Will virtualization cut the legs from the IT economy?

PC sales are still high, but that might change as more are virtualized

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Analyst firms IDC and Gartner both cut their estimates of PC sales for 2010, which at this point is like switching your bet during the fourth quarter.

Gartner said some consumers and businesses were putting off some purchases for budget reasons and buying tablet computers rather than at least a few laptops.

IDC will update its quarterly PC market report in two weeks, but sees the same slightly flattening trend Gartner does, according to Reuters.

"Reduction" in this case doesn't mean anything like what it does in the rest of the economy. Gartner still predicts growth in 2010 will be 14.3 percent, increasing to 15.9 percent in 2011.

IDC estimated 2010's third quarter grew at closer to 11 percent, but predicted in June 20 percent growth for the full year.

Much more interesting is what's happening to servers.

According to Gartner, x86-based servers took another jump in sales -- to 14.0 percent for the third quarter.

That's a big number for PCs; for servers it's incredible.

A big part of that growth is in servers being used for virtualization projects -- which replace old servers with new, add virtual server software, and get four, five or ten servers worth of work out of one piece of hardware.

"Inside the data center virtualization is a catalyst for change, which means new servers, storage, networking to go with an investment in virtualization," according to Mark Bowker, analyst at Enterprise Strategy Group. "You do see some companies repurposing old hardware, but not many, so mostly it's new hardware."

More than 85 percent of U.S. companies are using or testing virtual servers, and will continue to drive sales of virtual server technology steadily during migrations that could last for years.

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