Microsoft, VMware offer deep discounts to gain virtualization market share

Comparing vSphere and Hyper-V list prices to determine which is cheaper often doesn’t translate into real-world costs for organizations.

When it comes to comparing publicly available list prices from VMware and Microsoft, IT shops and channel partners...

say the figures should be taken with a grain of salt, because both vendors negotiate pricing deals to capture territory in the market.

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On paper, the comparison between published list prices for VMware and Microsoft virtualization tools fluctuates according to the type of OS being virtualized, the size of the environment and what types of management tools a customer buys.

Beyond that, there are nearly endless theoretical nitpicks that surround VM density, operational efficiency and the ever-elusive concept of total cost of ownership (TCO).

In real life, though, the actual price negotiations render list pricing moot. 

Entering into an Enterprise Agreement (EA) with Microsoft is the first step toward negotiating a better price for many customers. Virtualization users can also get into the Enrollment for Core Infrastructure (ECI), which bundles together Windows Server operating system (OS) licenses and System Center 2012 into one package that costs less than licensing the two separately.

ECI prices contract negotiations are different for each organization, but prices often fall well below the publicized list price.

“For a three-year cycle, [System Center and Windows] Datacenter edition is commonly around $2,500 per processor,” under ECI, along with a bundled-in license for a Forefront Client Security device subscription, said Rob McShinsky, a senior systems engineer at Dartmouth Hitchcock Medical Center in Lebanon, N.H. List price for System Center 2012 ECI is $5,056 per processor.

Organizations in the education field can also get generous discounts from Microsoft.

“For Windows Server Datacenter we pay $150 per processor,” said Scott Ladewig, a network and operations manager of information services at the Olin Business School at Washington University in St. Louis. List pricing for Windows Server Datacenter edition is $2,357 per processor.

“VMware also offers academic discounts, but it’s nowhere near on that scale,” Ladewig added. “I’d be looking at thousands of dollars if I wanted to upgrade my vCenter license to add more than six sockets.”

Mainstream enterprises also get deals on Microsoft software, channel partners report.

“Microsoft is willing to work with customers to make the cost factor fall in their favor,” said David Kinsman, national technical solutions architect for World Wide Technology Inc., a systems integrator based in St. Louis, Mo.

VMware’s counterpunch: Free View and management tools
VMware is also willing to negotiate. Large VMware shops can get discounts of as much as 50% or more through Enterprise License Agreements (ELAs), volume deals or through resellers. In fact, almost nobody pays list price for everything, VMware experts say.

VMware vs. Microsoft: Pricing wars

VMware vSphere vs. Microsoft Hyper-V: Which is cheaper?

VMware vs. Microsoft: Cloud management is the new battlefield

Are Hyper-V savings worth the cost of a VMware rip and replace?

Lately, VMware has included its View VDI software and management tools for free in some deals, as a way to counters Microsoft’s aggressive prices.

“The kind of deal we’re seeing with VMware is less around the discounting of vSphere but more around the inclusion of additional VMware licenses,” said Eugene Alfaro, director of IT engineering services at Cornerstone Technologies LLC, an IT services firm based in San Jose, Calif.

VMware’s bargain pricing for View is already well-established; Alfaro said he’s also seen VMware throw in vCenter Operations (vCOps) licenses, including vCenter Configuration Manager.

 “By tossing in vCOps, what they’re telling [customers] is, ‘You don’t have to purchase the System Center suite from Microsoft,’” he said.

One caveat for IT shops looking for deals: Windows Server 2012 Hyper-V will pack in more features, said Kinsman, but it might also end Microsoft’s “willingness to make that cost conversation so easy.”

“Now is the time to negotiate with Microsoft,” said Kinsman. “Once Hyper-V 3 comes out, your negotiating power with [Microsoft] is going to be diminished.”

In part three of this four part series, we consider VMware and Microsoft’s new battlefield: Cloud management.

Beth Pariseau is a senior news writer for SearchServerVirtualization.com and SearchDataCenter.com. Write to her at bpariseau@techtarget.com or follow @PariseauTT on Twitter.

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Do you pay below the list price for Hyper-V or vSphere?
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sorry to say but vmw is history. for years they've been claiming they're way ahead of everyone else. now they're chasing ms. vmware has totally dropped the ball, with less features and costs more. really bad combination.
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Using hyper-v since R2.
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Not paying list prices on anything
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Microsoft is strategically pushing ECI agreements with current EA customers, aggressively pushing them to migrate Windows Datacenter and System Center licenses into an ECI agreement, more so know with the Introduction of System Center 2012. Daryl Ullman
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VMware is still leading imo, even though other vendors say they can do the same stuff it is often less effective
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discount on our ela was 62%
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