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Maximizing hypervisor value at lower cost amid virtualization competition

Pricy hypervisors like VMware's are on the road to commoditization. But until they decrease in price, use these survival tactics to maximize value without paying a premium.

Hypervisors will decrease in price. But until they do, negotiate solid licensing agreements to derive maximum value from whatever hypervisor you choose.

Today, buying a hypervisor is not much different from buying stock in a down market. Some organizations essentially guess when a hypervisor's price will hit bottom and then make a buy; others decide on a preferred hypervisor and buy it at the market price. Of course, in an era of escalating price wars, settling on a server virtualization technology may mean that you second-guess your timing should a significant price drop happen shortly after you make your purchase.

The x86 virtualization market today comprises a few vendors that charge for hypervisors (e.g., VMware Inc., Virtual Iron Software Inc.) as well as several vendors that give away hypervisors (e.g. Microsoft, Citrix Systems Inc., Novell Inc., Red Hat Inc.).

For more on the commoditization of the hypervisor, check out Chris Wolf's video on our Server Virtualization Blog:

When hell freezes over
In the near term, I expect all vendors, including VMware, to offer free versions of their hypervisors. If you think hell will freeze over before VMware offers a free version of ESX Server, think again. Sure, there isn't a hypervisor today that matches ESX feature for feature, but the alternatives don't have to. In many cases, a hypervisor that is just "good enough" for a particular task and less expensive will win out, especially for less-critical workloads. Whether they want to admit it publicly or not, all hypervisor vendors realize that developing best-in-class management is key to winning the hypervisor war. Indeed, regardless of their unique intrinsic value, hypervisors are becoming commoditized.

If you think hell will freeze over before VMware offers a free version of ESX Server, think again.
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And like it or not, the word free speaks to a lot of organizations. At the end of the day, even if VMware's solution is better than one that's only good enough, VMware has to be close on price if it wants to win competitive sales opportunities. VMware has to swallow its pride a bit if it wants to continue to expand market share. Otherwise, you should expect to see vendors like Citrix and Microsoft begin to steadily chip away at VMware's hold on the market and inevitably develop features that rival or exceed some of VMware's offerings. Citrix's XenServer solution is a great example of not just a cost-friendly solution but also one that is architecturally superior.

For more on virtualization pricing:
Microsoft pricing won't win VMware users

Citrix simplifies XenServer pricing model; VMware to follow?

VMware pricing draws large enterprises' ire
Survival techniques in an era of pricing wars
In an era of virtualization pricing wars, what can you do to get features and value? Here are a few tips:

  • Buy only what you absolutely need.
  • Avoid lengthy perpetual license contracts based on today's prices.
  • It's a buyer's market. Negotiate!

When you have a set budget for a project, it's often easiest to buy what you need for the duration of the project, even if implementation will take six months, for example. But consider this: Over that six months, the cost of your preferred hypervisor might decrease $600. Let's assume a modest number of 25 physical hosts to run the virtualization software. In that case, a $600 price drop would lead to $15,000 in savings. That $15,000 could buy you a few more servers or free room in the budget for the third-party virtualization management tool that you've had your eye on.

With hypervisor prices expected to drop, don't lock your organization into a lengthy licensing deal. What could look like a steal today could easily be viewed as a ripoff in a few months. By 2009 several major vendors will ship enterprise-ready hypervisors; locking yourself into a licensing contract beyond 2009 will likely result in a lost opportunity for significant savings.

Users in driver's seat
The virtualization landscape can be confusing and overwelming. But take heart: It's a buyer's market, so don't be afraid to negotiate. Competition is heating up, and as a result there is no reason to expect to pay full retail price for virtualization software. Depending on the size of a sale, discounts of 20% to 50% are possible. So if a vendor is pushing you on a long-term commitment, bargain hard and look for a major discount in order to do so.

Free hypervisors won't offer the kitchen sink; you'll still need to upgrade licensing to add advanced features, such as high availability or live migration. Regardless, competition in the hypervisor market puts you in the driver's seat. Remember, virtualization does not have to be a one-size-fits-all solution. While you may not be ready to trust your production workloads to a less feature-rich hypervisor, you may not have the same reservations about your development, test or training environments, especially if an alternative hypervisor provides the features and management capabilities you require at a significantly reduced price point.

It's not every day that you'll have the leverage that the hypervisor price wars now offer. Use the sparring to your advantage.

For more on the virtualization pricing wars, check out the rest of our special report .

About the author: Chris Wolf is a senior analyst at Midvale, Utah-based Burton Group. He has 14 years of experience in the IT trenches and eight years of experience with enterprise virtualization technologies. Wolf provides enterprise clients with practical research and advice about server virtualization, data center consolidation, business continuity and data protection. He is the author of Virtualization: From the Desktop to the Enterprise , the first book published on the topic, and has published dozens of articles on advanced virtualization topics, high availability and business continuity.

And for more on virtualization, check out our Server Virtualization blog.


This was last published in June 2008

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