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The release of Hyper-V R2 with live migration makes it easier to make apples-to-apples comparisons of Microsoft's virtualization platform to more mature VMware offerings. But the question of which is cheaper is still up in the air and highly dependent on an IT organization's individual needs and circumstances.

For more on virtualization pricing: Hyper-V vs. VMware: Which is cheaper? Microsoft Hyper-V vs. VMware ESX cheat sheet Hyper-V R2 matches VMware with 64-processor support

With the release of vSphere 4, the entry price for a VMware environment with VMotion has decreased, but it is still far from free. And while Hyper-V R2 now includes a live migration feature, making effective use of it in all but the smallest environments requires investments in Microsoft System Center and System Center Virtual Machine Manager (SCVMM), both of which carry a hefty price tag.

VMware has done their best to keep their prices just as high as they can. Gordon Haff, principalIlluminata Inc.

"No one has ever claimed that they are the cheap solution," said Gordon Haff, a principal analyst at Illuminata Inc. in Nashua, N.H. "VMware has done their best to keep their prices just as high as they can," while Microsoft appears to be using Hyper-V as a loss leader to expand the use of its management, which Haff described as "Microsoft's primary monetization engine" for virtualization.

VMware, Hyper-V pricing compared
In terms of software acquisition costs, the price differential between VMware and Microsoft virtualization platforms has shrunk a bit with the release of vSphere 4 and Hyper-V R2.

Going from VMware Infrastructure 3 (VI3) to vSphere 4, the starting cost of a VMware environment with VMotion has dropped about 20%. Under old VI3 pricing, two dual-processor servers (the minimum to logically use VMotion) running ESX plus vCenter, the management console from which administrators perform a live migration, had a list price of $15,956, of which $12,916 was for two ESX licenses with Gold Support and Subscription Services (SnS), and $2,040 was for vCenter Foundation Edition with Gold SnS.

With vSphere 4, customers can get virtualization and live migration with Advanced Edition, which lists for $2,717, including Gold SnS, while the price for vCenter Foundation remains the same. Thus, the above mentioned configuration would list for $12,908 today, a savings of 19%.

A basic version of Microsoft Hyper-V R2 with System Center Virtual Machine Manager (SCVMM) Workgroup Edition can be had for $505 and provide management for up to five hosts. Beyond that, Microsoft list price for managing two Hyper-V hosts with System Center Essentials with SQL Server, 10 Management Licenses (MLs), patch management and monitoring is $2,961. Additional server management licenses are priced at $101 each. Thus for two Hyper-V hosts with 20 guests, a combination of SCE 2007, SCVMM Workgroup Edition and an extra 12 MLs to cover the remaining guests would be priced at $4,678 ($2,961 + $505 + 1,212), not counting optional Software Assurance (SA).

Alternately, some Microsoft customers might choose to purchase the entire System Center Server Management Suite, which in addition to VMM also includes Operations Manager, Configuration Manager and Data Protection Manager. A new version of the suite, SMS Datacenter, includes Software Assurance and unlimited client licenses, and is priced at $744 per processor. Thus, SMS-D for two Hyper-V hosts would cost $2,970, plus $579 each for SCOM, DPM and SCM, for a total of $4,713.

Either way, a small Hyper-V deployment with management capabilities and live migration can be obtained for less than half the price of a comparable VMware configuration.

VMware's VM density push
But in some cases, particularly in larger environments, VMware maintains that it has the price advantage over Hyper-V. Using an updated a cost per application calculator unveiled at VMworld 2009, the company demonstrates how customers can reduce total costs compared with Hyper-V.

Memory overcommit does work; it's there for a reason. Gordon Haff,

In an example scrutinized by Matt McSpirit, a Microsoft-employed partner technology specialist, the VMware calculator states that the cost per application to virtualize 100 workloads on VMware instead of on Hyper-V ranges from 3% less on vSphere 4 Enterprise Edition to 12% less on vSphere 4 Advanced. (vSphere 4 Standard Edition would present even greater savings, but it does not offer VMotion.) McSpirit dissects VMware's calculator at great length, but the crux of the issue is VMware's higher virtual machine (VM) densities, or consolidation ratios, of 1.5:1, thanks largely to VMware's memory overcommit feature.

Memory overcommit, which Microsoft Hyper-V does not have, allows memory going unused by a guest to be returned to a central pool for use by other VMs. This, in turn, enables more guests to share the allotted memory resources.

Higher VM densities translate into lower costs because fewer physical servers are required to host the organization's applications, requiring fewer software licenses, and lower infrastructure and power costs. Servers, in turn, can be tuned to run even more virtual machines by loading them up with memory.

VMware still has VM density advantage
"There is definitely some truth to VMware's contention that their features let them do things a bit more efficiently," said Illuminata's Haff. "Memory overcommit does work; it's there for a reason."

Thanks to memory overcommit, Rick Vanover, an IT infrastructure manager at Belron U.S. in Columbus Ohio, said he routinely drove consolidation ratios of 30:1 and higher with VMware, and that some of his peers strive for 100:1 consolidation ratios with the latest Intel "Nehalem" processors.

Even Microsoft's McSpirit gives VMware memory overcommit its due. "What ESX can do with memory management is very impressive indeed," McSpirit wrote. And while he notes that not everyone uses memory overcommit, he admits he wished Hyper-V had some of the same memory management techniques.

Other features that contribute to higher VM densities with VMware include a virtualization-optimized 'gang' scheduler, and for customers with Enterprise or Enterprise Plus editions, Distributed Resource Scheduler (DRS), said Mark Chuang, group manager for product marketing in VMware's server business unit. "With DRS, people don't leave as much headroom on any particular server, because DRS will distribute a spike across the cluster," he said.

Hitting the VM density wall
While vendors can debate the relative pricing of dueling technologies forever, list prices often mean nothing. The truth lies in real-world deployments.

And when it comes to real-world deployments, there are limits to how far IT managers are willing to push VM densities for performance, availability and cost reasons. Some workloads need constant access to their memory allotment, making them unsuitable for memory overcommit. And on the availability front, some IT professionals simply aren't comfortable with memory overcommit or, for that matter, running dozens of VMs on a single physical box.

I'm starting to think that consolidation may be overrated. Rick Vanover, IT infrastructure managerBelron U.S.

Chris Wolf, a senior analyst at Burton Group, says that lightly loaded two-processor systems are "the sweet spot" for virtualization deployments, because they provide ample I/O expansion slots and memory, and spread the risk of a server failure across more nodes in a cluster. With highly consolidated systems, "if you have a host that goes down with 60 VMs on it, all of a sudden you have 60 VMs that need to start up somewhere else," Wolf said.

Nor do users necessarily save money on hardware by buying fewer larger systems, experts said. For one thing, maxing out a server with RAM means using the highest-density dual inline memory modules, or DIMMs (at 8 GB), which cost a lot more than 4 GB or 2 GB memory models.

Using the Dell website as reference, for example, Microsoft's McSpirit found that doubling a server's RAM configuration from 32 GB to 64 GB with 4 GB DIMMs could be achieved for $889. However, quadrupling the RAM to 128 GB with 8 GB DIMMs bumped the system price by a whopping $9,950, dramatically eating into cost savings of a higher consolidation ratio.

IT shops that favor high consolidation ratios also tend to favor expensive Fibre Channel storage systems rather than Ethernet-based iSCSI and Network File System, or NFS, said Vanover. Fibre Channel also typically requires special -- and costly -- skills. "I'm starting to think that consolidation may be overrated," Vanover said. "I've historically been a four-socket, Fibre Channel guy [but increasingly] the two-socket iSCSI configuration is appealing to me with a lesser-contended I/O [storage/network] subsystem and smaller consolidation ratio per host."

Small businesses balk at VMware cost
But arguments about VM densities and consolidation ratios are cold comfort to organizations just starting out with virtualization, many of whom cringe at the high initial price tag of VMware.

Last winter, Jim Hutchins, the CIO at T2 Systems Inc., a parking management vendor in Indianapolis, was prepared to spend about $40,000 to deploy VMware Infrastructure 3 Enterprise Edition and vCenter across six hosts, but in February it changed course and went with Hyper-V and SCVMM. He briefly looked at VMware's Essentials Plus bundle, but with six servers, he would have had to divide them between two separate vCenter domains (vCenter is limited to three Essentials servers per domain).

The lack of live migration in Hyper-V 1.0 was disappointing, but Hutchins was reconciled to living without for a couple months. "If [live migration] were years away, then no, but I really believe that we'll have it within the quarter."

Unlike Fortune 500 companies, companies like T2 Systems "don't care about these features -- or at least not enough to pay the price they are asking," Hutchins said.

Ultimately, business size may be the most important predictor of whether an organization opts for VMware or Hyper-V, said Illuminata's Haff.

"Microsoft is going to have a real strong entrée into Microsoft accounts in the midmarket," Haff said. Conversely, "VMware's real strength is in the enterprise and the service provider space."

But that doesn't mean that either company is giving up on their weaker segment, Haff added. "I don't see VMware beating Microsoft in the midmarket, and I don't see Microsoft beating VMware in the enterprise, but that doesn't mean that can't capture some portion of each other's market."

Let us know what you think about the story; email: Alex Barrett, News Director.

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