virtualization of new servers has come to be the rule rather than the exception. This enthusiastic uptake of virtualization undoubtedly brings along its own set of problems; some of them are reincarnations of management problems from the physical world, whereas others are centered on new possibilities raised specifically by virtualization, such as resource pooling and enhanced automation.

Even just those areas of virtualization management that have counterparts in physical systems management constitute a large market today in dollar terms with several sizeable niches that would be lucrative to an entrepreneur. The existence of several closely-related niches  like backup/HA/DR, capacity management, VM optimization etc. may make virtualization management look like a crowded market, but individual niches often don’t have more than a couple of vendors serving them. Moreover, this market exhibits classic signs of an early market, as evidenced by a puzzled user base that isn’t always able to articulate fine functional distinctions. Note that we aren’t even talking here about future management issues raised specifically by virtualization, which we also think will be substantial because of the transformational nature of virtualization. In fact, the IT analyst firm Gartner projects the overall server virtualization market size to reach $6.8bn by 2013.

So what does this mean for an entrepreneur looking to enter the virtualization management market today? Only that it’s hard to overstate the importance of that old business maxim: ‘listen to your customer’. Whereas it is important to be aware of conversations in the analyst community, which raise issues that will shape the future of your market, it is just as important, if not more, to listen to your customers and prospectives and see if there isn’t a problem you could be solving for them today both to their advantage and your profit. And if we could help you scale your business, we’d love to hear from you.

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