European Companies Enter Era of Broad Server Virtualization Adoption, Says IDC

LONDON – MAY 4, 2007 – According to a new study by IDC's European Systems and Infrastructure Research Group, server virtualization is becoming firmly entrenched in large European organizations and is expanding at a significant rate. The survey shows a rapid rate of adoption, with respondents reporting deeper and broader server virtualization deployment within their organizations.

"Virtual server technology has been a feature of IT systems for a very long time, having started in the mainframe datacenter as a way to create logical partitions within a large computing resource so that each partition could run a specific workload without interfering with the others. However, faced with mounting pressure to constantly deliver new applications at a lower cost, more rapidly and with a higher level of availability, enterprise datacenters naturally turn to server virtualization to optimize IT resources," said Nathaniel Martinez, program manager with IDC.

This study reveals a widespread adoption of server virtualization, spanning both x86 and non-x86 server environments:

On average, 7% of installed servers for this sample are virtualized.

Respondents report that 69% of servers purchased in the last 12 months were virtualized.

Respondents report that they expect 49% of new servers purchased next year will be virtualized.

The survey points to significant differences in server virtualization adoption:

By industry – with the services industry showing the highest propensity to rely on the technology.

By operating system – with Linux representing the most likely target for virtualization, closely followed by Windows.

By form factor – with rack-optimized servers followed by blades dominating respondents' virtual server environment.

"Virtualization is already impacting European server sales," said Thomas Meyer, VP of IDC's European Systems and Infrastructure Solutions group. "According to data from IDC's European Quarterly Server Tracker, over the last six quarters, there has been a steady decline in the growth rates of worldwide x86 shipments. While typical year-over-year shipment growth rates averaged 20% to 25% in previous years, during 2006 this growth slowed to single digits. In the fourth quarter of 2006, Western European x86 server shipment growth was only 1.8% over the same period a year ago."

Overall, IDC anticipates the number of virtualized servers to grow by a CAGR of 55% to 1.1 million shipments in 2011, representing 52% of the forecast 2,197,000 server shipments for that period. This will be equivalent to 5.4 million logical servers (i.e., partitions deployed in 2011).

IDC forecasts customer revenue from virtualized server sales in Western Europe will grow from $948 million in 2006 to $5.5 billion in 2011, corresponding to a 41% five year CAGR. Overall, it anticipates the server and software virtualization opportunity in Western Europe to grow at 38% CAGR from a current $1.1 billion combined revenue to $5.9 billion in 2011.

"Virtualization, along with automation and systems management, represents a major cornerstone of current IT investment from large IT organizations," said Meyer. "These technologies represent the three pillars enabling the direct connection of IT operations with what's happening on the business process side."

"European organizations surveyed view the virtualization of system resources as a technology that has the potential to change the dynamics through which organizations consume IT resources," said Martinez. "And, in many ways, it is quickly becoming a de facto component of their IT fabric." However, to fully harness the value this technology can unlock, virtualization alone is not sufficient, and IT organizations need to consider change management and system management tools to optimize their virtual IT environments.

IDC EMEA has launched a team from multiple research areas to look at virtualization themes in 2007. "It is effectively the most important technical theme for datacenter managers in 2007," said Martin Hingley, IDC EMEA's chief research officer. "And it is particularly important for suppliers and users to understand its adoption on x86 servers and to compare our region with the U.S. and other countries."

The European Server Virtualization Trends 2006 special study (Doc #SR03P, April 2007) is based on a survey of 102 European IT directors and managers that have implemented server virtualization within their organizations. The study profiles European organizations that are currently deploying server virtualization, sizes the market, and looks at implications for the future of European datacenters and infrastructure spending.

To purchase the study, please contact your local IDC office or visit .

IDC will hold an Enterprise Datacenter Conference on May 17 in London. For further details, or to register, click here: .

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 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting .

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