According to a new study by Saugatuck Technology Inc., virtualization will have the single largest effect on IT budgets for hardware and support over the next three years, and just three companies -  Cisco, VMware, and Citrix (previously XenSource) - will dominate IT virtualization, accounting for 60 percent of all new virtualization deployments.

Saugatuck Technology, founded by Bill McNee, is a strategic advisor to senior executives, leading information technology vendors and investors, providing market strategy consulting and subscription research services focused on emerging and disruptive technologies, key business/IT challenges, and effective management strategies.

The lead author of the report, published in December 2007, is Charlie Burns, who notes: "All too frequently, the general concept of virtualization is equated with the specifics of server virtualization. That is because server virtualization, or more precisely, mainframe virtualization has been a fixture of the IT landscape for decades. But virtualization can be applied to all IT resources from servers to storage to networks to desktops and is not one-size-fits-all."

Research highlights from the report include:

• Virtualization poses a revenue threat to vendors of microprocessors, servers, Operating Systems, Middleware, and applications.
• Virtualization poses challenges in IT management which result in opportunities for vendors of IT management offerings.
• While all facets of IT Virtualization offerings will see enhancements in functionality and performance, the most significant enhancements will be in microprocessor, hypervisor, and operating system function for Server Virtualization.
• Through 2010, Server Virtualization will have the single largest impact on budgets for IT hardware and support. The second largest impact will be network virtualization.
• Through 2010, three vendors - Cisco, VMware, and XenSource (now Citrix) - will dominate IT Virtualization, accounting for 60 percent of all new virtualization deployments.