In a blog post, Gartner analyst Tom Bittman identifies the top server virtualization trends to watch out for in 2012 as the market matures. Short version: VMware’s dominance in this space is threatened as competitive choices mature and customers begin to fear the ramifications of getting locked into its ecosystem.

Here are Bittman’s points, distilled:

1. Competitive Choices Mature: Bittman doesn’t name names, but he does acknowledge that VMware’s competition in server virtualization is rapidly maturing, and that price is starting to become a key differentiator. In other words, virtualization environments like Citrix Xen, Microsoft Hyper-V and especially Red Hat KVM are catching up in both feature set and popularity to VMware vSphere. Enterprises currently using VMware for virtualization are unlikely to switch, but those who are just starting to look have an increasing number of completely valid options, and VMware is no longer as surefire a bet.
2. Second Sourcing Grows: Okay, so as I said, businesses aren’t moving away from VMware environments. But they are setting up second, internal virtualization environments and taking the competition for a test-drive to attempt to avoid putting all their eggs in one basket. There’s not much by way of multi-environment, heterogeneous virtualization management yet, but as this second sourcing trend grows, the interest in such a solution is as well.
3. Pricing Models in Flux: As the controversy over the VMware vSphere 5 licensing model in mid-2011 proved, there’s plenty of room for innovation in virtualization licensing schemes. That matter only gets worse as hybrid and private cloud deployments become more commonplace. Watch out for plenty of chatter around price models.
4. Penetration and Saturation: For a Gartner VP, it takes Bittman a while to get to a statistic: Virtualization is at 50% penetration, and competition is going to drive prices down and down. Conversely, as virtualization usage rises, server vendors are going to see a downtick in their own businesses until this trend slows down.
5. Cloud Service Providers Are Placing Bets: IaaS vendors are fully aware of this virtualization trend, and are scrambling to make their own infrastructures compatible with desirable host environments so that businesses can on-ramp virtualized workloads to their clouds. The options for a cloud service provider, as Bittman sees it, are to either build your own (limiting appeal), buy into the virtualization technology used by enterprises (risking commoditization) or invest in tools that connect the two (which could get complex). And these cloud providers are starting to make their investments. For instance, Rackspace uses Citrix Xen and XenServer for its cloud server instances, while Verizon subsidiary Terremark has thrown in with VMware vSphere.

Services Angle

As Bittman himself notes in the conclusion to his blog entry, just because the market is maturing doesn’t mean it’s done shaking up. There’s going to be some turmoil, and I’m sure some melodrama, as cloud service providers continue to throw in with one vendor or another for server virtualization. It would behoove the CIO to pay attention to the market, and, as ever, make choices based on actual value and not the name on the box.