Recession Continues to Take Its Toll on the Market, Even Server Virtualization, Although There Are Signs of Recovery as Customer Adoption Expands, According to IDC

FRAMINGHAM, Mass.--(Business Wire)--
According to IDC's Worldwide Quarterly Server Virtualization Tracker, 16.5% of
all new servers shipped in the second quarter of 2009 (2Q09) were virtualized,
an increase from 14.5% in 2Q08. However, actual shipments decreased 21.0% year
over year to 246,000 physical servers in 2Q09 as customers continue to limit
spending on new server hardware relative to last year. Similarly, worldwide
virtualization software revenue declined 18.7% year over year in 2Q09 to $344
million. Virtualization licenses did grow quarter over quarter in 2Q09. The
server virtualization market continues to shift towards the use of paid
hypervisors, with paid virtualization software now running on 60.8% of all new
server hardware shipments virtualized in 2Q09, an increase over 57.2% in 2Q08.

"In the second quarter, IDC observed a number of signs indicating that stability
is beginning to take hold in the worldwide server market," said Matt Eastwood,
group vice president of Enterprise Platforms at IDC. "The worldwide server
installed base has aged significantly and virtual machine densities on these
systems have increased sharply over the past year. As a result, the market is
poised for the beginning of a significant infrastructure refresh cycle in the
months ahead. IDC believes that virtualization will be a cornerstone technology
as medium and large enterprise organizations around the globe accelerate the
need for more dynamic and converged infrastructure designed to support the
business needs of the next economic cycle."

Server Virtualization Maturity Signals Changing Behaviors and Buying Intentions

"Server virtualization has forever changed how customers manage their
datacenters," said Michelle Bailey, research vice president of Datacenter Trends
at IDC. "'Virtualization First` is now the default approach for new server
deployments at most enterprise IT organizations and is quickly becoming the
foundational platform for cloud computing initiatives among service providers.
Additionally, growth in emerging regions is accelerating as the economic
downturn limits the ability of organizations to raise capital. The next phase in
virtualization will require a reinvention of IT policies and procedures and
continued adoption of automation tools will be key as virtual machine densities
rise and customers find themselves facing virtual server sprawl issues."

Overall New Server Shipments Virtualized Market Standings, by Vendor

Hewlett-Packard held onto the number 1 spot for worldwide new server shipments
virtualized with 36% market share. HP's shipments declined 18% year over year in
2Q09 but grew 1% sequentially. These results were driven primarily by its x86
Proliant server business. Dell continues to distance itself from the remainder
of the field as the number 2 vendor with its market share growing 9% over 1Q09.
Dell`s relatively strong performance was driven by growth of Intel-based x86
servers in a weak market. IBM remained in the third position with 15% market
share. IBM achieved 14% sequential growth driven by a solid performance from its
converged System p and x86-based servers.

x86 Virtualization License Market Standings, by Virtualization Platform

VMware continues to hold the number 1 (VMware ESX) and number 2 (VMware Server)
virtualization platforms despite revenues declining 22% year over year. This was
slightly more than the decline of 21% in total x86 virtualization licenses.
Microsoft saw its virtualization license shipments decline 16% year over year,
due to the continued depreciation of Virtual Server 2005. However, Hyper-V
showed a sharp increase of 54%, one year after its official launch and
entrenching itself into 4th place while it cannibalizes itself into the number 3
position, past Virtual Server 2005. Parallels Virtuozzo rounds out the top 5
with license shipments declining 36% year over year. Citrix XenServer showed the
largest increase, growing 108% year over year due to the company changing its
business model and offering the product for free with certain management
functionality. It`s a bold seeding strategy that will see market share gains,
but will take some time, if ever, to monetize.

"Despite economic worries, we are seeing the continued increase of paid
virtualization platforms, as it now accounts for more than 60% of all x86
virtualization license shipments," said Brett Waldman, research analyst for
System Software at IDC. "This is due to the maturation of virtualization
deployments and the need for greater control with higher quality, fine grained
management tools as IT departments continue to strive towards internal cloud
computing environments."

IDC's Server Virtualization Taxonomy

Virtualization licenses represents the amount of virtualization platform
shipments for a given vendor in a given quarter. New server shipments
virtualized maps the amount of virtualization platforms shipments that are sold
directly by the hardware vendors. Virtualized server revenue represents the
hardware revenue of new server shipments virtualized. Virtualization software
revenue represents the software revenue associated with virtualization platform
sales.

IDC's Worldwide Quarterly Server Virtualization Tracker is a quantitative tool
for analyzing the global server market on a quarterly basis. The Tracker
includes quarterly virtualization license shipments, new server shipments
virtualized, virtualized server revenue and virtualization software revenue,
segmented by region, cpu type, vendor, form factor, sockets, virtualization
platform, and primary guest operating system. For more information, please
contact Hoang Nguyen at 508-935-4718 or hnguyen@idc.com.

About IDC

IDC is the premier global provider of market intelligence, advisory services,
and events for the information technology, telecommunications, and consumer
technology markets. IDC helps IT professionals, business executives, and the
investment community make fact-based decisions on technology purchases and
business strategy. More than 1,000 IDC analysts provide global, regional, and
local expertise on technology and industry opportunities and trends in over 110
countries. For more than 45 years, IDC has provided strategic insights to help
our clients achieve their key business objectives. IDC is a subsidiary of IDG,
the world's leading technology media, research, and events company. You can
learn more about IDC by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of
their respective holders.

IDC
Brett Waldman, 508-988-6748
bwaldman@idc.com
or
Matt Eastwood, 508-935-4503
meastwood@idc.com
or
Michael Shirer, 508-935-4200
press@idc.com

Copyright Business Wire 2009