(I wrote the following response to Microsoft's blog, but it turns out MS doesn't post reader comments).
I have spent 20 years developing, writing and speaking about ROI as the appropriate tool for making intelligent IT platform decisions. TCO is inadequate because it fails to consider the context of the overall savings realized. Such is the case here. When organizations successfully virtualize their data centers, they are typically able to save hundreds of thousands, millions or tens of millions (depending upon the size of the environment). Moreover, because the bulk of virtualization cost is absorbed up-front in terms of hardware (servers/storage), consulting and training – the marginal ROI that results as an organization virtualizes closer to 100% of its data center is even higher.
The enormous savings at stake make it imperative that an organization considering virtualization should evaluate its overall projected savings/cost avoidance versus the overall costs to achieve those savings. Data center virtualization typically enables a truly amazing reduction in costs relative to the investment, resulting in payback periods commonly less than 12 months. And these savings/cost avoidances are not the reduced risk or increased agility type of ROI commonly touted. While virtualization certainly includes these benefits, we’re talking about only very hard savings of hardware, data center space and power that the CFO will validate and sign off on. When calculating ROIs for our clients, we don’t even bother to quantify the large reduction in IT staff time required http://www.dabcc.com/article.aspx?id=9425, because this figure is a little more fuzzy and can therefore lead to skepticism. Besides, there is no need – the other savings are compelling enough on their own.
The fist step to a successful virtualization project is therefore to calculate an ROI for which we only need a general idea of the investment in order to derive an order of magnitude for the savings/investment ratio. Assuming the numbers overwhelmingly justify an enterprise virtualization deployment, the optimal platform (HS/SW) for successfully enabling the virtualization project can then be evaluated. While the comparative cost of any specific solution can be a factor, much more important is its ability to facilitate the overall goal of 100% virtualiztion with all the performance, reliability, scalability and manageability required.
A lot has been written about the superior capabilities of ESX to any other virtualization platform in these areas including features such as Storage vMotion, DRS, Distributed Power Management, etc. 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). Now vSphere takes these capabilities up a level with new features such as Fault Tolerance, vmSafe, storage thin provisioning and around 150 more. And the enhanced performance capabilities of vSphere mean that even the largest workloads can now run as fast or faster as virtual machines.
One of the major inhibitors to organizations virtualizing their data centers today has been the lack of networking support within any virtualization hypervisor. This becomes even more important in facilitating a seamless cloud computing strategy. vSphere includes the vNetwork Distributed Switch enabling QOS and the application of security and network policies that follow virtual machines as they migrate across hosts. By adding the Cisco Nexus 1000v (which only works with vSphere), network administrators can use the same Cisco command line tools in the same way they manage physical switches.
The competition to VMware vSphere isn’t Hyper-V or any other hypervisor, it’s inertia. By not virtualizing, organizations continue to purchase servers, network and SAN ports, rack space, power and cooling, UPS and generator slices, cable runs, etc. It makes far more sense for an organization to virtualize today with the best platform available and achieve what is likely to be an amazingly short payback on the investment while also reducing IT staffing requirements.
Since I've covered the ROI, I do want to bring up a TCO item you highlighted. You say that you leave the cost of the guest OS out of your calculations because, "That cost is the same whether you're running Hyper-V Server 2008 R2 or VMware so I didn't bother to include it". This is silly - if we're running a Linux VM on vSphere, we obviously, as opposed to Hyper-V, do not require a copy of Windows Server.
Steve, I'll counter your unobjective point of view with my own.
Customer wins over VMware say more than anything:
(1) Ingersoll Rand: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000003609
(2) PoundHost: http://www.poundhost.com/virtual-servers/ [just switched away from VMware]
(3) St. Leonard's College: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000004127
(4) Kroll Factual Data: http://www.microsoft.com/Presspass/press/2009/apr09/04-20KrollGreenPR.mspx
(5) Lionbridge Technologies: http://www.microsoft.com/Presspass/press/2009/feb09/02-23LionbridgePR.mspx
(6) Compensar: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000003816
(7) Munder Capital Management: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000003571
(8) Santa Barbara Web Hosting: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000002983
(9) MLS Property Information Network: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000003046
(10) INA: http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=4000002722
Are there businesses that have chosen ESX/vCenter over Hyper-V/System Center? Of course. Are there businesses that have chosen ThinApp over App-V? Not too many, but of course. Point being, VMware's business model is narrow compared to other vendors. VMware is a one trick pony: virtualization. Any loss to Microsoft, Citrix, Oracle, RedHat, etc. means VMware has no "in" to those businesses. On the other hand, these other vendors have other "ins" to VMware's customers. Vendors are growing into VMware's market, not vice versa.
Posted by: Patrick | May 11, 2009 at 01:19 PM
Patrick,
Thank you for your response, though I'm not clear on what it has to do with my blog. I was pointing out that the MS Hyper-V pricing comparison to VMware vSphere is misguided when evaluated from an ROI perspective (which it should be) or even from a TCO perspective. I don't disagree that some organizations are choosing Hyper-V over VMware or even App-V over ThinApp (though not our customers). As far as VMware's "narrow" business, I call that "focus". It is a difficult model to execute well, but those who are good at it tend to be very successful. As an example, look at VMware. It seemed to come out of nowhere to become a $2B software behemoth - and one of the largest software companies in the world. Microsoft is a great company, and I'm a long-time admirer. But the sheer size and diversity of Microsoft put it at a disadvantage when competing against VMware's laser-beam focus in virtualization. I would never make the mistake of counting Microsoft out, but if VMware can continue innovating and executing on all fronts - it will be difficult for Microsoft or other organizations to displace it as the industry leader.
Posted by: Steve Kaplan | May 11, 2009 at 07:04 PM
This Tolly Group report (of course, commissioned by Citrix) shows some interesting outcomes comparing VMWare ESX 3.5 to XenServer 5 especially when related to running XenApp servers:
* XenServer 5 outperformed VMWare ESX 3.5u3 by 41% in user scalability tests
* XenApp maximum concurrent user load was 164 on XenServer versus 116 on VMware, before performance became inconsistent in both environments
http://www.tolly.com/ts/2009/Citrix/XenApp/Tolly209103CitrixXenServerPerf.pdf
Posted by: Sean Thomas | May 26, 2009 at 09:12 AM