According to the International Data Corporation (IDC) Worldwide Quarterly Server Virtualization Tracker, 19.4% of all new servers shipped in the fourth quarter of 2010 (4Q10) were virtualized, an increase from 18.4% in the fourth quarter of 2009. New server shipments virtualized in 4Q10 increased to 398,617 units, with the majority of the growth coming from emerging regions. And after declining 4% year over year in 2009, new server shipments virtualized experienced 28% year-over-year growth for the full year 2010. Virtualized server end user spending increased 23.3% year over year in 4Q10 and 13.5% for all of 2010, reaching $16.8 billion for the year.   

Worldwide virtualization software revenue for all CPU types increased 36% year over year in 4Q10 to $877 million, due to the maturation of virtualization usage which mandates higher value virtualization software management tools. Virtualization licenses increased 13% year over year and 32% for all of 2010.

"2010 was characterized by strong demand for new servers to support rapidly expanding virtualized environments with x86 systems leading the way," said Matt Eastwood, group vice president of Enterprise Platforms at IDC. "IDC continues to see virtualization as a critical evolutionary step in the journey to the private cloud with customers' environments quickly maturing and focusing on mobility, self-provisioning, and metering & chargeback capabilities. As a result, IDC believes that automation tools increasingly represent the battleground in determining the winners and losers in a marketplace which is rapidly reshaping itself."

Server Virtualization Maturity Signals Changing Behaviors and Buying Intentions

"Over the last year we have seen widespread adoption of virtualization in both mature and emerging regions," said Michelle Bailey, research vice president of Datacenter Trends at IDC. "The recession affected datacenters across all geographies and consequently many organizations leveraged the consolidation benefits of virtual machine technology to lower short-term capital costs. Looking ahead, the most successful vendors in the virtualization market will be those that can automate the management of an ever-escalating installed base of virtual machines as well as provide a platform for long-term innovation that enables customers to continuously make improvements to their operations. Virtual server sprawl is already a reality for many IT organizations and we expect that 2010 will be a tipping point in the adoption of new management tools and IT policies."

Overall New Server Shipments Virtualized Market Standings, by Vendor

Hewlett-Packard held onto its number 1 spot for worldwide new server shipments virtualized with 43% market share for the quarter, increasing 22% year over year in 4Q10. Dell maintained the number 2 position with 26% market share following a 9% year-over-year increase in new server shipments virtualized in 4Q10. IBM remained in the third position with 15% market share in 4Q10 while growing shipments 12% year over year in the quarter.

For 2010, Hewlett-Packard increased its market share to 41%, up 3% from 2009. Dell's and IBM’s market share were essentially flat in 2010 at 28% and 14%, respectively.

x86 Virtualization License Market Standings, by Virtualization Platform

VMware ESX continues to be the number 1 virtualization platform with total licenses increasing 21% year over year in 4Q10. Microsoft Hyper-V is the second leading virtualization platform growing 62% year over year. Citrix XenServer rounds out the top 3, while growing 25% year over year. Meanwhile, the type 2 hypervisors, VMware Server and Microsoft Virtual Server 2005 continue their descent, declining 27% and 51%, respectively.

"The hype of cloud computing was all the rage in 2010," said Brett Waldman, senior research analyst for Software Appliances and Virtualization at IDC. "But it is the foundation of virtualization that makes it all possible. Combined with the economic recovery, the drive to pave the way towards creating cloud computing environments gave rise to a very successful year in virtualization implementations."

IDC's Server Virtualization Taxonomy

Virtualization license is a unit count that represents customer usage of a virtualization platform in terms of instances deployed into production. For example, production usage of one installation of VMware ESX would be considered one virtualization license. New server shipments virtualized maps the amount of virtualization platform shipments that are sold directly by the hardware vendors. Virtualized server end user spending 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.