Virtualisation software and service vendors will be making $1.35bn a year in the Asia-Pacific region within two years, analysts report.

The market is growing at a rate of 42 per cent annually, according to Springboard Research. Three-quarters of the revenue will be earned from services, with software generating between one third and one quarter.

"Virtualisation is becoming an imperative and a growing number of companies will implement virtualisation at the server level in 2008," said Michael Barnes, vice president of software research at Springboard Research.

"The complex nature of engagements with vendors and system integrators while implementing solutions is a prime reason for virtualisation services taking a larger share of the market."

Half of the chief information officers surveyed in four key Asia-Pacific markets are planning to rollout virtualisation services within 18 months to two years.

However, many fear that the technology is not mature and that its introduction will raise new management and security challenges, according to Barnes.

An IDC study last year found that the majority of data centres in the Asia-Pacific region had yet to install any significant virtualisation technology. For example, 83 per cent in China and 73 per cent in India were not using the technology.

However, in some of the region's more developed economies, such as Singapore, 40 per cent or more had some degree of virtualisation.

"There is clearly a need for more customer education on the benefits of virtualisation and successfully incorporating it into the IT environment," said Ravi Shekhar Pandey, a senior analyst at Springboard.

"Sharing case studies of successful deployments alongside direct linking of virtualisation with return-on-investment and business benefits is a key imperative from the vendor side."