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The worldwide x86 server virtualization market is expected to reach $5.6 billion in 2016, an increase of 5.7% from 2015, according to Gartner. Despite the overall growth, new software licenses have declined for the first time since this market became mainstream. Growth is now being driven by maintenance revenue, which indicates a rapidly maturing software market segment.
"The market has matured rapidly over the last few years, with many organizations having server virtualization rates that exceed 75%, illustrating the high level of penetration" said Michael Warrilow, research director at Gartner.
According to Gartner, usage of server virtualization among organizations with larger IT budgets remained stable, being one of the most heavily used technology during 2014 and 2015. But this market segment is approaching saturation. Organizations with smaller IT budgets expect a further decline in usage through to at least 2017, causing an overall decline in new spending for on-premises server virtualization.
Gartner says organizations are increasing their usage of "physicalization," choosing to run servers without virtualization software. More than 20% of the organizations expect to have less than one-third of their x86 server OSs virtualized by 2017 — twice the amount reported for 2015. However, the underlying rationales remain varied.
The rise of software-defined infrastructure (SDI) and hyper-converged integrated systems (HCIS) are providing new options. It has put pressure on best-of-breed virtualization vendors to add more out-of-the-box functionality and provide a better experience and faster time-to-value.
"What was considered as the best approach to greater infrastructure agility only a few years ago, is becoming challenged by an array of newer infrastructure choices," said Warrilow.
While server virtualization remains the most common infrastructure platform for x86 server OS workloads in on-premises data centers, Gartner analysts believe that the impact of new computing styles and approaches will be increasingly significant for this market. This includes OS container-based virtualization and cloud computing.
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