Small Businesses Latch Onto Virtualization

Despite first gaining traction in the corporate data center, virtualization is now becoming as popular with small- and midsized businesses (SMBs) as it is with larger enterprises — perhaps even more so.

That’s according to new reports from Forrester Research, which said that about 36 percent of the x86 server operating system instances at participating SMBs are virtualized, as opposed to 31 percent of operating systems instances at enterprises.

“I was surprised by the interest in cloud computing and virtual servers was so high,” Forrester analyst Frank Gillett told He said that it shows that companies are listening to the hype and would like to implement the technology.

He also said that over the years, the use of virtualization by SMBs has trended only a few percentage points behind its use in enterprises.

Forrester’s study also confirmed that VMware leads maintains the lead in the virtualization market.

Gillett pointed out that VMware (NYSE: VMW) not only holds a lead in the present, but also the near future. The survey asked respondents about the vendor they use now and the vendor they plan to use in 2010, and VMware led for next year as well.

However, VMware should not be overconfident of its lead in the SMB market, Gillett said. When Forrester asked which primary vendor they expect to use to enable x86 server virtualization this year, 52 percent of SMB respondents chose VMware — but 45 percent chose VMware in 2010. In contrast, Microsoft (NASDAQ: MSFT) saw a boost, from 18 percent today to 24 percent in 2010.

The reports also found that business customers appear to prefer to retain expensive desktop computers and serve applications to them from the Internet. That’s despite the fact that those applications could, in theory, run on far less expensive thin clients, which are stripped-down versions of desktop computers that are designed to run applications served to them.

According to the study, 31 percent of enterprises are implementing application virtualization and 17 percent more plan to do so, while 15 percent said they are not interested in the technology. That’s compared to the 18 percent who are implementing thin client hardware, with 15 percent planning to do the same, while 24 percent reported not being interested in the technology.

For smaller companies, 27 percent of SMBs are implementing application virtualization, and 18 percent plan to do so, while 18 percent said they are not interested in the technology. In contrast, only 18 percent are implementing thin client hardware, 15 percent more have plans to do so, and 27 percent said they are not interested in the technology.

Virtualization Faces Budget Pressure

Even though virtualization is commonly seen as a way to cut costs — chiefly by consolidating several servers onto a single piece of hardware — the IT budget crisis is also making it harder for companies to adopt virtualization.

Among enterprises responding to Forrester’s survey, 8 percent said they lack the budget to implement server virtualization. And while they’re aware of PC management software, 22 percent said that although they’d like to implement it, they lack the budget to do so. That could be a dicey proposition: recent studies from Aberdeen Group find that lack of virtualization management tools can hurt businesses’ efforts to recoup their investments in the technology.

Smaller businesses are also feeling the budget pinch. At this point, 14 percent of responding SMBs said they would like to implement x86 server virtualization, but lack the budget to do so.

At the same time that virtualization is on a tear, enterprises told Forrester that cost-savings efforts are driving other decisions as well.

For instance, they’re implementing backup plans to avoid the cost of downtime. And while energy efficiency may be a desirable x86 server feature in theory, in practice, electrical consumption and costs are a lesser concern than price, security and manageability, according to Forrester.

The survey also contains a mild warning for hardware vendors: although customers are satisfied with x86 server features and quality, they are less satisfied with the price of x86 servers and only marginally more pleased with the tech support.

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