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While it seems logical that virtualization would mean fewer servers, fewer
processors and a negative impact on Intel’s business, the vendor’s worldwide
channel chief says virtualization is actually helping Intel and its partners
keep up with demand.

Steve Dallman told Channel Insider that though IDC
research purports to show that virtualization will decrease the number of
servers sold and also dampen demand for server technology, he and the company’s
channel partners are seeing incredible growth in the server market.

"You would think with virtualization that you’d see fewer servers, but
that’s not happening.  The need for servers and server capacity is
phenomenally large," especially from the SMB (small and midsize business) market,
Dallman said. Research firm Access Markets International said in January that
global SMB server spending will reach $19.8 billion in 2008, a double-digit
growth over 2007.

Virtualization is adopted first through enterprises, and therefore hasn’t
negatively affected the channel and solution providers, most of whom are SMBs providing
services to other SMBs, Dallman said. 

"SMBs just don’t need to consolidate server farms," he said.

If anything, virtualization is helping to keep server supply more in line
with demand, and eliminating hardware shortages that might have occurred
without virtualization, Dallman said.  Since partners and their end-user
customers are able to manage and deliver a greater amount of data on fewer
physical server devices, they don’t need as many physical servers.

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While growth in the server space is still accelerating, Dallman said without
virtualization, the growth in the space might be out of control.

"All virtualization is going to do is to moderate the growth in the
server space" to a level that’s manageable for both vendors and partners,
he said.

The global need for servers driven by the SMB market could be offsetting any
decline in enterprise server demand brought about by virtualization, Dallman
said, offering lucrative growth and services opportunities for partners
delivering server technology to those SMB customers.

In an SMB environment, partners could find opportunities installing and
maintaining e-mail and BlackBerry servers. 

He also said that server demand is high in vertical markets, like federal,
state and local government and the health care industry, driven by federal
mandates such as HIPAA.  Other demand drivers include the need to maintain
growing amounts of data and to do business globally, Dallman added.

Dallman said Intel is working closely with companies such as VMware and
XenSource to make sure Intel partners are aware of the companies’
virtualization technologies and products, Dallman said.

Dallman added that Intel’s Enabled Server Acceleration Alliance program
works to validate and certify server configurations and compatibility with
VMware virtualization technology.  

Related coverage from the Intel partner summit:

Intel, NaviSite Ink Managed Services Deal

For Intel, Desktops Aren’t Dead

Intel Channel Chief: Virtualization a Boon for Intel

Intel Partners Say Small Form Factor a Big Deal

Intel Jumps Into Managed Services Market