Strong demand for server virtualization management software is set to raise revenues for global virtualization software by 43 percent to hit US$2.7 billion this year, according to Gartner.
In its latest report, the IT research firm estimated global virtualization penetration to hit 20 percent this year, up from 12 percent last year.
Alan Dayley, research director at Gartner, said server virtualization management is expected to be the primary source of growth because the hypervisor function is "rapidly" moving to the hardware layer.
Dayley said: "Server virtualization management technology is designed to reduce total cost of ownership (TCO), reduce associated availability risk and improve quality of service.
"In addition, building more manageability into infrastructure components provides technology suppliers with an additional source of revenue and a basis for competitive differentiation."
Gartner said revenue from server virtualization management software will increase 42 percent from US$913.9 million in 2008 to US$1.3 billion in 2009. Revenue from server virtualization infrastructure is expected to grow 22.5 percent from US$917 million in 2008 to US$1.1 billion in 2009.
The hosted virtual desktop space is expected to fetch US$298.6 million in 2009--"more than triple" that of 2008.
Dayley said the current economic downturn is expected to play a role in boosting virtualization adoption, because of the technology's touted cost-cutting benefits.
By 2013, Gartner expects Microsoft to pose a threat to VMware's position as dominant server virtualization software vendor. It said the software giant "will do very well in the small and medium-sized business (SMB) market".
"The server virtualization management market is currently wide open, with more than 100 vendors supplying products that meet some of the requirements in the management stack," said Gartner. With the management market maturing, acquisitions and build outs will help consolidate the market, it said.