Virtualization Software Market to Reach $10.5 Billion in Revenue by 2013, According to 451 Group Report

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Economic recovery, hardware refresh cycles and accelerating adoption will spur nearly fourfold growth over the next five years.

Virtual machine software is increasingly being seen as a commodity

The server and desktop virtualization software marketplace will grow nearly 400% over the next five years to reach more than $10bn revenue in 2013, according to a report from The 451 Group. A rebounding economy and adoption of new technologies will propel virtualization revenue from an estimated $2.8 billion in 2009 to $10.5 billion in 2013, an annual compound growth rate of 39%, according to the report.

The report is part of Market Monitor, a new supply-side primary research service from The 451 Group Research and its wholly owned subsidiary, Tier1 Research, that tracks emerging enterprise technology markets. The Virtualization Software Market Monitor tracks more than 115 vendors, and segments revenue into 12 market subsectors.

The server virtualization management segment will account for the first major wave of growth in the marketplace in 2010 and 2011, driven by revival of the hardware upgrade cycle and increasing recognition of the economic benefits of virtualization. Beginning in 2012 and 2013, increased adoption of desktop virtualization will drive a second wave of growth as the desktop market begins to move from isolated pockets of usage to wider-scale deployments.

Meanwhile, commodification is eroding revenue growth for the hypervisor and some other areas of the virtualization stack, "Virtual machine software is increasingly being seen as a commodity," said Dan Kusnetzky, Vice President of Research Operations for The 451 Group. "The result has been a decline in the rapid growth of the overall market. We believe that other areas in this broad market are going to be the source of growth in the future."

Market Monitor predicts that revenue from software tools that manage virtual environments will more than make up for revenue lost to commodification. The management stack currently accounts for more than 80% of total revenue in the sector and is growing rapidly. "The server virtualization management market is evolving to the point where it is beginning to pose a credible threat to the incumbent vendors of enterprise systems management, and we're keenly monitoring how the big vendors respond to this challenge," said Rachel Chalmers, Research Director, Infrastructure Management at The 451 Group. "The ability to manage virtual servers is also a precondition for offering the two hottest delivery methods of present and future datacenters: that is, for infrastructure- and platform-as-a-service."

About The 451 Group and Market Monitor

The 451 Group is an independent technology-industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company - at vendor, investor, service-provider and end-user organizations - rely on The 451 Group insight to support both strategic and tactical decision-making for competitive advantage.

The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, London and Boston. The company also operates Tier1 Research - an independent division of The 451 Group - which analyzes the financial and industry implications of developments impacting public and private companies within the hosting, communications and Internet infrastructure sectors.

Market Monitor is a supply-side primary research service that offers a five-year, bottom-up market size, share and growth forecast for key segments of the enterprise technology marketplace. Virtualization Software Market Monitor is the first service to be released, to be followed in mid-November by Cloud Computing Market Monitor, which will offer a five-year forecast for the 200-vendor-strong cloud computing marketplace. A team of more than a dozen experienced analysts contribute to the current Market Monitor offerings.

For additional information on The 451 Group or Tier1 Research or to apply for trial access to their services, go to: or


Dan Kusnetzky

Tim Miller
415-989-1555 x110

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Tim Miller
The 451 Group
415-989-1555 ext. 110
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