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Virtualization: Article

From Server Virtualization to Cloud Virtualization

Tactical Virtualization Evolves into Strategic Virtualization

I have heard of TAM (total addressable market) estimates for VMware of about $80B.  I’m not sure if that includes the much touted hybrid cloud (or cloud virtualization) opportunity.

VMware has stirred up plenty of news lately for sending mixed messages about the public cloud, and its willingness to allow its customers to leverage true hybrid cloud operating models (which would involve seamlessly connecting public clouds like AWS and Azure with their private clouds, or The End of Server Virtualization Lock-In).

Gartner forecasts the shipment of about 10M servers per year over the next three years, with about 50% of them being x86.  What if enterprises wanted the strategic scalability, agility and protection of the hybrid cloud model, instead of the tactical agility, efficiency and protection of server virtualization?

Hybrid cloud would give enterprises more complete control of their apps and services.

If VMware could get $4k/year for each server (traditional and x86) that would amount to a TAM of $120B based on a three year refresh rate.  Yet that would represent a major business model shift and limit the amount of lock-in that VMware would have over its customers operating on their private cloud platform. They could face margin erosion for their core lines.

On the other hand, if Microsoft Azure truly embraced hybrid cloud, it could force VMware to decouple server from cloud virtualization and make the leap to an entirely new operating model. That could be even more interesting as it would give Microsoft a powerful position offering N+1 app and service in the cloud, for everything from development and testing to failover.  Microsoft could trump VMware. Hybrid cloud also is a lower risk proposition for Microsoft, as well as the opportunity to end VMware’s dominance of server virtualization.

If cloud virtualization is the natural evolution of server virtualization, then you can expect VMware, Microsoft and several others to go after an (estimated) $120B TAM.  Stay tuned. This should be interesting.

More Stories By Greg Ness

Greg Ness is a Silicon Valley marketing veteran with background in networking, security, virtualization and cloud computing. He is VP Marketing at CloudVelocity. Formerly at Vantage Data Centers, Infoblox, Blue Lane Technologies, Juniper Networks, Redline Networks, McAfee, IntruVerofficer at Networks and ShoreTel. He is one of the world's top cloud bloggers.

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