As VMworld 2013 opens, the hypervisor market is approaching a directional decision point. A lot is happening, with software-led networking, software-defined storage, and of course the perennial VDI all waiting in the wings while the market continues to digest server virtualization. Nearly a decade after virtualization appeared with the proven keys to huge CapEx savings as it increased average utilization from 18 percent to 85 percent, and despite the huge spur of the 2008 economic disaster, estimates of the average percentage of servers virtualized today hover around 70% — a new survey by Wikibon.org puts it at 69 percent among its community members and projects that it will grow to 84 percent in 18 months. That means that server virtualization is still a major focus and growth driver in the market, particularly for MVware, which gives some idea of how long it takes the IT industry to consume even a technology with obvious positive impact to bottom line expenses.

But increasing numbers of organizations are reaching the saturation point with server virtualization and presumably are looking for something new that will provide similar levels of benefit. Presumably the ultimate goal for most IT shops is to create a fully software-led infrastructure, which would imply that the next focus would be virtualizing either storage or networking. Both provide advantages in simplifying management and getting increased use of resources, but those are not nearly as dramatic as the cost advantages of server virtualization. And they threaten major disruptions in the IT organization, breaking down the server, storage, and networking divisions and, of course, the mini-empires of technicians who service them. This generates the usual internal political resistance to change that can be a large barrier to progress.

Meanwhile CIOs face a large growing problem meeting end-user demands for business service delivery to an increasingly complex population of mobile devices, including employee-owned tablets and smartphones from Apple, RIM, a gang of Android vendors, and the Microsoft-based suppliers. By surrendering control over the hardware with BYOD policies, CIOs avoided a new set of religious wars at the cost of huge complexity. Now to provide native access they have to maintain & support duplicate software for multiple variants of all these platforms, do their best to answer employee questions, and try to sleep at night with the security nightmare all this creates.

The Attraction of VDI

CIOs desperately need an answer to this mess, and that answer is VDI. Virtualizing the desktop fixes all of these problems at a stroke and offers the extra advantage of promising lower cost desktop and laptop computers. And VDI technology has evolved into a much more mature state that has largely fixed problems such as the morning log-in storms by adopting advanced technologies such as flash storage with its huge IO capacity. It eliminates almost all the issues of delivering service to the wide variety of devices and moves all that valuable business data, unique spreadsheets, etc., back into the data center (or to a cloud service provider) where it can be backed up and protected. If a virtualized device is lost or stolen, already an all-too-common event with business laptops, all IT has to do is deauthorize that device and the precious business data is kept safe. Just eliminating those embarrassing notifications to customers that their personal information may have been compromised because a laptop was left behind in a cab should be enough to convince C-suite executives that VDI is worth the investment.

Of course the big trade-off for VDI is that it requires a huge new addition to the infrastructure — not just a new server and software but possibly a data network upgrade as well. However a new option has appeared recently for companies unwilling or too short-staffed to add a new huge application to their data centers — VDI-as-a-service. This eliminates most of the issues, including the budgeting and predicting demand for a totally new application that eventually will reach every employee and for which the company has no experience.

VDI of course has been around forever, and its supporters are forever predicting that this is the year of desktop virtualization. But the combination of the pressure to find a better answer to supporting an increasingly mobile workforce, solve the security problem caused by sensitive company and client data walking out of the building every day in employee laptops and now other mobile devices, and the maturation of the technology combined with the cloud service option, makes VDI a much more attractive option.

So is 2014 the “year of VDI”. I think it probably will be. David Grimes, CTO of IaaS and managed service provider NaviSite, says, “We’re seeing a tremendous amount of interest in the funnel” for the Navisite VDI cloud service. The Wikibon hypervisor survey identified Microsoft’s Hyper-V rather than VMware as the fastest growing market competitor for the next 18 months, with VMware second although also with healthy growth. And it found that users like Hyper-V for desktop virtualization in part because it hugely simplifies the issue of licensing the core Microsoft end-user business tools in an environment where individual employees may use Office on three or four different devices.

VDI for some reason has always been the one area of virtualization where VMware has never has a strong presence. In the early years of the century this was the province of Citrix XEN. In the last few years Hyper-V has captured that space, and the Wikibon survey found Citrix clinging to a vanishingly small 3 percent of the market, which Floyer expects to shrink to 2 percent or less over the next 18 months. Strong interest in VDI may well be a large contributor to Hyper-V’s projected strong growth over that period.

Hyper-V and VMware

So what does this mean for VMware on the verge of VMworld 2013? Paradoxically it may be good news. VMware’s dominance of server virtualization, where it is the 800 pound gorilla, combined with its strong position in software-defined storage thanks to its parent, EMC, and in software-led networking with its purchase of Nicira a year ago, could well attract the attention of government regulators. The EU has been particularly sensitive to the actions of computer industry dominant players such as Microsoft in the past. If so, ironically it might be Microsoft in the form of Hyper-V that could help it avoid those unwanted attentions.

Certainly having two strong players in the market benefits users. Today VMware is the technically more advance hypervisor, while Hyper-V is “good enough” and of course free. At VMworld users will see what VMware will do to maintain the technological edge and get a feeling for just how much challenge it will mount for the VDI niche.

Want a ringside seat but unable to go to San Francisco next week? Tune in to Siliconangle.tv for wall-to-wall exclusive interviews with key players including the top brass of VMware, prominent users and important third party vendors and service providers. This is where you can find out everybody’s cards going into what will be an exciting crunch year for software led infrastructure.