Virtualization will have the single largest impact on budgets for IT hardware and support over the next three years, a market that will be dominated by three large vendors, says a new study.

Saugatuck Technology's new report, entitled "The Many Faces of Virtualization -- Understanding a New IT Reality", finds that Cisco, VMware, and Citrix, which recently acquired XenSource, will account for 60 percent of all new virtualization deployments. The second largest spend will be on network virtualization, according to the research.

A third key finding of the study is that all facets of IT virtualization will see substantial enhancements in functionality and performance, with the most significant enhancements in virtualization technology being found in microprocessor, hypervisor, and operating systems.

The background to the report is Saugatuck's finding that "virtualization is a key enabler of IT and business efficiency, but it is vastly misunderstood and underestimated within user enterprises. As a result, user executives fail to effectively manage it, and therefore fail to realize the full potential and benefits of IT virtualization. And IT vendors seldom realize the breadth and depth of opportunity that IT virtualization presents to them."

According to the research company, the study "provides previously unseen depth and explanation of the rapidly-evolving topology of IT virtualization in its many forms, from servers to mainframes, to applications to storage to networks."

"We're at a very critical point in the evolution and adoption of virtualization by both users and vendors. Almost everyone sees opportunity in virtualization, but very few really grasp its scope and complexity," said Saugatuck VP and study author Charles Burns. Presumably he has in mind issues such as virtualization security, about which Gartner last year warned of the risks.

"That leads to a lot of missed opportunities -- and some very inflated costs of management", continued Burns. "Our goal with this study is to provide a foundation for understanding key categories of virtualization, their benefits, and how to manage them effectively."

"This study is the first attempt that we've seen to use real-world expertise and practicality to classify and explain the types and effects of IT virtualization, in terms that both user and vendor executives can understand, and can profit from," said Saugatuck founder and CEO Bill McNee. "This is a solid foundation from which executives can educate themselves, and begin planning more effective management of virtualization."