Slide Show: Virtualization Channel Survey Results5:00 PM EST Fri. Jan. 11, 2008
Software-based server virtualization using x86-based server hardware is one of the fastest-growing segments of the IT industry, and the channel is fast-becoming the key provider of virtualization technology.
When server virtualization showed up as a key business driver in our 2008 State of the Market study, we decided to take a deeper look at where the channel sits in the virtualization curve. Some 260 solution providers responded to CMP Channel's first study of the virtualization channel, conducted in November.
With high services and margin potential, virtualization is ripe with channel opportunity.
While server consolidation barely beat disaster recovery in terms of what solutions VARs plan to sell in 2008, disaster recovery is the clear driver for server virtualization sales this year.
Business customers are by far the main target market for solution providers, with government and education far behind at No. 2 and No. 3.
Issues such as training and certification are quickly evaporating as most of the server virtualization vendors have cut the time and expense recently. Sales certification for many vendors now is free of charge, with only a few hours of online learning required.
While the survey focused on server virtualization software, major hardware vendors such as HP, IBM, and Sun came close to the top as strategic partners for solution providers. Many of the server virtualization software vendors, especially market leader VMware, sell a lot of their software through the hardware vendors.
Solution providers use the different virtualization products available to offer multiple solutions to customers.
The top seller for solution providers is actually the one that typically comes free of charge. Server-hosted virtualization, such as VMware Server and Microsoft's Virtual Server are offered free-of-charge to companies who wish to try virtualization, and were not intended for production. However, many customers are using the technology, and depending on their solution providers for help.
Server consolidation is traditionally the first reason customers adopt server virtualization, but disaster recovery and storage virtualization are getting more and more important to server virtualization because of the need to backup, protect, and migrate virtual servers.
While market demand is building, solution providers carefully consider their choices in virtualization.
Implementing virtual servers seems to have very little impact on hardware server margins for 58 percent of solution providers, while 27 percent found a positive impact. Server margins are not that good in the first place, and the fact that server virtualization is often done using existing server hardware.
Server virtualization sales are seldom initiated by the customer, but by the solution provider who either sees the technology as a substitute to new servers that customers are considering buying, or who see benefits to server virtualization that the customer hadn't even considered.
This market is wide open. A slight majority of solution providers in the server virtualization market have been in the market for under a year.
Well more than two-thrids of virtualization customers come from the business world, with government and education taking just more than a quarter of the market.
While server consolidation barely beat disaster recovery in terms of what solutions VARs plan to sell in 2008, disaster recovery is the clear factor that will drive server virtualization sales this year. Server consolidation is a top goal of acquiring server virtualization, but disaster recovery concerns are one of the main reasons that customers are consolidating servers.
The potential server virtualization market for the channel sits right at the heart of most solution providers' main target market, with over 51 percent of the potential business coming from small and large midmarket customers, and an additional 20 percent from small businesses, for a total of more than 70 percent of the potential business coming from customers that range from 20 employees to about 1,000 employees.
Vendors are encouraging VARs who are new to this technology to get the sales training and certification right away and to partner with others to do the implementation initially