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VMware ESX 3.0 upgrades stall on license costs, VAR says

Longstanding VMware ESX shops are miffed by the high cost of upgrading to Virtual Infrastructure 3, one VMware reseller says.

VMware ESX 2.x users are proving slow to upgrade to VMware Inc.'s latest and greatest, VMware Infrastructure 3 (VI3), introduced last summer. At least one VMware reseller is pointing the finger at the high cost of upgrading to the new platform.

For customers with Service and Support (SnS), the cost of upgrading from VMware ESX 2.5 to Virtual Infrastructure 3 Enterprise costs $3,000 per dual socket server [a promotion that put the upgrade at $1,000 ended on 12/31/2006]. In comparison, a net-new VI3 Enterprise license goes for $5,750. Depending on when the ESX 2.x license was purchased, customers paid between $3,000 and $5,000 per dual-socket server.

A lot of people feel that 3.0 should have been a free upgrade.
Steven Reed
CTO, VirtualNgenuity

That doesn't sit well with some ESX 2.x users, many of whom have had ESX 2.x installed since 2003 and are paying annual license and subscription fees of 21% to 25%.

"A lot of people feel that 3.0 should have been a free upgrade," said Steven Reed, chief technology officer at VirtualNgenuity Ltd., a virtualization-specialized VAR in Canyon Lake, Texas.

Of course, upgrading to VI3 Enterprise provides VMware shops with a lot of new functionality, notably HA, Distributed Resource Scheduler (DRS) and Consolidated Backup, plus support for more memory plus greater virtual CPUs.

But Reed contends that users aren't using all the high-end VI3 features.

For example, VMware HA and DRS are extremely popular with end users, but Consolidated Backup has proven very tough to sell users on, Reed said "It's not because it isn't a fantastic product – it is – but because it's a big departure from the status quo."

Conversely, VMotion, VMware's live migration tool, is seen as absolutely central to most virtualization deployments, but it only comes with Enterprise. "We sell a lot of VMware," said Reed, "but to date, we've only sold one SKU that isn't Enterprise."

At VMworld last November, VMware announced that just under one-third of its customers had upgraded to VI3, and that another 45% planned to upgrade by June of 2007.

That basically rhymes with VirtualNgenuity's experience – but with a twist. While approximately 75% of its customers have purchased VI3 most of them are running it in test and dev or as a net-new install, Reed said. Customers that have wholesale upgrades to VI3 from 2.x are the exception, not the rule.

The VMware deployment at Tom Becchetti's shop bears out these points. As senior capacity planner for a large financial services company, Becchetti oversees about 40 ESX 2.5 nodes, but only three 3.x boxes – and those are net-new. "We don't do extra work if we don't have to," Becchetti said. As older boxes start dying, Becchetti will replace them with ESX 3.x, but probably not before. Becchetti is impressed with VI3's availability features and management interface, but he was unimpressed by the Consolidated Backup.

Another reason Becchetti favors upgrading by attrition? A wholesale upgrade "would be very costly," he said. "We've already paid for it once. Why should we pay for it again?"

VirtualNgenuity stages lower cost alternative
In the meantime, VirtualNgenuity has started presenting some of its more cost-sensitive customers an alternative virtualization platform from Virtual Iron Software Inc. in Lowell, Mass. With its eye on VMware ESX 2.x users dismayed by ESX 3.0 upgrade costs, Virtual Iron has teamed up with Toronto, Canada-based PlateSpin Inc. and is offering a bundle that marries Virtual Iron virtualization and PlateSpin virtual-to-virtual (V2V) conversion software. A Virtual Iron license for two dual-processor servers plus 24 V2V conversions is priced at $3,700.

With the exception of VMware's Consolidated Backup option, VirtualNgenuity's Reed said that Virtual Iron is feature-for-feature comparable to VMware Infrastructure 3. Furthermore, because it is designed for the latest AMD-v and Intel-VT chipsets, Virtual Iron "can be faster in large-scale computing environments," Reed said. Virtual Iron software also supports more memory (96 GB) and larger SMP configurations (up to eight virtual CPUs) per virtual machine than VMware (64 GB and 4, respectively).

But while the Virtual Iron pricing may appeal to a few customers, "VMware dominates the market, and that brings a certain degree of comfort to customers that it will work," Reed said. Technologically, Virtual Iron is a valid option, he said, "but customers still have to become more familiar with the product."

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

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