VMware, Microsoft, Citrix should benefit from Chinese server virtualization growth

Companies with strong local presence best positioned for growth

VMware (NYSE: VMW), Microsoft (Nasdaq: MSFT) and Citrix may be among the companies that will benefit from growth in the Chinese enterprise server virtualization market predicted by two leading research firms.

Gartner estimated 70 percent of x86 enterprise service workloads in China will be virtualized by 2016, up from just 10 percent today. This growth will be spurred by data center energy saving, floor space reduction, server utilization and the move to private clouds, according to the firm.

This bullish view of the Chinese server virtualization market is shared by IDC, which predicted the market will continue to show healthy growth over the next few years, fueled by cloud computing, business system integration and demand for more infrastructure flexibility.

"Cloud computing will shift revenue from the virtualization software market to the cloud platform software and virtualization management software markets," said Eric Peng, senior market analyst for enterprise system and software research at IDC China.

Gartner also predicted that growth in hosted virtual desktop workloads will outpace server workloads over the next few years. Growth in these two markets will open up opportunities for virtualization vendors, systems integrators and private cloud service providers, particularly those with a strong local presence and delivery infrastructure in China.

"In common with many emerging markets, cloud and mobile initiatives are hot and enterprises are also making progress in adopting virtualization technologies, a key stepping stone in the journey to cloud," observed Matthew Cheung, principal research analyst at Gartner.

Overall, enterprise spending on IT in China is expected to grow from $117.8 billion in 2013 to $172.4 billion in 2016, a compound annual growth rate (CAGR) of 8 percent, compared to a global growth rate of 3 percent over the same period, according to Gartner.

China looks like a hot market for enterprise communications in general, and vendors that already have established relationships are the best positioned to capitalize on this growth.

For more:
- see Gartner's China predictions
- check out IDC's report summary

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Gartner: VMware maintains dominance of server virtualization market