Victims of Success: VARs Must Go Beyond Basic Virtualization

Blame VMware.

Where once VARs had to hard-sell users on virtualization, today the technology is almost universally regarded as beneficial. VMware and other pioneers pushed virtualization into the mainstream claiming it addresses the needs of all customers in all markets. Everyone has too many servers, too little space and is using too much power.

The pitch worked. But the broad adoption and familiarity it spawned is threatening to make once-lucrative virtualization a commodity. As solution providers nervously watch the virtualization competition grow and prices drop, industry experts say the market, while increasingly challenging, still has room to thrive for those offering both 'basic' virtualization technology -- server and storage consolidation and server virtualization --and for those willing to carve out specialized niches and leverage virtualization technology in new ways.

"Market needs are shifting but there's still a huge need for the basics to get going.  Those basic implementations aren't necessarily differentiated, but that doesn't mean [VARs] aren't deploying them," says Forrester analyst Frank E. Gillett.

"Customers are always struggling with server sprawl, physical space issues, and rising energy costs," says Mike Grandinetti, chief marketing officer for virtualization software provider Virtual Iron.  While it's important for VARs to address those very pressing needs, the number of solution providers delivering server consolidation and other virtualization technologies is increasing by the day, as is the number of customers deploying virtualization solutions. 

A recent report from Forrester showed that about half of enterprise IT shops surveyed had taken advantage of x86 server virtualization as of November 2007 and that two-thirds will by next year.  By 2009, 45 percent of those enterprises' servers will be virtualized, compared to 24 percent today, says Gillett. 

Find out how Virtual Iron is helping its VARs turn their customers' green

But once a customer's data center is deploying virtualization, what then?  Sure, you can increase the percentage of servers virtualized, or upgrade them to newer hardware and software.  But it's important now for VARs to dig deeper, before the market becomes extremely commoditized, and either target specific verticals or approach virtualization in new ways. Gillett says that as VARs start to feel the market  tapping out, they need to look at the one third to one half of the virtualization market that's left and go beyond the basics.

Virtual Iron and its partners, for instance, target customers in verticals such as healthcare, education and government, says Grandinetti.  The company also sees a unique opportunity in the SMB market.

Grandinetti says that while virtualization was at first geared toward enterprise customers with large data centers, the technology is equally applicable to small and midsize businesses (SMBs) who lack financial flexibility.

"When Google or Microsoft or Goldman Sachs need more capacity, they build a new data center.  SMBs tend to have more limited resources -- they can't just add new data centers, they have to look for more flexible, scalable alternatives," he says.

Those alternatives include not just virtualization, but also cloud computing and hosted services and infrastructure. All are gaining traction with VARs and their customers, both for their impact on companies' bottom lines and for their ability to reduce energy consumption and cut hardware and physical space costs, says Grandinetti.