Contributed Article By Eric Courville, COO and co-founder of VM6 Software 

2011 - The Year of the Small and Medium Business

The small and medium-sized business (SMB) sector has proven to be a viable market for virtualization vendors in 2010. The big players have focused much of their marketing activities around the SMB, hoping to gain a larger market share for their products. Much has been written about who leads the pack, who has a better offer, and who has the best product. The battle will not slow down in 2011, but the difference will be that SMBs will be wiser about existing solutions and will have their pick of what will best suit their needs.

In early 2009, Microsoft Hyper-V's adoption rate was at 7 percent. By early 2010, it had grown to 22 percent, with industry experts mentioning that at least 55 percent of surveyed enterprises were "trying it out in labs" by mid-2010. Ever since, statistics about who is winning the SMB war continue to surface with alternating winners, depending on the day. And while true adoption rates (with companies actually deploying Hyper-V instead of just testing it out) seem to be coming at a slower rate than anticipated, we estimate that about 35 percent of SMBs will adopt virtualization in 2011. This will be in part because of Microsoft partners who are focusing their solutions around Hyper-V and also targeting the SMB market.

Furthermore, now that the first generation of virtualization projects have been implemented in enough small and midsized enterprises, many SMBs have moved on to the second phase of virtualization: trying to get original projects working correctly, since some solutions just didn't deliver the promised simplicity and cost benefits. Simplicity is now appearing on the radar as a requirement for virtualization technologies, and SMBs are no longer erroneously assuming its existence. For virtualization vendors, this means that they will have to step it up in 2011 by offering simplified solutions to really penetrate the SMB market. Additionally, the major players will not only have each other to contend with, but also new companies that understand this market will bring about more competition, giving SMBs further options from which to choose.

Finally, storage will no longer be a nice-to-have, but rather a major focus for SMBs. Currently, capital expenditure (CAPEX) costs of shared storage continue to drop, but operational expenditure (OPEX) costs and time to learn new technology do not. This typically dominates the true cost and complexity of new virtualization projects. On this front, high-end external SANs are not likely to massively expand in 2011, but more pragmatic solutions will start to gain traction. SMBs will look for solutions that will simplify their environments at a reasonable price point and will seek out vendors who can meet these requirements.

2011 will be a turning point for small and medium-sized businesses. They know the value they bring to vendors who are targeting them and are becoming savvier in their purchases. Virtualization vendors who want to win the market share will need to ensure that their products are tailored to the SMB, rather than merely offering cheaper versions with less functionality of their current solutions. Vendors who take the time to understand the SMB market and tailor offerings to meet its needs will give the major players some good competition next year.

About the Author

Eric Courville is the COO and co-founder of VM6 Software.  He brings over 18 years of successful experience in sales, marketing and business development and a solid track record at improving top line growth. Prior to joining VM6, Eric was vice president of worldwide sales and business development at Embotics and PlateSpin.