Mental Ward

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Breaking Down vSphere Pricing

Now that vSphere has been announced, the analysis and nitpicking begins. I'm happy to add to all the blognoise (hey, I like that term -- has anybody trademarked it yet? If not, I call dibbs.)

One area I'd like to dig into today is pricing. In my news story, I quote Enterprise Strategy Group Analyst Mark Bowker saying that pricing is the biggest factor in vSphere -- more than VMsafe, Fault Tolerance, VStorage, distributed virtual switches and so on. Burton Group Analyst and Virtualization Review "Virtual Advisor" columnist Chris Wolf also praised the pricing model.

So let's break it down.

There are two entry-level suites: Essentials and Essentials Plus. Essentials Plus adds high availability and data protection onto Essential's base offering. Essentials is $995 for three servers (about $166 per socket), and Plus triples that, for a cost of $2,995.

The four core suites are Standard, Advanced, Enterprise and Enterprise Plus. Pricing:

  • Standard: $795/proc
  • Advanced: $2,245/proc
  • Enterprise: $2,875/proc
  • Enterprise Plus: $3,495/proc

Key features like VMotion and Fault Tolerance are avialable at the Advanced level. Time-saving features like distributed virtual switches and host profiles are only available at the Enterprise Plus tier.

Now, the issue here is not whether the pricing structure is fair, or worth the money. The issue, in terms of marketshare, is how this compares to what the competition offers.

During a briefing last week with VMware about vSphere, I asked Bogomil Balkansky, VMware senior director of product marketing, specifically about VMotion, VMware's version of Live Migration. I picked VMotion because many admins consider Live Migration an essential tool for virtualization. It's available for free in Citrix' XenServer, and Microsoft announced yesterday that it will be available for free in Hyper-V Server 2008 R2, meaning it should be available next year. So, I asked Balkansky, if you're an admin in a a small shop with a tight budget, do you go for VMware Essentials, and get a non-Live Migration version of vSphere on three hosts for a thousand bucks, or do you look at XenServer or Hyper-V, which set you back $0?

Balkansky skillfully danced around the question, saying that customers will want VMware's overall features and the maturity of its products more than they want XenServer or Hyper-V. He may be right -- VMware has the name and reputation, both well-deserved. But Citrix and Microsoft (along with Virtual Iron, Red Hat, Novell, IBM and so on) are building reputations in the business, too. And they're attacking VMware hard on price. Will the attacks take their toll? That's a great unknown now. In general, I like the fact that VMware is more seriously recognizing the lower end of the market, and targeting it with affordable options.

But even those who think vSphere is going to be a good product have serious concerns about price. Here's an e-mail I received this morning, from someone who knows this industry very well and likes VMware generally:

"There are new scalability enhancements, and a few "new" features that to me aren't all that new. But the cost just blows me out of the water. $3,500 per *processor*???? How do IT organizations legitimize that kind of cost to their business? Who's snowing whom here?"

If you're an enterprise VMware customer, or considering becoming one, are you prepared to pay $7,000 or more per server? Or is my friend being too hard on vSphere pricing? Will you be taking the plunge on vSphere when it's out? I want to hear your thoughts on this, either below or via e-mail.

Posted by Keith Ward on 04/21/2009 at 10:27 AM


Reader Comments:

Thu, Jun 25, 2009 Joe Shonk Phoenix

The competition already has a free version on vMotion. For most organizations, a FREE hypervisor such as XenServer more than fits the organization's needs. vSphere is suited for high-end, specialized needs. People should look at VMware as a tactical solution instead of strategic solution due to the high costs.

Wed, May 27, 2009 Ron Raleigh

VMware could get away with their pricing if they shore up the base of VMware technical experts in the market. Cisco did this back in the early 90's by giving away all the information & knowledge needed to be experts on their products and created attractive career tracks. VMware has this in place now but needs to be more aggressive about building an expert base of system engineers.

Thu, May 21, 2009 Dave Jax, Fl

VMWare will have it good for a while but they had better watch out for Microsoft. Microsoft makes 100% more profit in 3 months than VMWare makes sales in an entire year. Think about that. If Microsoft REALLY wants to "own" something they can. VMWare has the technical edge. They had better start thinking about getting the marketing edge as well. That means a MASSIVE gain in the number of customers (and servers). Its called "Golden Handcuffs". Make a product so great (and cheap) along with the investment in training and knowledge that it would not be worth it to consider another alternative.

Wed, Apr 29, 2009 MattG

I have been using ESX since 2.0 and even with the new pricing will continue using ESX. However, I think that VMware should be adding new features and lowering the price of the software as the good enough approach of MS and Citrix is attractive to those comfortable with those vendors and unfamiliar with VMware.

Thu, Apr 23, 2009 Josh Raleigh, NC

As much as I'd love to jump to vSphere I'm holding out for a while. We're making plans for updating our SAN and datacenter switching so I may be able to lessen some of the costs associated with Enterprise Plus with these initiatives.

We're looking at the Nexus line of switches from Cisco and expecting some savings on cabling with the unified fabric and distributed switch available with vSphere and the Nexus 1000v module.

I haven't seen pricing on all of these components yet and not 100% confident that I'll be saving a ton this way, but once these technologies have matured to market expect Microsoft to have a new hill to climb trying to compete with the new DC-OS and how the relationships that VMWare had built with hardware, networking, and storage vendors enable greater flexibility and concise planning. The high availability, manageability, and flexibility are going to make it tougher to catch up.

I've seen these technologies demonstrated and found the new VMWare solution simple and elegant, especially from a design perspective. I'm looking forward to no longer needing servers with tons of NICs to meet our needs and duplicating this hardware across every ESX host in my resource pool. Reducing the complexity and cost of purchasing large number of NICs adds up differently depending on the environment but I think this is truly where people are going to initially find the ROI with going to Enterprise Plus.

Tue, Apr 21, 2009 Virtualizer Utah

Hyper-V is cheap and easy, and I think Microsoft has VMware clearly in their sights. Hyper-V isn't everything just yet, but it will be. So, it's just too hard to plunk down the dough for VMware.

Tue, Apr 21, 2009 Bill MOseley Charlotte

I think I am one of the companies that is on the sidelines waiting. My company has ten employees and we are looking at a server upgrade to allow virtualization. The two new servers are 10k - the vmware 3.5 is 15k - but my sales rep tells me that I am getting three copies - to run on 3 machines with two sockets each. Since I am only buying two machines - I am paying $7,500 to virtualize each machine. Ouch.

My decision is to continue to use the free esxi software for a year until the competition releases these new capabilities.

I question if this is the way for VMware to build market share or should consumers wait until they realease a free version of VMOTION next year when the competition does.

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