Will vender’s hardware revenues shrink as a result of virtualization?

820 pts.
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Hardware Costs
Servers
Virtual Servers
Virtualization and hardware
Virtualization strategies
Since virtualization allows one server to replace several non-virtual servers one would think this would be bad for HP,Dell, IBM and other server vendors. Yet it doesn't seemed to have caused the stock of these vendors to go down. Is this because the new virtual servers will cost more and have a higher profit margin so the financial impact on the vendors will be positive rather than negative? Jim4522
ASKED: August 14, 2008  7:18 PM
UPDATED: February 3, 2009  2:44 PM

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Keep in mind all of those companies have their own version of virtualization software, or deals with the companies that do. Essentially, they will always be hand in foot. As long as you have virtual softwares, you will need a platform to run them on.

-Schmidtw

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  • Eric Siebert
    It may hurt the total number of servers that they sell but this is mostly offset by the size and options of the servers that are purchased for virtualization. Most virtual hosts have alot more RAM, CPUs, NICs, storage adapters and disk then servers purchased to run a single application. For example a virtual host that will run 12 - 16 VMs will typically run on hardware that has 2-4 dual/quad core CPU's, 16GB - 32GB of RAM, 4-6 NICs, 1-2 fibre channel adapters and complete redundant hardware. A host of this size will cost anywhere from $20,000 - $30,000 compared to the typical cost of $4,000 - $5,000 for a server that runs one application. So what it comes down to is that they are selling fewer more expensive servers then a greater number of cheaper servers. Most hardware vendors sell virtualization software and support along with the servers also.
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