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Use of virtualization by SMBs will affect unit shipments and change the types of channel partners they do business with, says AMI

New York, New York — July 22, 2010 — US SMBs are rapidly increasing their use of virtualization with serious implications for their entire ecosystem—such as limiting the growth in shipments of physical IT equipment, especially servers, and changing the channel partner skills they require. IT vendors, distributors and SMB channel partners need to understand this shift and upgrade the entire ecosystem to meet the changing needs of SMBs, according to New York-based AMI-Partners, based on new research.

“Driven by their need to optimize IT infrastructure—especially in the current economic environment and enabled by increasing availability of SMB-focused products from virtualization vendors—there has been a significant increase in SMB virtualization adoption (servers, clients, storage, applications) over the last year,” says Anil Miglani, SVP of IT Infrastructure and Managed Services Research at AMI-Partners.

While first-time server adopters will continue to drive overall server shipments, they will purchase low-priced, low-margin equipment. Most revenues and profits will come from SMBs that already own a few servers each and are ready to use virtualization. These SMBs are getting ready to replace and upgrade their IT infrastructures and many are considering adopting virtualization for the first time. However, given the limited IT skills of SMBs, channel partners will need to enhance their own skills in this area and help SMBs implement virtualization without having to go through the usual trial and error which often negate the savings that SMBs expected to derive from virtualization.

In response to this interest, many SMB channel partners have already started to offer virtualization solutions. However, most SMB channel partners themselves are SMBs with limited skills and resources and find themselves overwhelmed with the rapidly changing landscape. Channel partners who do not quickly acquire the required skills will find their clients looking for others to help them.

As these SMBs successfully implement virtualization, and simultaneously increase their use of cloud-based applications and services, they will require fewer (although more powerful) servers, limiting the revenue potential for SMB channel partners from the resale activities and making the revenues from services even more important. While the initial adopters of virtualization have been the more sophisticated SMBs, this is changing rapidly. IT vendors need to understand the characteristics and needs of SMBs that are already using virtualization as well as those who plan to use it in the near future in order to focus their sales and marketing efforts.

Related Studies

AMI’s upcoming “2010 SMB Virtualization Market Analysis and Assessment” explores the current and planned adoption of different types of virtualization technologies by SMBs including their key drivers and challenges, decision making processes, channels, market sizing and forecast (including impact on unit shipments).

AMI’s “Global SMB Routes-To-Market (RTM) Opportunity Assessment and Sizing “ presents detailed market sizing and forecast for different products and services, as well as shipments and installed base for key IT products sold to SMBs in over thirty countries and six regions worldwide. This research draws on AMI-Partners’ comprehensive quarterly and annual surveys of small (1-99 employees) and medium (100-99 employees) businesses and channel partners as well as detailed discussions held with several IT vendors, channel partners and other key players in this market.

To inquire or learn more about AMI’s SMB Virtualization and Cloud Computing Services Studies, please call (212) 944 5100 or email ask_ami@ami-partners.com.