The Disruptive Power of Virtualization

Few vendors appreciate the potential for virtualization technology to remake large parts of the IT industry, impacting the markets for server software, storage and beyond.

By George Gilbert and Juergen Urbanski, Tech Strategy Partners

Everyone in The Valley knows that virtualization software from vendors such as VMWare, Microsoft and Citrix can be used to consolidate underutilized servers. Many also realize that virtualization creates a new platform for delivering high availability and disaster recovery at radically lower cost and complexity. Few though fully appreciate how virtualization will completely upset the status quo in markets as diverse as databases, middleware, systems management software and storage. How much of that ripple effect will lead to a disruption of existing markets vs. creation of entirely new markets will be of vital importance to vendors such as Oracle, IBM, HP, CA, BMC, Symantec, NetApp, EMC, DELL and many others.

This article examines the economic impact of server virtualization across key parts of the IT stack and concludes that, among other effects, virtualization creates unprecedented pressure on the database and middleware business and threatens to crack open the storage industry.

New Webinar Next Week:
Usability Wins More Customers - Even in a Down Economy

When the economy is in a downturn, companies are tempted to put product usability and user interface projects on the budgetary chopping block. But did you know that ROI on a UI investment typically is up 1000%? This first webinar in a series from user-experience design company, UEVision, will address why usability projects are even more critical during tough economic conditions. Learn how companies today are using their usability projects to lower their support costs quickly and easily, keep and attract new customers, and increase profitability. The webinars will take place on March 3 at 9:00am and 12 noon Pacific and on March 5 at 9:00am Pacific. Space is limited. Register by February 27, 2009 at http://www.uevision.com/webinars.html

Partly Cloudy

Guy Smith takes a look at the forecast for business intelligence in the cloud and finds a hole in the market in this post to the SandHill.com Blog on cloud computing.

The Collaboration Conundrum

Enterprise 2.0 models are changing the way companies do business – and supply chain interactions are no exception. Ken Lyon of BitLogic explains why adopting social networking models as the basis for supply chain data exchange will provide benefits to all participants in this post to the SandHill.com Blog on Enterprise 2.0.

Publish Your Perspective!

SandHill.com wants your opinions. Send your thoughts on the enterprise software industry to SandHill.com editor, Maryann Jones Thompson (maryann@sandhill.com) and have your opinions published on our site.

DON'T MISS: What’s Different About M&A in this Downturn

M&A may be more resilient in this downturn than in previous ones, but it will be a different kind of M&A. Find out how in this article from The McKinsey Quarterly.

News Update: Movement in M&A

SAP swoops in for a downturn deal; plus India commiserates at Nasscom, HP avoids layoffs and cloud computers will double. Read these stories and more software news of the week in the latest SandHill.com Software News Summary.

Poll: Virtualization’s Impact?

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More at SandHill.com:

IBM plans IT center in Dubuque – and job applications pour in.
Read the most important enterprise software industry news of the week >>

OpSource receives $10 million.
Monitor the latest software venture capital deals >>

Outsourcer Aragon buys Krugle.
Size up last week’s software M&A deals >>

Grant Wagner named president and CEO of XML software developer Formatta.
See who’s made it to the top in our list of recent software executive appointments.

Send us your feedback on this newsletter and the SandHill.com site.

Parting Thought

“Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They're absolutely free-- and worth a fortune.”
— Sam Walton

Courtesy of Malcolm Kusher, The Kushner Group

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SandHill.com is published by Sand Hill Group, which provides investment and management advice to emerging leaders in the $600 billion enterprise software, services and solutions market. Sand Hill Group produces the Software and the Enterprise series of conferences for industry executives, and authors research reports on cutting-edge technology topics.