"If I were VMware, I would be looking to lower my prices."
Laura DiDio, an analyst with ITIC. Reuters, July 6, 2009.
Both financial and industry analysts have berated VMware over the past 18 months for refusing to reduce prices despite Microsoft's commoditization of the hypervisor. VMware instead bumped the price of vSphere Enterprise Plus when it debuted last May, and yet continues to dominate the virtualization industry. The vast savings enabled from virtualizing a production data center make any delta in hypervisor costs a rounding error. Virtualization as a feature of the operating system is less than compelling to those organizations committed to an enterprise virtualization strategy. "Good enough" is not good enough.
I'm Not Cool Enough to be a VMware Person
A BrandPapers article defines commodities as, "…largely undifferentiated products that offer little or no perceived differences between competitive offerings." Maturing markets are more susceptible to commoditization which is signified by a uniform pricing level reflecting not much more than the marginal cost of production. Light bulbs, generic pharmaceuticals, mousetraps, computer RAM and coffee shop wireless service are some examples.
Microsoft knows a lot about commodities. It spends hundreds of millions of dollars defending its Windows brand against open source products. But it also takes the commoditization side as it did in 1996 by bundling Internet Explorer 3.0 as part of Windows 95 in order to crush Netscape. More recently, Microsoft launched a series of "laptop finder" commercials geared toward convincing would-be Mac purchasers that they pay an extra $500 for a logo. The Microsoft sponsored Endpoint Technology Associates white paper, What Price Cool?, claims that they pay an "Apple tax".
Particularly threatened by VMware's data center stronghold, Microsoft has been waging a vigorous campaign for the past year and a half alleging that not just basic hypervisors, but virtualization itself is essentially a commodity, stating "Virtualization is simply a role within the Windows operating environment." It misleadingly claims that an extra virtualization layer results in a "VMware tax". Its web site stresses the supposedly lower cost of Hyper-V virtualization including white papers, brochures, videos, charts, price-oriented case studies and a Microsoft vs. VMware Cost Comparison Calculator. Even the output of the Microsoft Virtualization ROI Calculator is 50% devoted to a cost comparison against VMware.
Other than price, Microsoft differentiates its virtualization solution by promoting the ability of Systems Manager Server Management Suite DataCenter (SMDS) to manage a heterogeneous environment incorporating multiple hypervisors and physical servers. This is only an attribute, however, in an organization approaching virtualization from a tactical, rather than strategic, perspective.
Hyper-V continues to rapidly improve as a product, and while not yet recommended by Burton Group for production environments, undoubtedly will be before long. Hyper-V R2 now includes the live migration feature ESX has had since 2003, but still lacks capabilities necessary for enterprise data center virtualization such as vNetwork. Cisco says this lapse results in the virtualization of 30% fewer servers while necessitating 30% more administrative time spent on the virtual network.
Evolutionary Approach to Virtualization
Microsoft has a vested interest in maintaining the large Windows-centric architecture common in most data centers and advocates a slow and limited approach to virtualization. Its white paper titled Microsoft Virtualization Delivers More Capabilities, Better Value than VMware states "…rather than undertaking a costly revolution, you should evolve your environment in a way that preserves and extends existing investments." In Microsoft's view, "physical machines…will continue to remain a key part of your infrastructure, as well as all the Hyper-V and VMware virtual machines."
The obvious disadvantage of a tactical, evolutionary approach to virtualization is the prolonging of high costs and inefficiencies along with unnecessary risk. A more insidious drawback is that layering virtualization onto an existing physical infrastructure inevitably leads to inefficiencies in the integration of compute, storage, network, backup and disaster recovery. The overall complexity of the data center increases along with the objects to manage which now include not only a physical architecture, but also virtualization hosts, virtual machines, hypervisors, virtual switches, virtual network adapters, virtual storage arrays, virtual back-ups, etc.
Achieving data center virtualization through an evolutionary process is also a difficult task. This was evidenced by Microsoft's Technical Case Study released early last year showing only a 50% internal data center virtualization rate with an expectation of "virtualizing at least 80% of new servers".
Why Adopt an Enterprise Virtualization Strategy?
The economics of virtualization tend to be extraordinary – it's not uncommon for an SMB organization virtualizing only 100 servers to realize millions of dollars in savings with an investment payback in fewer than 12 months. Larger organizations often have much higher savings and even shorter payback periods.
Virtualizing not just servers, but the entire data center provides a platform to unify technologies, equipment and processes. Desktop and disaster recovery silos become integrated components of a virtual infrastructure which in turn serves as the foundation for a comprehensive cloud computing strategy. Availability, recoverability, manageability, security and even performance can be improved beyond what is practical in the physical world.
VMware continues to thrive despite Microsoft's commoditization onslaught in part because of its enterprise virtualization features such as vNetworking, Fault Tolerance, Storage vMotion and Host Profiles. It has by far the most complete set of management and automation tools for a virtual infrastructure ranging from software development to disaster recovery to virtual machine lifecycle management. vSphere also includes published APIs that allow the leading manufacturers in security, storage and network to integrate their products directly into the hypervisor – resulting in still more efficient, scalable and secure environments.
Despite these many unique attributes, VMware's most compelling differentiator may be its astounding reliability. Unlike Hyper-V, it offers data center stability, performance and security that is independent from the bloat, reliability and patching issues of a general-purpose operating system. Even Redmond Magazine, "The Independent Voice of the Microsoft IT Community" gave its 2008 Editors Choice award for the most reliable IT technology to VMware ESX (the IBM mainframe came in #2).
The Importance of a Virtualization Focus
Microsoft's diversity in operating systems and other products gives it the financial leverage to offer virtualization as a free feature of Windows Server, but also detracts from an enterprise focus. Its home page, for example, mentions not a word about Hyper-V and instead promotes products such as Windows 7, Zune HD, Internet Explorer 8 and Office 2010.
VMware's corporate DNA is completely focused on virtualization as a strategic platform along with its role in enabling cloud computing. Its many years of experience and multiple levels of partner education and certification further differentiate its value from a commodity play. Denton County, Texas, for example, recently switched from a Hyper-V pilot to VMware vSphere for a complete virtualization deployment in part because of concerns about the lack of ISV support for Hyper-V. The county also found it difficult to find consultants with significant experience virtualizing data centers with Hyper-V.
Virtualization is a Lot More than Servers
In discussing VMware last July, Microsoft COO Kevin Turner stated, "We're a tremendous high-value, low-cost, high-volume software provider. That's our strategy, and that's what we're driving in this environment." This strategy has enabled Microsoft to become one of the most successful companies of all time and an incredible force in many different arenas. The enterprise virtualization market, though, is still young. Gartner says that only 16% of workloads run on virtual machines (eWeek 10/21/2009). A high-volume, low-cost product is far less important than the most reliable, secure and scalable solution.
A CIO advocating a data center transformation from physical to virtual may well put her job on the line. If successful, her organization will quickly realize huge savings along with other very significant benefits. It is imperative to choose the platform that best enables a complete, fast and successful transition. It is no time for compromise.
Author Disclosure: I work for a professional services company which is also a leading VMware partner, although we strive to provide the best virtualization solution for our clients.
