Virtualization providers will be the target of acquisition activity in 2008

Prime candidates are Citrix, Virtual Iron and SWSoft

Springboard Research has identified Citrix, Virtual Iron and SWSoft as prime candidates for acquisition in 2008 as part of its list of hot predictions for the new year.

Consolidation in the software industry is set to continue in 2008 despite all of the buyout activity that occurred this year for business intelligience vendors.

For example, Oracle acquired Hyperion while SAP picked up Business Objects and IBM secured Cognos.

Springboard senior market analyst, Ravi Shekhar Pandey, believes this activity will extend to the collaboration and virtualization space in the coming 12 months.

This fits with the emergence of Software as a Service (SaaS), Service Oriented Architecture (SOA) and virtualization as the biggest trends of the year.

The other hot issue was Green IT. But while a large number of IT professionals believe environmental factors are important in planning IT operations, Pandey said only a small proportion actually have clear green purchase criteria currently in place.

"Social Networking" was elected the IT buzzword of the year with SAP's US$6.8 billion purchase of Business Objects voted acquisition of the year.

CIOs agree 2008 is set to be an interestinig year if the research firm's acquisition predictions go ahead.

Virtualisation software vendor, Virtual Iron (VI), has been a thorn in the side of VMWare since it began in January 2005.

The company's marketing manager Mike Grandinetti said the single biggest barrier to virtualization technology adoption is VMWare pricing.

"It is too expensive. VMware's approach is puzzling to us," he said.

VI makes hardware virtualization software that requires CPU hardware assist in the form of Intel's VT or AMD's equivalent.

The next company Springboard Research says is a target for acquisition in 2008 is Citrix Systems which has completed its recent acquisition of XenSource, a virtual machine infrastructure provider, that puts the company squarely in competition with VMware.

And finally, there is SWSoft, a company well known among virtualization aficionados. The company's Virtuozzo software is used on several hundred thousand servers, mostly by remote data centres and hosting providers, according to CEO Serguei Beloussov.

It's best-known product is its Parallels desktop virtualization software, the popularity of which exploded a year and a half ago after it became the first software to allow Intel Mac owners to run Windows simultaneously with Mac OS X.

That and other versions of Parallels are used on more than 700,000 PCs, Beloussov said.

The company has doubled its revenue every year for the past eight years, and its head count doubled to 900 over the past year -- and rather than running development out of Silicon Valley, does it halfway around the world in the frozen Siberian city of Novosibirsk.

But as the virtualization market heats up, SWsoft wants to step out of the long shadow cast by its closest rival, VMware.

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