Preparing for the 3 rd Platform:
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1 Preparing for the 3 rd Platform: It s Not Business as Usual April 2014 Al Gillen Program VP, Servers and System Software IDC April 2014 IDC Visit us at IDC.com and follow us on
2 Agenda 1. Industry & Market Overview Introducing the 3 rd Platform The changing face of server diversity How tomorrow s datacenter is different from today s 2. The Impact of Virtualization The growth in virtualization How server growth is impacted by virtualization Workloads and virtualization 3. The Emergence of Cloud Virtualization or private cloud? OpenStack: An unprecedented trajectory 4. Essential Guidance 2
3 3 rd Platform: Causing Enterprise IT to Rapidly Transform New Enterprise IT Platform Emerging Virtualization Cloud Mobility Big Data Analytics Continuous delivery Billions of users Millions of: Apps New app architectures Services accelerate rate and pace of change Number and diversity of devices proliferates Datacenter and computing Hundreds of millions of users Information Content Experiences Tens of thousands of applications architectures also change dramatically Millions of users Thousands of applications Source: IDC,
4 Steady Consolidation on Standard Solutions WW Server Unit Shipments x86 RISC Source: IDC Server Tracker, March 2014 Windows, Linux: top two volume products CISC+EPIC Virtualization and OS instances leads to dramatic uplift over physical view Linux share increasing on physical servers vs. Windows; virtualized shares more stable 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Server unit growth stagnating Virtualization, cloud continues to put downward pressure on unit volume Workloads currently on Linux/Windows/x86 will stay put, as have previous workloads/platforms WW Server Operating Environment (Software) Shipments/Subscriptions/Deployments Windows Unix Other Host/Server NetWare Mainframe Source: IDC System Software Research, July
5 The Changing Form Factors WW Server Shipments by Form Factor (units) Density optimized heavily used in hyperscale centers Density Optimized Tower Blade Rack optimized Growth in D.O. strongest in US Expect continued acceleration of D.O. Servers, and expansion of global reach 0 Tower form factor in decline Rack optimized, blade form factor both relatively flat Density optimized are driving overall market growth 15% of WW today D.O. has a high attach rate for Linux operating systems 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: IDC Server Tracker, December
6 A Diverging Server Market Develops Integrated Computing 2nd platform optimized Private cloud Enterprise/Hoster System level design Heterogeneous Workload optimized Complex app portfolio OPEX optimized Aggregated Hyperscale Computing 3rd platform optimized Public cloud CSP/Enterprise DC level design Homogenous Software defined Singular app portfolio CAPEX optimized Disaggregated 6
7 WW Density Optimized Form Factor/OS Mix WW Unit Shipments 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Unix Linux Windows Source: IDC Server Tracker, February
8 Windows P-Servers Under Pressure WW Server Shipments 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Others Linux Windows Source: IDC Server Tracker, February
9 Server Operating Environments Growth OS revenue growth far outpacing hardware sales growth Higher-end SKUs, maintenance contracts, renewals all positive SKUs with unlimited virtualization rights highly popular right now Red Hat position solid, combined competitors remain a minority Long term, Linux vendors face challenges in SP customer sites SaaS another opportunity that all OS vendors must exploit Continued standardization on x86 server continues to reduce the overall role of non-x86 operating systems Unix migrations still a key focus of x86 Linux OS vendors OpenStack the next big thing for Linux growth 9
10 Agenda 1. Industry & Market Overview Introducing the 3 rd Platform The changing face of server diversity How tomorrow s datacenter is different from today s 2. The Impact of Virtualization The growth in virtualization How server growth is impacted by virtualization Workloads and virtualization 3. The Emergence of Cloud Virtualization or private cloud? OpenStack: An unprecedented trajectory 4. Essential Guidance 10
11 The Impact of Virtualization Most customers use virtualization first strategy In mature geos, the easy-to-virtualize workloads have been virtualized already Many business workloads also virtualized today, but The most critical, complex and compute-intensive workloads are now candidates for virtualization But also have higher requirements and expectations Virtualization inherently makes each server more business critical 11
12 Virtualization Approaches Saturation WW Rate of Virtualization Blade Total Rack optimized Total Overall Rate of Virtualization WW Mean VM Density Tower Total 4 0 Density Optimized Total 2 Source: IDC WW Quarterly Server Virtualization Tracker, March 2014, and custom forecast Source: Worldwide Virtual Machine Forecast: Virtualization Buildout Continues Strong IDC # / Aug 2013 Virtualization solidifies role as foundation for software controlled everything Fewer workloads remain to be virtualized; those still unvirtualized are likely very important Growth in the rate of virtualization tapers down; VM density continues to grow VM density growth exceeds growth in rate of virtualization Result: virtualized severs become ever more critical due to the multiple workloads supported Customers need to treat these as business critical solutions 12
13 WW x86 Virtual Machine Software Shares 2013 New Server Shipments Virtualized Competitors are now good enough to challenge VMware Competitive landscape is more diverse, complex Others; 15% KVM; 4% Microsoft; 0 Change comes w/new deployments, not in-place replacement Multi-hypervisor deployments offer competitive opportunities Difficult, long-term decisions for workload VMware; 53% deployment/management Source: IDC WW Quarterly Server Virtualization Tracker, April
14 The Net Impact of Virtualization WW Servers installed, VMs installed Guest VMs Installed Instances Virtualized Server Installed Base Nonvirtualized Server Installed Base Source: Derivative analysis based on Worldwide Virtual Machine Forecast: Virtualization Buildout Continues Strong IDC # / Aug
15 Virtualization of Server Workloads % of total workloads in Non-Virtualized Bars show percent of total serves dedicated to workloads 39% of servers are used for IT infrastructure Outliers including IT Infrastructure, Web infrastructure, and industrial R&D less virtualized 0.2 Business workloads are more closely split Virtualized servers typically run 8-10 workload instances This is a server view, not an instance view Source: IDC Server Workloads 2013: Understanding Server Deployment / June
16 Buyer Insights: Drivers for Virtualization Top drivers for server virtualization Cost concerns Efficiency Classic capex reduction Management Reliability Flexibility Operational benefits Performance Other/None New technology Security Source: Server Virtualization MCS 2012, n=407 IDC Visit us at IDC.com and follow us on 16
17 Agenda 1. Industry & Market Overview Introducing the 3 rd Platform The changing face of server diversity How tomorrow s datacenter is different from today s 2. The Impact of Virtualization The growth in virtualization How server growth is impacted by virtualization Workloads and virtualization 3. The Emergence of Cloud Virtualization or private cloud? OpenStack: An unprecedented trajectory 4. Essential Guidance 17
18 Shifting IT Spend Favors Private Cloud in Near Term Q. Please estimate how much of your company's IT budget will be allocated to buying and managing these different types of IT services % 13% % 19% Public Cloud Private cloud - Hosted Private Cloud Inhouse Enterprises see private cloud as the onramp to wider cloud adoption Automation and elasticity will become the mantra Pre-integrated modular converged systems will become critical % Today 37% 24 Months Outsourced IT Traditional IT Source: IDC s Cloud Computing Survey, June 2012 n=500 18
19 Hypervisor Installed Base: Not an Automatic Choice for Private Cloud Virtualization vendors with installed base will Q. Which hypervisor for your cloud system software? upsell Opportunity to reconsider cloud system SW choices Hypervisor becomes a feature of the system new 53.2% existing 46.8% SW Diverging approaches to cloud and applications Built for new cloud applications vs. Built for legacy application compatibility Source: 2012 Cloud System Software Survey, n=282 19
20 VMware and Microsoft Lead Private Cloud, OpenStack Gaining Q. Which Cloud infrastructure platforms is your organization currently investing in/considering for near-term use in your Private Cloud? Microsoft Cloud OS VMware vcloud OpenStack trajectory unprecedented in the industry OpenStack still in early stages; limited enterprise deploys OpenStack-based platform CloudStack based platform Some competitors using FUD against OpenStack Eucalyptus We ve seen this movie before and OpenNebula Other, please specify Source: 2013 CloudTrack Survey, n=736 20
21 Essential Guidance 3 rd Platform computing is already happening Linux is gaining share on physical devices, but less so on an all-up instance basis Virtualization penetration growth slowing down; VM density is the metric to watch going forward Enterprises face tough decisions: go with high-value purpose-specific servers Or function like a service provider and go with high volume, low cost solutions How does a software-defined environment fit in? Private cloud is an opportunity to re-think your virtualization strategy and trajectory 21
22 Questions Al Gillen Program VP (landline) al.gillen algillen For more information on the following IDC programs and for published research: Operating Environments Cloud and Virtualization System Software Enterprise Servers: Technology Markets Please visit, and search using one of these service names. IDC Visit us at IDC.com and follow us on 22
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