X86 server virtualization platform sales increased substantially in the second quarter, as VMware held its market lead despite a strong push from Microsoft.
In the second quarter of 2008, VMware's virtualization revenue market share was 78%, down from 86% in the previous year's second quarter and identical to its share in this year's first quarter. Meanwhile, VMware's share of new shipments was 44% in the second quarter, down from 51% the previous year but up from 42% in the first quarter of 2008.
Microsoft captured 23% of new shipments with Hyper-V and Virtual Server 2005, up from 20% last year and from 18% in this year's first quarter. But Microsoft's revenue share is a paltry 1.1% of the x86 market, says IDC analyst Brett Waldman, who notes that the second quarter was the first in which Microsoft shipped a paid product.
Parallels' Virtuozzo product secured 16% of the second-quarter revenue, good for second place behind VMware, Waldman said.
VMware, despite losing some of its industry-leading market share, enjoyed year-over-year revenue growth of 27%. That's indicative of the healthy gains made throughout the virtualization market. Worldwide, second-quarter virtualization license shipments rose 53% over the previous year, IDC says in a quarterly virtualization market share update.
The rate of growth is slowing, however. In the first quarter IDC observed 72% year-over-year growth. Second-quarter revenue growth was 15%, compared to 32% in the first quarter.
"The modest decline in growth rates indicates that the market is showing early signs of maturation," Waldman said in a press release. "Based on our conversations with end users, IDC believes that the high-volume consolidation opportunities -- the low-hanging fruit in the x86 server virtualization market -- is starting to dry up. This is, in turn, resulting in smaller deals overall." To keep growing, hypervisor vendors will have to target new customer segments, such as midsize companies, IDC says.
Second-quarter virtualization-software growth was driven largely by a 60% increase in shipments of x86 hypervisors. CISC virtualization license shipments dropped 15% while RISC licenses dropped 7%. (Compare server products.)
Hardware vendors who ship servers already virtualized also are benefiting from the virtualization boom. Shipments of virtualized servers rose 52% over the previous year, with HP leading the way at 34% of all shipments. Dell solidified its position as the No. 2 vendor by more than doubling its shipments and clocking in at 29% market share, up from 25% in the first quarter. "Dell's strong performance was driven by solid growth of Intel-based processors and a very strong performance from Advanced Micro Devices sales," IDC reports.
IBM came in third at 16% market share, with solid performances in virtualized Power Systems and RISC servers.