1. Copyright 2010 IDC. Bringing the Private Cloud to the Data Center Matt Eastwood Group Vice President Enterprise Platforms Research September 2010

2. Copyright 2010 IDC. IT in the Cloud is a Journey… The Market Has Been Cloud Washed… What’s Next? Enjoy the Ride

3. Copyright 2010 IDC. Cloud Computing Defined Cloud Computing – consumer and business products, services and solutions delivered in real-time over the Internet including: –Standard shared service (built for a market, not a single customer) –Solution-packaged (“turnkey” integrating appropriate resources) –Self-service –Elastic scaling (dynamic and fine-grained) –Service Metering (use-based pricing) –Ubiquitous Network Access (accessible via the Internet) –Browser Based (standard UI technologies) –Published API (common Internet APIs) Public: Open to a largely unrestricted universe of potential users; designed for a market, not a single enterprise Private: Designed for, and access restricted to, a single enterprise (or extended enterprise); an internal shared resource, not a commercial offering; IT Org is the “vendor” of the shared/std service to its users Deployment Models

4. Copyright 2010 IDC. Cloud Adoption: Evolutionary vs. Revolutionary Dynamic IT xSPs A Look Back to 2005 Private Cloud Public Cloud Traditional Datacenter Public Cloud Private Cloud New Existing Elastic Scaling Dynamic IT Migration ‘Custom’ xSPs New ‘Bursting’

5. Copyright 2010 IDC. Agenda Cloud and Convergence Attitudes Towards 'The Cloud' Market Trends Essential Guidance

6. Copyright 2010 IDC.  A more balanced view of end-user business goals is returning to market  With virtualization, focus has been on cutting costs  Customers are again beginning to look for additional business benefits from IT  Technology will clearly play an important role in future business initiatives -16 +3 +6 +3 NC +4 Q.Prioritize the following business goals as they relate to your organization by allocating 100 points among them. Source: IDC Enterprise Platforms Surveys The “New Normal” Shifting Business Goals Impact Technology Goals

7. Copyright 2010 IDC. Worldwide Server Market, 1996-2010 -$20B +$11B+$5.5B -$17B -30% +23%+8% -27% +22 Pts -1 Pts -31 Pts ‘97-’08 Change Revenue (%) 55% 14% 23% 32% 45% 31% Source: IDC Quarterly Server Tracker, Q4 2009 x86 Servers Unix Servers Other Servers

8. Copyright 2010 IDC. Source: IDC Quarterly Server Forecast. June 2010 YOY Shipment Growth 4Q Rolling Shipments Q309  Q410 +1M Units +16% Server Deployments are Increasing Rapidly on Refresh 15% 45% 85% 100% WW x86 Server Shipment Forecast: x86 Servers Continue to Accelerating Q308  Q309 -1.7M -21%

9. Copyright 2010 IDC. The Technology Catalyst: WW Growth 2009-2013 2.5x 2.7x 4.7x 8.4x 12.4x 2.3x 1.3x Efficiency Complexity Elastic Scaling Off Premise Servers (M) Blades (M) Cores (M) VMs (M) Data (TBs) Transactions10G Ports

10. Copyright 2010 IDC. Server Installed Base: The Evolution From Physical to Virtual WW Server IB Virtualization Leaves its Mark and Primes the Market for Change Servers WW Server Shipments WW Virtual Server IB ’09-’13 CAGR 31.5% 0.6% 6.5% Source: IDC Server Virtualization 2009

11. Copyright 2010 IDC. Virtualization is the Foundational Platform for the Datacenter More than half of all workloads (51%) will be virtualized by the end of 2010 Two-thirds (69%) by 2013 Only 12.8% of all physical servers are virtualized in 2009 VM densities continue to rise predictably Averaging 6 VM’s per physical server in 2009 and 8.5 in 2013 2.1% Servers 12.8% Servers 22.3% Servers WW Installed Workloads Virtualized

12. Copyright 2010 IDC. 2005200620072008200920102011 2012 3.0 3.3 4.2 5.3 6.1 7.1 7.7 8.2 1.4M VMs 15M VMs VM Cross Over 5% Shipments 21.6% Shipments 2013 WW Server Virtualization Shipment Forecast, 2005-2013

13. Copyright 2010 IDC. Virtualization Management Gap WW Spending on Servers, Power and Cooling, and Management/Administration 56 million virtual machines by 2012 New Economic Model for the Datacenter Shifts to Automation Tools are a Requirement

14. Copyright 2010 IDC. Virtualization is Foundation for Cloud Hypervisor Mobility Metering & Chargeback Metering & Chargeback Provision Consolidate Virtualize Automate Hypervisor Mobility Hypervisor Mobility Metering & Chargeback Metering & Chargeback Self Provision Cloud 45% Sites 18% Market 45% Sites 18% Market 90% of Virt. Sites 90% of Virt. Sites 20% of Virt. Sites 20% of Virt. Sites 10% of Virt. Sites 10% of Virt. Sites Cloud Internal vs. External Cloud Internal vs. External 18% 20% 10% 90% Source: IDC Server Virtualization 2009

15. Copyright 2010 IDC. IT Optimization by the Numbers: Houston We Have a Problem Q. What were the top three areas of savings? (N=400) % of Responses % of Annual Spend Costs Drop 25% but 80/20 Rule Still Applies RESupportP&C Server HW System SW Staff -15% -5% -9% -8% +20% +17% Source: IDC Server Virtualization 2009

16. Copyright 2010 IDC. Who’s Embracing the Cloud Q. Rate utilization of public cloud over next 3 years (1-10 Scale)?  Cloud is divisive concept with SMB and mature virtualization site favoring  SMB’s consuming SaaS applications  Startups and enterprises with large scale Web infrastructures  Enterprise developers with one-off projects  Compute intensive tasks Total <500 Employees 5,000+ <15% >50% Virtualized 500-4,999 15-<50% Source: IDC Enterprise Platforms Survey, Jan 2010 (N=255)

17. Copyright 2010 IDC. Workloads in the Cloud Q. Which applications will you run in Cloud in 3 years: Private Agnostic  Workloads remain the critical pivot point in the datacenter  Virtualization is hot and it impacts cloud adoption profiles  Users with high rates of business change favor cloud models Bus. Processing DSS VOIP IT Infra App. Dev. Tech. email Collaboration Web Infra Source: IDC Enterprise Platforms Survey, Jan 2010 (N=255) 32% 18% 16% 13% 14% 8% 31% 41% 21%

18. Copyright 2010 IDC. Server Workloads Topology Business Processing  ERP  CRM  OLTP  Batch Collaborative  E-Mail  Workgroup Decision Support  Data Warehousing/Mart  Data Analysis/Mining Web Infrastructure  Streaming Media  Web Serving App. Development IT Infrastructure  File & Print  Networking  Proxy/Caching  Security  Systems Management Industrial R&D 18 Workloads in 7 Workload Categories Collaborative Business Processing Decision Support Web Infrastructure App. Development IT Infrastructure Technical Source: IDC Server Workloads 2009

19. Copyright 2010 IDC. Three layers of cloud computing Cloud Applications Software as a Service (SaaS) Cloud Applications Software as a Service (SaaS) Cloud Platform Platform as a Service (PaaS) Cloud Platform Platform as a Service (PaaS) Cloud Infrastructure Infrastructure Services (IaaS) Cloud Infrastructure Infrastructure Services (IaaS) IT Cloud Services Server Storage Network Storage Network Workloads Platforms

20. Copyright 2010 IDC. Actual Mileage May Vary: Migration Starting Point OLTP email CRM File Serving ERP Collaborative Sys Mgmt Technical Caching Security Networking Data Analysis Data Mining Streaming Web App. Dev. Source: IDC Server Virtualization 2009 $44.9 Billion $16

21. Copyright 2010 IDC. Cloud Implementation Help Q.Who will help build out your private cloud?  Larger companies and leaders favor internal IT  Smaller orgs and laggards favor server vendors  Virtualization vendors are broadly favored  Those planning private clouds are most likely to favor Internal IT Source: IDC Enterprise Platforms Survey, Jan 2010 (N=255)

22. Copyright 2010 IDC. Cloud Leadership Q. Who is the leading vendor?  Comparing mature and understood (virt) with unknown (cloud)  The evolution to private cloud will be led by traditional IT  Traditional IT suppliers lag in Public cloud  Larger orgs name IBM  SMB favors Google, Amazon and Salesforce 55% 45% 50% Source: IDC Enterprise Platforms Survey, Jan 2010 (N=255)

23. Copyright 2010 IDC. Attitudes Towards Convergence Source: IDC Enterprise Platforms Survey, Jan 2010 (N=255) Q. Most appeal w/ convergence? End-users rate likelihood of converged adoption at 3.6 of a 10 scale The sever will be the focal point for IT convergence Larger companies, leaders and leading virtualization adopters favor most Service providers more likely to favor network led convergence 3.6 3.3 3.9

24. Copyright 2010 IDC. New Business Cycle for IT Convergence Reigns for the next 10 years 199019851995 Mainframe/minicomputer Integrated architecture 200020052010 Integrated architecture Unix/RISC Modular architecture Transactional applications and Database ERP, Analytics and Datamarts Application Development Web File/Print and Networking Collaborative Integrated architecture X86 Servers Modular architecture 2015 Microservers? Compute/Memory Boards? Modular architecture Business Value Converged Infrastructure & Private Clouds Virtualization Public Clouds Public Clouds Lower Cost of Computing Per Unit of Work

25. Copyright 2010 IDC. Intersection Technology Offerings Traditional IT Private Cloud Hosting Outsourcing Public Cloud Traditional Servers Converged Infrastructure Micro Servers Heterogeneous Infrastructure: Server, storage and network resource pools assigned as needed to business services Heterogeneous Infrastructure: Server, storage and network resource pools assigned as needed to business services Homogeneous Infrastructure: multi-node computing design including processor, memory, network, storage, P&C in a single chassis Homogeneous Infrastructure: multi-node computing design including processor, memory, network, storage, P&C in a single chassis

26. Copyright 2010 IDC. Market Segments Continue to Shift: Understanding the Impact of Cloud % Server Spend 17% 81% 2%  Traditional IT –Heterogeneous –Legacy & Proprietary  Private Cloud –Bladed and Virtualized –Consolidation Play –Existing Workloads  Public Cloud –Homogeneous –Dense/Low Cost –New Workloads Private Cloud Public Cloud Traditional IT 93% 6% 1% 20% 70% 10% Units

27. Copyright 2010 IDC. Cloud and Convergence, 2013 The Whole is Smaller than the Parts Networking Equipment $62 Billion Storage Systems $32 Billion Server Hardware $50 Billion 2013 Mkt Not $144B But $123B 2013 Mkt Not $144B But $123B File&Print eMail Workgroup Streaming $10B CAGR (10-13 ) Not 3.2% But -2.0% CAGR (10-13 ) Not 3.2% But -2.0%

28. Copyright 2010 IDC. Cloud and Convergence, 2013 A View of a Bifurcating Server Market $52B: Bifurcation Non x86 38% Datacenter 34% Small Site 19% Scale-out 9%

29. Copyright 2010 IDC. An Alternative View (or is it) Workload Optimization $52B: Optimization BI 12% Infrastructure 61% BA 12% OLTP/DB 15%

30. Copyright 2010 IDC. Essential Guidance  CIOs pay attention to time, money and people  Downturns drive inflections and change on recovery  Workloads are the critical pivot point for cloud and convergence decisions  Many political barriers remain in the DC  User demographics change constantly

31. Copyright 2010 IDC. Questions Matt Eastwood meastwood@idc.com Twitter: matteastwood +1 (508) 935-4503