Virtualization to help Australian companies avoid almost Au$10 billion in costs by 2020

Avoided costs now funding next gen mobile cloud IT era

SYDNEY, 20 August 2013 — VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today revealed the results of a study it sponsored, which shows virtualization will help Australian business avoid AU$9.7 billion in costs through the year 2020. The IDC Server Economies Index, sponsored by VMware, shows a total of AU$106 billion in costs will be avoided across eight countries in Asia Pacific by 2020.

The IDC Server Economies Index, sponsored by VMware is part of a “Virtualization 2020” initiative that VMware is undertaking to celebrate its
15 th  year anniversary. The company was founded in Palo Alto, California in 1998. In Asia Pacific, VMware was the first virtualization player to enter the region in 2003 and has been a pioneer in driving business impact for customers by simplifying IT through virtualization.

“We are looking back and celebrating a significant milestone for VMware and we have quantified our company’s achievements in helping customers avoid billions of dollars, which can be put to use in building out next generation IT programs” said Duncan Bennet, vice president and managing director, VMware Australia/New Zealand. “VMware remains focused on leading the industry into the next era of IT – the mobile-cloud era, and the Software-Defined Data Center is the future of the data center,” Bennet added.

The IDC Server Economies Index, sponsored by VMware, is included in a published IDC white paper entitled “Vision 2020: Virtualization's Potential AU$106 Billion Impact” (August 2013, IDC#AP77008W) authored by technology analysts IDC. The paper looks at how much money Australia would have spent in a world with no virtualization versus a world with virtualization. It provides an analysis over the past 10 years and looks forward through to 2020.

In Australia, virtualization has helped businesses avoid AU$3.5 billion in costs between 2003 and 2012, and that number will increase and grow in excess of AU$6 billion by 2020, according to the VMware-sponsored study.

The potential economic impact for Australia by 2020 using the IDC model is AU$9.7 billion and comprises costs avoided in a few key areas:

  • AU$4.5 billion in server spending avoided due to servers avoided. Server spending refers to the customer revenue generated from the sale of physical x86 servers.
  • AU$1.6 billion in power and cooling costs avoided due to servers avoided. This refers to cost of energy to power and cool a physical server in the datacenter.
  • AU$58.5 million in floor space costs avoided due to real estate avoided. This refers to the land or construction cost associated in housing a physical server.
  • AU$3.4 billion in server admin costs avoided. This refers to server admin costs avoided and includes IDC's estimate of the cost of people and overheads needed to manage each physical server.

“Australia is known globally as a leader in the uptake of new and disruptive technologies, and with virtualization it is no different with data showing Australia being one of the world’s most virtualized countries,” said Matt Oostveen, research director, IDC Australia.

“IDC calculates the saving to the environment as being very significant; some 8.9 million tonnes of carbon dioxide emissions from 2003 extending to 2020,” Oostveen concluded.

The Software-Defined Journey Ahead
Over the past 12 months, VMware has made several announcements in support of the Software-Defined Data Center, whereby the benefits of server virtualization are applied to everything in the data center. While the IDC report captures the avoidance of costs associated with server virtualization, VMware estimates that using a software defined data center model for all other aspects of the datacenter could extend savings as much as six to seven times that of server virtualization alone.

The software defined data center opens up new market opportunities for virtualization in networking, security, storage, for example. VMware estimates that these areas taken together represent a AU$30.5 billion total addressable market (TAM) for VMware and growing above 20% globally.

VMware customers have utilized that cost avoidance to both boost the bottom line as well as re-allocate those resources to more strategic IT initiatives such as new application development projects that drive the business forward.

Virtualization impact across Asia Pacific
When comparing results across the countries studied, the findings showed that the mature markets of Australia, Japan and Singapore derived AU$8.5 billion more in historical savings from virtualization than from the emerging markets. For these mature markets, the critical saving area was in the costs of servers avoided, which contributed to nearly half (47%) of overall savings in the four areas.

In contrast, the emerging markets of China (PRC), India, Indonesia, Malaysia and Thailand saw greater forecast savings from virtualization by AU$16 billion than the mature markets. Given that it has one of the lowest current levels of server virtualization, China saw the most significant difference between historical and forecast savings – a staggering AU$42 billion – resulting in the PRC being able to increase cost avoidance by more than five times.

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About the VMware-IDC Server Economies Index
VMware commissioned IDC to create a hypothetical view of a world where x86 server virtualization never existed, and then to forecast the impact that server virtualization is likely to have made by the year 2020. IDC put together a select team of IDC worldwide, Japan and Asia Pacific analysts to build a server-centric model that shows the impact of virtualization, which models data for eight countries across APJ (Australia, India, Indonesia, Malaysia, PRC, Singapore, Thailand & Japan). The IDC Server Economies Index indicates server virtualization’s positive economic impact across two time periods, 2003-2012 (historical) and 2013-2020 (forecast), in four areas: Server Spending, Power & Cooling, Server Admin Costs, and Floor Space.

About VMware
VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume Information Technology resources in a manner that is evolutionary and based on their specific needs. With 2012 revenues of $4.61 billion, VMware has more than 500,000 customers and 55,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

VMware, VMware Horizon Suite, Horizon Workspace, Horizon View and Horizon Mirage are trademarks or registered trademarks of VMware, Inc. in the United States and other jurisdictions. The use of the word “partner” or “partnership” does not imply a legal partnership relationship between VMware and any other company.

Contacts

Ian Murphy
Text100 PR for VMware
Ian.murphy@text100.com.au
(02) 8923 9505
Michelline Santos
Text100 PR for VMware
michelline.santos@text100.cm.au
(02) 8923 9502