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Solution providers are turning server virtualization, one of the fastest-growing segments of the IT market, into their very own gravy train.
According to two recent exclusive CMP Channel surveys, solution providers said server virtualization is becoming a larger part of their business and it's also quickly becoming the catalyst for a wide range of other service offerings, including disaster recovery and data center consolidation.
"Server consolidation and IT optimization [are] hot," said Stan Staszak, director of System i and System x for Sirius Computer Solutions Inc., a San Antonio-based IBM solution provider. "Solution providers who aren't doing virtualization are missing the boat."
The 2008 CMP Channel State of the Market Study found that nearly one in five solution providers surveyed are already currently selling or recommending virtualization products of some sort, including server and/or storage virtualization. And, according to the CMP Channel's first study on virtualization, VARs that sell server virtualization products—such as technology from VMware Inc., Palo Alto, Calif.; SWsoft, Herndon, Va.; and Citrix Systems Inc., Fort Lauderdale, Fla.—are seeing that technology already account for an average of 20 percent of their revenue.
These results coincide with other industry research showing virtualization's galloping growth that will continue for the next few years. IDC, for instance, estimates that the number of virtual servers deployed will rise 41 percent annually through 2010, resulting in 7.9 million virtual servers implemented on 1.7 million new physical servers.
About half of enterprise IT shops are now using x86 server virtualization, and that figure should rise to about 65 percent by 2009, according to Forrester Research. About 45 percent of servers used by businesses that have adopted server virtualization are expected to be virtualized by 2009, compared with 24 percent today, Forrester said.
Our exclusive research reveals just how attractive these numbers are to solution providers, which are jumping on the virtualization bandwagon in growing numbers. According to CMP Channel's Virtualization Study, of those solution providers now active in the server virtualization market, 52 percent have been there for less than 12 months. What's more, more than 51 percent of server virtualization sales are going to a prime channel customer segment—midmarket companies with from 100 to 999 employees, the survey found. For virtualization leader VMware, VARs are absolutely critical to its go-to-market strategy because there is still a lack of customer awareness about the technology, said Carl Eschenbach, executive vice president of worldwide field operations. "Although customers might have knowledge of it, their experience and their education around virtualization is still limited, and that's why VARs provide tremendous value to the customers," Eschenbach said.
And that's good news for solution providers, said Diane Greene, VMware president and CEO. "It's a big upsale opportunity for VARs that these people don't have the awareness, so they can just go in with this awesome, better way to run their systems," said Greene who sat down with CRN for an interview and to review the results of our virtualization study.
Pat Edwards, vice president of sales at Alliance Technology Group, a Hanover, Md.-based solution provider, said that strong sales in the midrange has been his experience because these are the companies that right now don't have the in-house technical people required but, over time, will become enterprises.
Solution providers are also finding that customers depend strongly on them to bring server virtualization technology to their data centers. According to the survey, 48 percent of server virtualization sales stem from the customer looking for a server solution that the solution provider then turns into a virtualized opportunity, while 41 percent of sales come when solution providers proactively bring server virtualization technology to customers' attention. Another 11 percent of sales result from customers asking about the technology.