IDC: Virtualization market booming

As x86 server virtualization software vendors roll out tools to better manage virtual environments, corporate users in growing numbers are looking at virtualization technology for more than test and development and simple server consolidation, according to a pair of reports from IDC.

Virtual machine software “is moving beyond test and development and production consolidation to high availability and disaster recovery,” writes IDC analyst John Humphreys in a September research report titled, "Worldwide Virtual Machine Software 2005 Vendor Shares."  “These new use cases will drive future growth and adoption for the new technology.”

In a separate report, "Worldwide Virtual Machine Software 2006-2010 Forecast", also issued last month, Humphreys predicts that an already strong virtualization software market will expand to more than $1.8 billion in 2009. The market stands at about $810 million today, up 46% from $560 million in 2005.

As far as the vendors offering the software, the market is heating up as companies such as Microsoft, SWsoft and the open source Xen virtualization technology get more serious about taking on market leader VMware.

VMware, owned by EMC, continues to dominate the market it created, growing its revenues nearly 80% from $172 million in 2004 to $310 million in 2005. It held a 55% share of the market in 2005, according to IDC.

Microsoft grew its virtual machine software revenues 48% between 2004 and 2005, expanding from $33 million to $49 million and grabbing 8.7% of the market last year.

SWsoft, which takes a different approach to x86 server virtualization by employing the technology on top of a single instance of an operating system, rather than enabling multiple operating systems to run on a single physical box, was the fastest growing virtual machine software vendor. It grew revenues 98% between 2004 and 2005, jumping from nearly $24 million in 2004 to about $47 million last year. Despite the fast growth, its market share hovered around 8% in 2005.