As VMware heads into VMworld 2013, it is in a dominant position in the virtualization market, comparable to Microsoft on the desktop in 1990 or IBM in 1970, with continuing strong growth ahead of it. And while Microsoft’s Hyper-V seems to be growing faster at present and may improve its market share over the next 18 months, it and the other competitors (KVM, OVM, and Citrix XEN) will in total still only have just over 30% total market share in 18 months, according to a just-published hypervisor market report by Wikibon CTO David Floyer based on a survey of 104 Wikibon Community members. And those four competitors will all be confined to niche markets, with some of Microsoft’s growth coming at the expense of Citrix, which is losing ground in what is otherwise a general growth market.

The Wikibon report shows virtualization growing from 69 percent of servers in respondents’ shops today to 84 percent in 18 months. While Floyer thinks that growth projection may be optimistic, the basic point is that server virtualization remains a high growth market for the next two years. And VMware is expected to gain the lion’s share of this growth in absolute numbers, although its market share may slip slightly.

One big reason for that, Floyer writes, is that VMware just runs well. Its users particularly praised its ruggedness and durability. And it is still the clear leader in technology and features overall. By contrast, Hyper-V users described it as “good enough” for their Windows Server environments and for desktop virtualization.

Hypervisor Consolidation

The survey also identified another important trend — companies are consolidating their virtualized environments. Forty-eight percent of respondents indicated that simplifying their environments is more important than any disadvantages coming from vendor lock in, and that they therefore are going to standardize on one or two hypervisors. Today the survey found that responding companies on average had 1.82 hypervisors running, with some companies having as many as five. In 18 months, Floyer projects that average will decrease to 1.67 hypervisors per company. This trend will obviously benefit the dominant providers in those multi-hypervisor shops, which in most cases are likely to be VMware and Hyper-V, at the expense of smaller players.

This trend benefits VMware in another respect. Today increasingly CIOs are seeing virtualization not solely as a server phenomenon, but as the first step of breaking the traditional technical silos to create a unified software-led infrastructure. Wikibon of course looked at storage virtualization as part of this survey and found that EMC is the clear leader. While VMware operates as a totally independent company, it is owned by EMC, and it is no surprise that EMC VNX leads the market in integration with VMware APIs, with NetApp a close second and EMC VMAX third.

The report does not cover the third important area, software-led networking. Here VMware’s purchase of Nicira a year ago has given it both credibility and a clear lead in technology and a year to integrate that technology tightly with vCenter. The result is that VMware is in a position to deliver a fully unified, software-led environment running over heterogeneous hardware and delivering the most advanced capabilities available. Its competitors cannot do that today. Most of the other hypervisor vendors focus on server virtualization only, leaving the user to find, install, and integrate software-led server and network solutions.

Third Party Support

Another VMware advantage is appearing in the announcements made this week in the led-up to VMworld — third party support. SiliconAngle has reported on announcements of new or greatly improved virtualization tools from NaviSite, SimpliVity, and HotLink that have one important thing in common, they work through vCenter.

NaviSite CTO David Grimes said they looked at other choices, including OpenStack, but ultimately chose to go with vCenter for two major reasons, despite acknowledging some deficiencies in the present version. First, it is ubiquitous, virtually all NaviSite’s customers use it as part of their operations. Second, “vCloud Director as a technology we feel has reached a level of maturity that’s solid.”

HotLink CEO Lynn LeBlanc said the big reason they selected vCenter as the controller for the new HotLink DR Express disaster recovery offering is that virtually all virtualization managers use it daily. In an emergency, an unfamiliar UI can be a recipe for costly mistakes. By using vCenter,HotLink ensures that users practice for recovering from that disaster, whether it is a hardware failure or a major regional event, every day.

As third party vendors choose to incorporate vCenter as their UI they create a feedback loop. Users who want those tools have to keep vCenter in their environments, so that even if at some time in the future an alternative hypervisor looks better, VMware will remain dominant in their data centers.

The Competiton

Nor are the other hypervisors a real threat. In fact they are not really competing in VMware’s core market.

Hyper-V is the second place hypervisor with 13% of the market and high growth. Floyer predicts it will grow at 61% for the next 18 months. However much of that growth will be in desktop virtualization, to an extent at the expense of Citrix, which is fading at least in the environments of Wikibon members. One of the major attractions of using Hyper-V for VDI is that it simplifies licensing Microsoft products in today’s BYOD end-user environments where companies want to deliver a standard image to a complex environment of mobile devices as well as standard laptops and desktops. This promises to be a major growth area in the overall virtualization market over the next two years. Its second market is virtualizing Wintel servers, often in smaller organizations or as a second hypervisor in a predominantly VMware environment.

KVM is popular mainly in large hyperscale environments and other cloud service provider infrastructures, another market where VMware has never played. The growth of Oracle’s OVM is confined to Oracle environments and driven mainly by a few large Oracle users. Oracle’s announcement of official support for Hyper-V earlier this year along with its sub-rosa support for running its products on VMware may signal its eventual withdrawal from the hypervisor market, which could provide Hyper-V with increased growth.

Finally Citrix XEN, at one time the main competitor to VMware and dominant choice for desktop virtualization, is fading from the market. Floyer puts it at 3 percent market share and shrinking and says it will be hard pressed to maintain a 2 percent share in 18 months.

VMware, therefore, owns the virtualization market, despite some competition from Hyper-V. Its announcements at VMworld will set the overall direction of the technology and market for the next year and beyond. All it needs to do to dominate this growing market is keep its focus.