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VMware has been the 800-pound gorilla in the hypervisor market for some time now. Few folks would deny the scalability and reliability of the VMware ESXi product, which normally would leave little room for many others. Microsoft, however, is not one to say no to another enterprise market, but unlike other markets it has products in, this one clearly is dominated by someone else. Microsoft introduced a new hypervisor called Hyper-V with Windows 2008. While the initial product was rough around the edges and lacked many of the advanced features VMware offered, the product still established a footprint for Microsoft in the virtualization market. With the latest iteration released with Server 2012 R2, Hyper-V has matured into a more reliable and stable platform.
Hyper-V has improved greatly since it was first released, but few would put it on the same level as VMware. Despite VMware having a head start on Hyper-V, Microsoft's offering still has a place in the data center. VMware ESXi is a fairly complex product to work with, and the licensing is expensive for key features such as vMotion, Distributed Resource Scheduler, high availability and others. The question you have to ask yourself is, "Do all of your VMs need first-class treatment, or could a few travel in business class or even coach?" In many organizations, VMs are often separated into different storage tiers to help maximize storage efficiency and costs. Most companies stopped at the storage level, but hypervisor tiering may also offer similar advantages.
Let's be clear, this is not a vSphere to Hyper-V comparison. VMware has a more established production record than Microsoft, but it can cost more to implement. Before the angry comments start, let's look at a few points. As far as price, Microsoft often likes to claim that Hyper-V is "free" with Windows Server. While this may have some truth, without the centralized management of System Center, the "free" offering is limited in what it can do and does not offer any of the advanced features. This limitation is very similar to VMware's free version of ESXi. However, if you choose to implement some of the features that narrow the feature gap, such as Hyper-V Live Migration (Microsoft's answer to VMware's vMotion), the list prices for the two products are relatively close.
Oftentimes the final cost comes down to which vendor can give the deepest discount, and that's where Microsoft has an advantage. Each vendor has volume licensing programs where customers reach different levels for deeper discounts. One of the top levels is "enterprise," where discounts, software perks and training are often included. The key is that this volume level is often easier to obtain with Microsoft than with VMware due to the sheer number of products each vendor offers. VMware is limited to the data center and the infrastructure, while Microsoft has a presence in the desktop and application space. This can lead to medium-sized companies having enterprise agreements with Microsoft and more "standard" agreements with VMware. With the licensing differences, this can mean a deeper discount for Microsoft products, resulting in a lower cost for Hyper-V when compared with VMware.
With the cost discussion somewhat established, the next debate is whether or not to keep production VMs on the same server as test and development VMs. Oftentimes test and development servers, while important, can sustain longer outages and do not need the same levels of performance as their production counterparts. This creates an opportunity for IT administrators to create that second tier of VMs and preserve more of the first-class resources for the first-class VMs.
Of course there is a downside to this concept. The organization now has multiple hypervisor environments to manage, and if it's anything similar to the challenge of managing multiple tiers of storage, it could be a rough trip. Besides the simple technical challenges of different interfaces, features and concepts, there is the additional licensing overhead and capacity planning. Licensing is often tedious and time-consuming.
Capacity planning is a challenge for most organizations, and the addition of a separate test and development environment running a separate hypervisor can add to the complexity. It's also important to recognize that familiar management tools for one hypervisor may not be compatible with the other.
Despite these challenges, tiered hypervisors provide a level of cost savings that can be substantial over time. In addition to the licensing savings, enabling and preserving advanced functionality for production VMs can lead to better uptime for those environments while not breaking the bank deploying advanced functionality to VMs that don't need them.