UPDATE : VMWorld Europe 2008 – Will Cost Be A Factor?

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As many of you know next week it’s VMWorld time in Cannes, France. Some of my colleagues will attend the event. One of the colleagues (Wilbrand) told me he will be blogging live from VMWorld. So next week you really should check out his blog.

Yesterday The Yankee Group published a new report titled ‘Virtualization Price War: VMWare’s Little Big Horn?‘.

Below you can find a summary of the report, and an excerpt :

Rapid commoditization and intensified competition in virtualization technology has precipitated a price war, which is a key element of emerging Anywhere Applications environment. This war is a boon for corporate enterprises who can pick and choose from a wide array of products at discounted prices.

No one feels the pressure more than market leader VMware, which has approximately 70% of the installed base, a best-of-breed product and a 2-year lead on its rivals. VMware’s position is similar to General George Custer. One minute he and the 7th Cavalry had the vast Montana plains all to themselves; the next they were surrounded and vastly outnumbered by the Sioux. In VMware’s case, it’s surrounded by rival vendors lusting for its business. Just as Crazy Horse, Sitting Bull, Gall and their warriors besieged Custer and the 7th Cavalry at the Little Big Horn, VMware’s competitors led by Microsoft, Citrix (which purchased virtualization vendor XenSource in August 2007), Novell and Red Hat are on the war path. They are ready to count coups and lure VMware customers, touting the fact that their products are significantly less expensive. For example, Microsoft Virtual Server offerings are from 40% to 75% less than comparable VMware offerings, depending on specific configuration, volume and licensing factors. Similarly, Citrix’s retail pricing is 66% lower than VMware solutions. Or to use another more specific metric, in the past year, all the virtualization vendors charged between $700 and $800 per socket for their commercial server products while VMware’s product retailed for a whopping $3,000 per socket, a 75% premium.

Yankee Group believes that server operating system vendors such as Microsoft and Novell have a distinct feature and performance edge in their respective management offerings because they have been in this end of the business far longer than VMware. By contrast, operating system vendors such as Microsoft, Novell and
Red Hat provide full management of the baseline OS, virtual machines and hypervisor. Microsoft’s Configuration Manager can patch and deploy software to virtual and physical instances of the Windows OS and hypervisor. VMware still requires a separate infrastructure product to patch its ESX Server.

The Yankee Group does a good job of providing first-hand accounts from customers and partners who have weighed the trade-off between features and costs. Case in point these excerpts:

Josh Clark, UNIX systems manager at the systems record management company Mobius Management Systems, Inc. headquartered in Rye, New York, chose niche market virtualization provider Virtual Iron over VMware last year specifically because of the latter was more expensive—85% more expensive to be exact. “We chose Virtual Iron over VMware because of price. The same configuration in VMware was $80,000 compared to just $12,000 for Virtual Iron,” Clark said.

“I think I state the case realistically, so $5750 for VMware ESX3 Enterprise versus $3260 is only a delta of $2490 is a smaller figure than some of the numbers I’ve seen,” said David Dodge, a VMware Authorized Consultant (VAC) systems engineer and certified engineer at TechPower Solutions, Inc. in Redmond, Wash.

“Virtual Machine Manager identifies the correct machine with the appropriate resource and it allows us to set policies on the host server to reject any new Virtual Server deployments if there’s a dearth of server CPU, disk space or memory,” the administrator said. He added that the functionality in VMware’s corresponding virtualization management offering falls far short of the functionality in Virtual Machine Manager. “VMware’s Lab Manager development tool focuses on desktops, not servers and even their new Virtual Data Center tool does not incorporate the intelligent placement feature of the Microsoft product,” he said.

The following chart is based on Yankee Group’s figures. Does this configuration match all customer demand? No, of course not. But Yankee Group does an admirable job of portraying a segment of the software market that is ripe for change due to the presence of Oracle/BEA, Red Hat, Citrix, Novell, Virtual Iron, open source alternatives … and of course Microsoft.


Source : Windows Virtualization Team Blog

UPDATE : John Troyer (VMware) placed a comment on my blog that the report contains a number of inaccuracies, please check out the corrections on the report on the VMWare blogs.