The virtualization market in India is still at a nascent stage but there are significant growth opportunities across server, desktop and storage virtualization. Of the total IT installed base in the country, only 5 to 10% have been virtualized so far. Through secondary research AMI has concluded that the small and medium business segment (SMBs; companies with fewer than 999 employees) comprises about 30% of the India virtualization market and is likely to grow exponentially in the next few years. This growth will be driven by a need to increase operational efficiencies. The size of this untapped market is considerable, presenting a huge growth potential for leading participants in the market.

“What makes this industry unique is that the participants compete as well as collaborate to offer best-of-breed solutions to the end users,” says Shweta Baidya, Bangalore-based senior research analyst at AMI India. Desktop virtualization is being adopted by organizations where the cost of maintaining desktops is high; it serves to reduce overall operational expenditures. The key driver for server virtualization is the reduction of overall capital expenditure. Also driving this technology is the need for easy data recovery and business continuity.

IT and IT enabled services have been early adopters of virtualization, followed by the pharmaceutical, telecommunication and banking/financial services and insurance verticals. In the past server virtualization was the more readily adopted technology among India SMBs. However, desktop virtualization has gained popularity in 2011 due to its operational advantages. India large enterprises have also embraced this solution because there is a need to move mission-critical applications to virtualization.

Inhibitors dampening virtualization adoption rates are the mindset of end users and their aversion to take on new technology. “Due to a lack of technical expertise and limited initiatives by vendors/system integrators to increase awareness, India SMBs tend to stall or postpone their plans to virtualize,” says Ms. Baidya.

According to leading vendors, the India virtualization market can be segmented into three distinct phases:

• Phase 1 - The end users opt for basic consolidation in order to reduce their capital expenditure. They try to move some non-critical applications onto the virtualized servers.
• Phase 2 - The end users try to virtualize their mission critical or core applications and the entire process is automated.
• Phase 3 - The end users are empowered to focus on self service which in turn improves scalability and performance.

According to Ms. Baidya, “In India large enterprises are considered Phase 2 participants. The majority of SMBs are Phase 1 players with some of these companies striving to become Phase 2 adopters. Many of the SMB segment are testing the virtualization concept through proof of concept/pilot programs. These pilot programs are opening the doors for marketers to increase awareness of virtualization technology through workshops and informational events, thereby increasing customer confidence.”