Virtualisation: A growth area

An interesting growth area is server virtualisation, where server partitioning technology separates the software from the underlying hardware, enabling multiple operating systems, such as Windows and Linux, to run simultaneously in one Intel server. This allows a single computer to run multiple operating systems and applications independently, improving efficiency and flexibility. Market leader VMware (VMW) was recently listed in New York and rose 80% on its first day, giving the company a $20 billion market value that makes it even bigger than Ford. After some difficult early years, VMware has finally convinced businesses that consolidated server environments cut capital and management costs. Research firm IDC estimates that the virtualisation market will double over the next five years to almost $12 billion, and that by 2010, almost 15%
of servers sold will be virtualised, compared with 4.5% of those shipped in 2005.VMware will continue to benefit from its early-mover and industry-standard status. It may also be somewhat artificially supported by its must-have status relative to its true free float size. Its rivals are Symantec (SYMC) and Microsoft (MSFT) and smaller operations that may take a bite of the small to medium-size business market, such as Virtual Iron Software and XenSource. The latter has software with functionality to rival VMware's and has just been bought by Citrix (CTXS) for an alleged $500 million - not a bad figure for an operation that started as a university research project.