Is virtualisation the next big market to be ripe for disruption?

People often ask, what makes Computer Weekly different among the ever-growing variety of technology news websites?

One of the main things is our focus on the often-boring topics that are central to corporate IT. Smartphones, tablets, apps and social media may make headlines in the national news and invoke conversation around dinner party tables – and of course they are increasingly central to IT leaders and their teams, and we write about them frequently.

But you’re never going to get much interest outside of the IT department in topics like server virtualisation. And yet, virtualisation has been arguably one of the most disruptive and transformational technologies of the last five years.

Thanks to virtualisation, the server and datacentre markets have seen dramatic change. Vendors have been forced to develop new products, forge new partnerships, and sell in different ways, all as a result of virtualisation. If an organisation has more than a handful of servers, and you’re not using virtualisation to some degree, you have to wonder why.

It has become a totally mainstream technology. Global research by Computer Weekly owner TechTarget shows that more than 80% of organisations intend to expand their use of virtualisation in the next 12 months.

And so, as happens eventually with every technology that goes mainstream, the virtualisation market itself is now ripe for disruption. It has one dominant player in VMware, a leading challenger in Microsoft, and a wide range of also-rans fighting over the scraps.

In fact, it’s not that different in its characteristics to the mobile phone market six years ago, just before the iPhone launched.

Then, you had two dominant players in Nokia and BlackBerry. Look at them now – one sold, to Microsoft, the other up for sale.

Are there other parallels?

Nokia and BlackBerry were disrupted by two fundamental trends – and this is common to a lot of disrupted industries in the digital age: First, they completely missed – or chose to ignore – the emergence of a whole new market.

This was the premium mobile ecosystem market, created in one fell swoop by Apple with the iPhone and App Store. It was widely dismissed at the time by many big players. Too expensive, said some. Nobody will want to browse the web using such a small screen, said others. The mobile network operators will never support the huge amounts of data needed to make it worthwhile. Wrong on every count.

Second, the rest of the mobile market got commoditised. This was Google’s play, with Android. Suddenly, Nokia and BlackBerry rivals had access to a free, open source mobile operating system that allowed them to produce low cost but highly functional devices, within a commoditised ecosystem, that the two big incumbents could not compete with.

As the commodity products moved up market, and the premium products moved down market, so Nokia and BlackBerry got squeezed out in the middle, with nowhere left to run.

How does this reflect the virtualisation market today?

There’s a new market emerged – public cloud – with a premium ecosystem being created primarily by Amazon Web Services (AWS). That market has been dismissed by the incumbent – VMware president Carl Eschenbach reportedly said, “I find it really hard to believe that we cannot beat a company that sells books.”

But I’ve heard more than one CIO recently saying to a peer, “Why don’t you just put it onto Amazon?” The word of mouth among corporate adopters of AWS is almost exclusively positive.

Put your datacentre in the public cloud, and you don’t need to worry about virtualisation any more.

At the same time, like any mature market, virtualisation is becoming commoditised. According to that TechTarget research, VMware remains a clear marker leader. But when asked, “If you are considering alternatives to your primary virtualisation supplier in the next 12 months, which will you deploy?”, the leading answer was Microsoft – nearly a third of respondents saying they are considering the Hyper-V supplier.

When asked why, most survey respondents pointed to price.

With the release this month of Windows Server R2, with free Hyper-V software becoming more functional, Microsoft is commoditising the virtualisation market – and IT buyers are noticing.

VMware may be a far better technical solution, according to experts, but many IT leaders will be happy to take “good enough” if it’s effectively free.

It’s important to point out that VMware is not Nokia, and it’s not BlackBerry, both of which – we subsequently learned – were riven with disagreement at board level about future strategy and how to respond once the disruption to their markets became apparent.

There’s no suggestion VMware is incapable of responding to the twin disruptive threats of public cloud ecosystems and market commoditisation.

But an early pattern of disruption is emerging, and the signs all suggest that a technology that has been so disruptive itself in its ascent to the mainstream, may soon feel what it’s like to be on the other side.