Gartner Says It Was "All Over" the Virtualization Effect

Published: April 2, 2007

by Timothy Prickett Morgan

Two weeks ago, IDC announced that it has revised its server sales forecasts to take into account the future effect that server virtualization (carving up a physical machine into multiple virtual ones) and multicore processors (putting two, four, or eight cores in a single CPU socket) will have on shipments in the market. The server box counters at Gartner took exception to our contention that IDC was the first to make such changes to server revenue and shipment models.

While Gartner did not, like IDC, issue a press release to discuss its thinking on the virtualization effect on the server market, it has apparently been noodling this over for the better part of two years. According to Tom Bittman, chief of research for infrastructure and operations at Gartner, the effect of virtualization is indeed already in its server forecasts. In early 2005, Bittman started talking about the downdraft on server shipments and therefore sales of logical and virtual machine partitioning with key chip and server suppliers who have a consulting relationship with Gartner. By the end of 2005, Bittman was briefing attendees at Gartner conferences on possible scenarios, and in April 2006, for-fee clients were privy to a multi-scenario report entitled Server Virtualization Produces a Shift in Server Shipments, which had best case, worst case, and likely case scenarios (the case being the point of view of server vendors, not customers). Since then, Gartner's server forecasts have taken into account virtualization along the most likely scenario, says Bittman.

"Believe me, we got this, and quite a while ago," Bittman explains. "We have been all over this. My impression is not that 'analysts are finally coming around to the idea,' but that IDC is reacting (and perhaps overreacting) very, very late." Bittman also concedes that the company has not released any public information about the change in its projections and that the people who interface with journalists as each quarterly sales figures came out were not necessarily aware of the change in projections. "We don't issue as many press releases as others do," says Bittman. "In this case, perhaps we should have."

Gartner is now in the middle of re-evaluating that April report, according to Jeffrey Hewitt, the research vice president at Gartner who does forecasting for North America and Western Europe, among other things. According to that April 2006 report, Gartner was expecting virtualization will have a substantial--but not dramatic--effect on X86 and X64 server shipments between 2005 and 2010.

In the likely case scenario, Gartner was expecting for 8.9 million servers to be shipping in 2010, which represents a compound annual growth rate (CAGR) for shipments of this class of server (which is the vast majority of all server shipments worldwide) around 5.3 percent. If you take into account virtualization--meaning, if virtualization were not available on these machines--Gartner would reckon that about 13 million servers would ship in 2010, which represented a 12 percent CAGR. So the demand for physical X86 and X64 servers between 2005 and 2010 is being hit to the tune of about a 7 percent CAGR decline in that five-year span. That also means Gartner is expecting companies to add just over 4 million virtual server instances in 2010. This is the most likely case scenario. The worst case scenario is if the economy gets bad and IT shops are forced to virtualize more than they might otherwise.

The key issue, according to Hewitt, is trying to come up with the likely workloads that can be virtualized. SMB shops don't care, at least not yet. Large enterprises already have virtualization in one form or another on their machines. Any kind of streaming media or high performance computing workload is not suitable for virtualization, says Hewitt. "Anything that has large spikes in CPU processing or heavy I/O will not be a good candidate for virtualization," he says. Hewitt says that the peak uptake for virtualization should be from 2007 through 2009 in the X64 server market, as hypervisors mature and servers come equipped with hardware features that make virtualization better.

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