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Xen startups wage price war on VMware ESX

With new products announced today, XenSource and Virtual Iron are both aiming at VMware's Achilles' heel: The exorbitant price of an ESX license.

VMware ESX has a proven track record of reliability and high performance, but it's too expensive, said executives from both XenSource and Virtual Iron, two startups that announced new versions of their Xen-based virtualization platforms today.

To counter the high price tag of VMware ESX, both companies will offer their hypervisor-based products for a small fraction of the cost of VMware ESX.

Virtual Iron Software Inc. will sell its self-titled virtualization suite for $499 per socket, with up to four cores per processor. In comparison, list price for VMware ESX is $3,000 per socket. XenSource's XenEnterprise pricing starts at $488 annual subscription fee per dual socket or $750 per socket for a perpetual license.

Both companies also announced entry-level alternatives to their full-fledged enterprise products. In addition to XenEnterprise, XenSource Inc. is offering XenServer, a stripped-down version of the product that supports up to eight Windows guests and 8 GB of RAM for $99 per dual socket server; and XenExpress, a free version that supports up to four virtual machines and up to 4 GB of RAM on a single server.

The beauty of the XenSource server family is that its architects built it around the same Xen 3.0.3 code base, said John Bara, XenSource vice president of marketing, and that makes for easy upgrades. Compare that with VMware ESX and VMware Server, where ESX runs on bare metal, while VMware Server runs on top of Windows or Linux. This "split architecture" is a real problem for VMware users, Bara said. "I was at VMworld recently and three-quarters of the people I talked to on the show floor talked about the pain of upgrades around multiple architectures," he said.

Virtual Iron Software Inc. is also offering a free version of its product, which doesn't impose any limit on the number of virtual machines or RAM but is limited to a single server and doesn't include any management features.

Sun shines on VMware, but for how long?

John Enck, research vice president for server strategies at Gartner Research, confirmed that pricing is a major gripe of VMware users. "We absolutely hear about pricing concerns," he said.

But the availability of products such as XenEnterprise and Virtual Iron may soon put a stop to that. "We don't think that VMware is going to be able to sustain its current level of pricing," he said. "To a certain extent, they're just making money while they can."

In October, VMware's parent company EMC Corp. announced that its subsidiary enjoyed 86% year-over-year growth in the third quarter and was on track to earn $750 million in 2006. In 2005, the company earned $387 million.

Reliability at stake

As a rule, Xen-based hypervisors should perform as well as VMware ESX, said Gordon Haff, principle IT adviser with Illuminata Inc. These products are based on "a native hypervisor and support Intel-VT [and AMD-v] so there's no reason to doubt their performance," he said, although it "would behoove users to do a bit more testing than you would with VMware."

The real problem, of course, is that Virtual Iron and XenSource are almost entirely unproven. "It's the maturity that concerns us," Gartner's Enck said. "We've seen very little production deployment."

But early returns on Virtual Iron, at least, are positive. Mobius Management Systems Inc., a content management software provider in Rye, N.Y., is one company that was scared off by VMware's prices. It has been testing Virtual Iron for three months, with good results.

The firm got its first taste of the power of virtualization about a year ago when it implemented Solaris Zones within its test and development lab. "It worked extremely well," said Josh Clark, Unix systems administrator. "It helped us vastly reduce the number of Solaris servers we have out there."

This year, Mobius decided to consolidate the hundreds of Windows boxes in its test/dev environment down to twelve machines running virtualization. Mobius looked at VMware, but the cost was too high – VMware ESX for 12 machines would have cost $80,000 – "about the same as we were paying for the new hardware," Clark said. Instead, the company deployed Virtual Iron on twelve dual-socket machines for $12,000.

Although he can't compare the performance he's getting from Virtual Iron to VMware ESX directly, Clark said he believes it's comparable, based on estimates he'd received from his VMware representative. Going forward, Mobius plans on buying new Sun SunFire X2200s -- dual core, dual socket AMD Opteron machines -- and maxxing them out with 64 GB of RAM. With those in place, "I think we'll be able to get more VMs on there," he said.

Clark was also pleasantly surprised by some of Virtual Iron's management features -- LiveCapacity and LiveMaintenance -- workload mobility features akin to VMware's Vmotion and HA. Would he have bought Virtual Iron without those features? "Probably," he said, "but they are awfully useful."

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