Dear Hyper-V:

Thank you for supporting vSphere adoption in your roundabout way. 

Much love, VMware

…not your typical mud-slinging blog, is it?

Actually, my quippy love letter was inspired by an article we just published over at SearchVMware.com by Steve Kaplan.

In it, Kaplan basically argues that while smaller companies will take the bait and try Hyper-V because of cost Windows Server 2008 prevalence, when they inevitably sit down and plan for a virtualization adoption beyond test and dev, they will likely consider the virtualization roadmap… a.k.a. IT as a service, which translates to setting up a virtual environment that can support an internal cloud…which means, spending the money to bring in VMware vSphere.

Take a read. Argue about it with your colleagues. Start a debate on this blog. Or, Tweet with your VMware buddies about how VMware will still reign supreme, after all. “Woot woot!”

Microsoft can afford to give things away for free as it has deep pockets and offers a great deal of other products and services. If Microsoft was the clear leader in the virtualization space, than it would more than likely be charging customers for Hyper-V and other advanced features. Right now, though, Microsoft is playing catch-up, and giving things away for free is the best way to do that. Because Hyper-V is relatively new it just can’t compete with VMware in areas such as features, performance and product maturity so Microsoft continues to hammer away at the one area that is easy for them to compete at: cost.

So how will VMware respond to this? Most likely, VMware will match Microsoft’s initiative and add VMotion and HA functionality to the free version of ESXi, and possibly one-up Microsoft by also including another management product for free.

VMotion by itself is a useful feature but by no way a critical component to a virtual environment; it simply allows a VM to migrate from one host to another without any downtime, handy? Yes. Necessary? Not so much. VMotion is mostly useful when patching hosts and doing hardware maintenance that requires a host to be shut down or restarted. VMotion, however, is the foundation for many other advanced features like Distributed Resource Scheduler (DRS) and Distributed Power Management (DPM), which require VMotion in order to work. Those features have direct benefits as they help ensure a well-balanced environment and also result in cost savings from lower power consumption.

In my opinion, if VMware chooses to follow suite and give HA and VMotion away, it wouldn’t hurt VMware too much. Many customers will still want the additional features like DRS and DPM that rely on VMotion. Further, it’s possible to get HA functionality for free on ESX hosts via a few different methods, so giving HA away for free would be a good move. As we get closer to the release date for Hyper-V R2, expect VMware to fire back at Microsoft in some way to even out the playing field.

Independence Blue Cross (IBC), the largest health insurer in Philadelphia, has grown quickly in recent years, and their  computing demands and costs have grown along with its business. Physical server sprawl and increasing power consumption has plagued the hospital and the cost of acquiring and managing new hardware was growing out of control, VMware reported.

To reverse these issues, IBC turned to virtualization. The company looked at Microsoft Hyper-V, but ultimately chose VMware because “it offered a more complete solution and robust tool set, rather than simply a hypervisor,” VMware’s spokesperson said on behalf of the customer. Another plus for VMware was that is offers VMotion to live migrate virtual machines (VM), which Micrsoft’s Hyper-V product won’t offer until the next version, as well as high availability,  resource pooling, manageability and automation, VMware said.

So far, IBC’s Windows application environment is approximately 70% virtualized, including applications like Active Directory, Exchange, SharePoint and SQL Server, PeopleSoft and Oracle 9i. There are 386 VMs are running on 48 physical hosts, and CPU utilization has increased from 5% to 75%, VMware reported.

Michael Garber, director of distributed infrastructure, at IBC, stated in the release that VI3 paid for itself in less than 16 months and helped IBC avoid more than $1 million in hardware costs.

VMware currently has over 3,000 hospitals on its list of customers, according to VMware.

VMware release lots of customer case studies to show the world how great they are, but when they announce Windows users as customers, Microsoft Hyper-V takes a bullet.  Hyper-V is built right in to Windows Server 2008, so why wouldn’t a Windows user just virtualize with Hyper-V? That’s Microsoft’s argument, and it looks like people aren’t buying it.

There is a ton of speculation on whether Hyper-V will be able to surpass VMware in the virtualization market, but I haven’t seen anything from Microsoft (like Hyper-V customers!) signaling that possibility.

Nationwide Services Co., a unit of Nationwide Mutual Insurance Company, initially deployed VMware Infrastructure to reverse the effects of server sprawl and lower power consumption. Using a mixture of VMware and zLinux virtualization software that are complementary to each other, Nationwide reduced over 700 physical hosts.

So far, Nationwide has achieved a virtual-to-physical consolidation ratio of 13:1 and virtualization has helped Nationwide increase server utilization from an average of 15 percent to 70 percent.

Nationwide started its consolidation project with over 5000 HP servers, mostly DL385 and DL585 servers in 2004, and are now down to around 3,300 physical servers with over 1,200 virtual servers, said Scott Miggo, vice president of infrastructure engineering at Nationwide Services Co. 

Nationwide has not upgraded to Windows Server 2008, which has Microsoft’s hypervisor Hyper-V built in, and Miggos said he has no immediate plans to move there. 

“We may look at Hyper-V in the future when it is more tested and mature, but for know we feel VMware is more mature and my staff is fully trained on Vmware,” Miggos said. “Since we have been using VMware for over 4 years with good success, no major issues and an enterprise licensing agreement with VMware that help hold down our costs, we feel very comfortable staying with Vmware for the near term future. ”

In addition, Nationwide has already saved $2.2 million in hardware and expects to save even more by replacing additional physical servers with virtual machines. The company is also saving on its power bills, because they have reduced energy consumption and streamlined system administration.All of this was done without affecting availability, VMware reported.

IHA provides healthcare services to 750,000-pooohlus residents of British Columbia through a network of 183 hospitals and offices across the southeastern portion of the province.

IHA found itself adding an astounding 10 physical servers each week to keep pace with business demands over the past few years and the space requirements and costs made that pace unsustainable. IHA brought in VMware to gain control over its IT environment by reversing the physical server sprawl and providing a more efficient way to manage critical applications and data stores, VMware reported.

Kris Jmaeff, information system security specialist, IHA, stated in the release, “We wanted to get handle on our hardware requirements and, just as importantly, we wanted an application environment that could scale reliably…Over the long run, it should deliver millions in cost savings by slashing server procurement dramatically.”

By substituting VMware virtual machines (VM) for physical servers, IHA will avoid purchasing another 200 physical servers. The health authority is now running about 250 VMs in two datacenters that are fully redundant for disaster recovery, and all the VMs are managed centrally via VMware VirtualCenter.

About 95% of the virtualized applications are Windows-based, including Microsoft Exchange, SharePoint and SQL Server. They also virtualize Oracle databases and various custom applications for billing, scheduling and patient care.

The side effect of IHA virtualizing is that the organization is greener; the amount of power required to run and cool IHA’s data centers has been cut by nearly 85% using virtualization. Not only does this reduce carbon emissions by millions of tons, it has generated an annual power savings of over $70,000 for IHA, according to VMware.

Jmaeff said in the statement that IHA looked at other virtualization platforms, including Microsoft Hyper-V before choosing VMware. “VMware[s] platform could provide simplified and centralized management for all our VMs as well as the high availability, automation, and performance that we needed. And our decision has paid off with massive savings and big advances in IT resiliency. Now that we’ve abstracted the applications from the commodity hardware, we can relocate a VM in seconds if a box breaks. Users aren’t impacted. That’s invaluable in a healthcare environment.”

It’s obvious that VMware publicizes use cases like these, from hospitals where sensitive citizen data is kept and life saving technology is used, to dispell fears about virtualization performance and security. I think by now, in 2008, doubts about the performance of virtualization have been put to rest, though it seems security concerns still exist.

Speaking of virtualization case studies, I wish other software companies were as forthcoming about their customers. Most software companies send out product press releases that are riddled with marketing speak and not enough meat, with no customers to back up claims like “number one provider” of this or “the world’s best” that. Even Microsoft Corp. wouldn’t give me a Hyper-V customer to chat with after their virtualization product was released on the commercial market this summer. To be fair, however, there are virtualization companies that do offer up customers like Massachusetts-based Virtual Iron. But I digress.

Since I have a few VMware case studies from September cramming my Inbox, here they are in summary.

Accountants Inc.
On September 30, VMware announced that Accountants Inc., an accounting and finance department staffing agency, deployed VMware’s virtualization and management suite VMware Infrastructure 3 to lower its overhead, meet its disaster-recovery requirements, and make its data center more flexible.

Accountants Inc. had been using a single physical server per application, and as the company approached a hardware refresh cycle, it found that virtualization would be more cost-effective, VMware reported.

Donald Wong, manager of IT operations and development at Accountants, Inc., stated that if the company continued deploying physical machines in a ‘one server to one application’ way, it would have cost to much. “Now, we’ve standardized on VMware and we have a strict virtualization-first policy. As a result, we can spend less time managing our IT infrastructure and more time focusing on bigger picture things, like growing the business,” Wong said in the VMware statement.

The company was also able to reduce its data center footprint by consolidating about 50 physical servers onto 10 VMware ESX Servers, which led to added savings in power and cooling costs.

Interfaith Medical Center
On September 23, VMware announced that Interfaith Medical Center (IMC) of Brooklyn, New York is using VMware Infrastructure 3 to create a virtualized environment for the Microsoft Windows-based applications.

The hospital began investigating virtualization when its server hardware requirements reached unsustainable levels; IMC faced power, space and budget constraints and needed a solution, VMware reported. After considering offerings from VMware, Microsoft and Citrix, IMC selected VMware Infrastructure and is now running nearly all of its critical applications in VMware virtual machines. The hospital also implemented a VMware-first policy for all new applications, VMware reported.

IMC has reportedly achieved consolidation ratios as high as 17:1 on its physical hosts and has virtualized approximately 95% of its Microsoft Windows-based applications, including IMC’s core Meditech health information system used for patient care and billing, BlackBerry Enterprise Server, Microsoft SharePoint, Kronos software for timekeeping and scheduling, and Lawson software for finance and accounting.

CITOC
On September 3, VMware announced that Houston-based CITOC, an award-winning provider of managed and hosted IT solutions, standardized on VMware Infrastructure as its application environment for internal systems and client solutions.

CITOC, whose customers including Lockheed Martin, Mary Kay Cosmetics, Sysco Foods and Carriage Services, evaluated a number of virtualization platforms to incorporate into its IT operations, including VMware Infrastructure and Microsoft Hyper-V. CITOC opted to standardize on the VMware platform, mainly because they could run three times as many virtual machines on VMware Infrastructure as it could on Microsoft Hyper-V with identical hardware, VMware reported.

James Garrett, chief operating officer at CITOC, said in VMware’s statement that CITOC guarantees 99.999% application availability for clients, and is trusting VMware to help them stick to that guarantee.

Garrett estimates that CITOC is hosting nearly 5,000 virtual machines for its customers. About 85% of those virtual machines are running Microsoft Windows-based applications. Internally, CITOC is using VMware for applications like Microsoft Dynamics, Microsoft Exchange, Microsoft SharePoint, Microsoft SQL Server, and BlackBerry Enterprise Server.

Garrett reported that one customer was running 343 physical machines when it hired CITOC to streamline its IT operations. Today, the customer is supporting its entire application environment with 16 blade servers (32 including redundancy) running VMware Infrastructure.

Specifically, VMware’s post asked me to consider the inaccuracies they found:

“… evaluate the Microsoft calculator yourself – let us know what else you find! “

So I did just that, but it wasn’t how Microsoft calculated the numbers that bothered me most. I struggled to understand why a TCO and ROI calculator included a competitive analysis. After all, VMware’s TCO calculator doesn’t compare the cost of competitor’s products. What does that have to do with return on investment? It just seems out of place to me. Furthermore, if you go back and review VMware’s points they are mostly about the competitive cost comparison, too. It’s easy to forget we are discussing a TCO / ROI calculator.

As for using the calculator for ROI, it’s fine, I guess. But it did not live up to my basic expectations of helping with licensing. In fact, intentional or not, Microsoft comes across as trying to hide accurate licensing costs, as VMware points out:

“We did find a one-line disclaimer buried in the 66-page document: “Warning – Check pricing advice and rules as the automated recommendations here may not reflect all licensing rules.” Come on, guys – licensing is such a basic component for accurate TCO estimates. The disclaimer feels pretty weak.”

On the other hand, I think I can use the Windows Server Virtualization Calculators to help estimate licensing costs. But I shouldn’t have to use another calculator to verify the first one. Overall, I am left with the same feeling I get when trying to buy a new car. It’s similar to that doubt about the “dealership transport” charges or the frustration of feeling that I’m missing hidden costs even though the price is right. I am being forced to do way too much research.

I understand that the next few years will be filled with explaining the technical and financial differences between Microsoft, Citrix, VMware and all the other virtualization products. A competitive analysis calculator would come in handy. A single, unbiased virtualization competition calculator might be impossible to create, but even separate tools from each vendor that let you enter your own pricing numbers would be a great start. Call these tools what they really are. Don’t hide them in an ROI Calculator.

Chris Wolf, an analyst with the Burton Group, warned that Novell Inc. was similarly at the top of the world in the late 1980s with its NetWare network operating system, which filled a key gap in Microsoft products. Addressing the problem, Microsoft responded with Windows NT, a weaker alternative to NetWare but “good enough” and stronger over time, and featuring a Gateway Services tool with just enough interoperability to make it easy to port data between the two systems.

But that “gateway” eventually became a floodgate, siphoning off Novell NetWare customers, who now had an easy way to migrate to Microsoft NT and a motive for doing so: Microsoft had a much larger package of software solutions while Novell’s NetWare was just a single point solution. Farewell, Novell NetWare.

Fast forward to 2008. VMware is the undisputed leader in virtualization, the hottest thing in the software market. And as part of its interoperability measures, Microsoft’s new System Center Virtual Machine Manager will have extenders to VMware. Microsoft will also launch its far more modest Hyper-V virtualization software at the giveaway price of $28 per server this summer. But, clearly, Microsoft will be working at furious speed to make it more competitive.

VMware, like Novell NetWare, is a point solution, and Microsoft, even more than in the 1980s, is a giant ecosystem with an overwhelming share of the global software market.

“This is a great strategy for Microsoft,” Wolf said. “It’s providing just enough interoperability [with VMware] to give some management with the goal of facilitating migration. And when users get comfortable with those tools, they will slowly migrate over to Microsoft.

“It’s exactly the same runbook as Microsoft ran against Novell,” Wolf said. “It’s pretty eerie.”

The main interview covered security, management tools and best practices for implementation, but there was some other strong material about VMware 3i, Microsoft Hyper-V’s potential affect on VMware adoption and how Citrix plans to gain a better foothold in the marketplace with XenSource, so we decided to include them in this supplementary blog post.

SearchVMware.co: Do you think VMware 3i is VMware’s answer to the problems with the service console (patches, security vulnerabilities, etc.)?

Rule: Yes, and I think 3i is a great product for a variety of reasons. It’s a simpler, lighter footprint on hardware, which in turn gives better reliability and performance.

Do you think Hyper-V will detract from VMware’s customer base?

Rule: I don’t think there’s a compelling enough reason to move from one platform to another. From our internal lab testing, as well as customer feedback, I can say there’s more interest than there used to be in Microsoft, but the main issue is supportability. For at least the next 12-18 months, VMware will remain the market leader. 18 months out we may see more competition. But even looking at the long term, VMware is in a pretty good position because of their current stronghold in the market.

On the other hand, I have seen a few customers here within the last one to two quarters that don’t have any virtualization in place. Microsoft does come up more in conversations with new adopters than it used to.

Given the low licensing cost of Hyper-V, do you think VMware will have to alter its pricing?

Rule: At least with our customers, I don’t see a lot of push back on VMware licensing just because of the amount of consolidation you can get. At a 10:1 consolidation, you’re saving the customer so much it becomes a non-issue. VMware may have to focus on the business approach, and focus on, say, in a 1,000 server data center, here’s how much we can help you save. It’s really going to be about VMware and VMware-partner marketing.

Do you think Citrix XenServer will become a bigger contender?

Rule: A lot of it hinges on Citrix bringing their solutions together. Xen had good momentum behind it in the marketplace. People that didn’t like the VMware licensing, such as smaller size SMBs or those who used virtualization for test and development, liked XenSource. So, Citrix has brand recognition. If Citrix can meld their application and desktop virtualization products together, that’s going to be their strength. And, actually, that’s the direction they want to see things go.

Citrix has two focuses: people that aren’t doing virtualization at all yet, and their core customer base from Presentation Server. They’re taking on more of a grassroots campaign. It would be a tough sell with accounts that don’t currently have a Citrix install base.

How do you think VMware will remain competitive?

Rule: They’re going for continual add-on business, net-new accounts and the licenses they’ll bring in. You’ll see movement with virtual desktops and Site Recovery Manager. But virtual desktops are where VMware is going to see a huge surge of revenue coming in. If you have 1,000 servers, that’s 3,000 – 4,000 users. Just 10% of that is a huge amount of net-new licenses.

The idea behind that supposition was to match your enterprise investments to appropriate workloads because, let’s face it, running everything on ESX is going to be expensive compared to other options. Big deal if you don’t get ESX-level features because you may get enterprise level features on silver-medal products.

Now, I wish I could take credit for that idea (for better or for worse), but that really came from SearchServerVirtualization.com‘s editor, Jan Stafford. At any rate, a few people had comments about that note and I thought it would be fitting to continue that conversation with their input:

Hi,

One of the reasons I think Hyper-V is interesting is the server core concept. The ability to create appliance virtual machines for specific roles such as DNS, DHCP, DC etc. means you can drastically reduce the manageability overhead and the attack surface for those servers. Weird – I’m finding myself suggesting that an all-MS platform may actually be more secure than the alternatives!

On the other hand, you may be correct that fully-fledged servers with complex HA needs will be better off on ESX.

Cheers,
Dan Flower

There are flaws to this query, the base of which stem from whether ESX, Hyper-V and Xen-based virtualization products can even be compared; never mind that there are disparities between Xen-based virtualization vendors (xVM isn’t Red Hat isn’t Citrix Xen etc). This was the point that some folks took issue with:

Just a comment about an “apples and oranges” comparison you made:

I understand the point you were trying to make about using the right virtualization product for the right job, and at times this might mean using multiple solutions, but you can’t really compare Hyper-V or VMware to Xen. Both Virtual Iron and Citrix offer a virtualization solution based on Xen technology, but neither sells just Xen. Your reference to Xen brings to mind what a Suse or Red Hat shop might do with Xen technology, but not those that would consider Hyper-V or VMware as a virtualization solution.

David Roden

So, there are still many problems that have to be approached before we even ask the question of implementing a mixed enterprise virtualization infrastructure. Ultimately, people will have to decide on what functionality, support and management interfaces are important. Is quick migration support good enough, or do you need live migration? How does each platform approach P2V conversions? Does VirtualCenter have the right kind of management options for your installation? Will you be better off using System Center Virtual Machine Manager?

Let’s keep prodding at this idea and brainstorm ways that using multiple virtualization products in one environment could work. Send us your comments and feedback. If you’ve tried the mixed virtualization environment, we’d love to hear about it.