Microsoft Digs In For Next Stage Of Virtualization Battle With VMware

Microsoft could hardly contain its glee after VMware unveiled vRAM, its new vSphere 5 licensing model, back in July. The way Microsoft saw it, vRAM would dramatically raise costs for VMware customers and drive them toward the comforting economics of Hyper-V server virtualization. Finally, Microsoft would be able put a meaningful dent in VMware's market share.

So far, though, vRAM doesn't appear to be having this effect. Microsoft tried gamely to raise the vRAM issue at VMworld 2011 earlier this month, but the din of well-funded virtualization and cloud startups vying for attention at the show made it difficult to get a word in edgewise. VMware also loosened its vRAM terms in August, and based on feedback CRN gathered from channel partners and customers at the event, the new vSphere licensing model has gained a measure of acceptance.

VMware appears set to continue dominating the server virtualization market, but that's not to suggest that Microsoft hasn't generated momentum in the space since launching Hyper-V over three years ago. In a survey last year of 250 companies using server virtualization, research firm Stratus Technologies-ITIC found that 78 percent were using VMware and 38 percent were using Microsoft Hyper-V. But in a similar survey this year, 59 percent of respondents were using VMware and 53 percent were using Microsoft.

To keep the ball rolling, and to set up its channel for the private cloud wars of the future, Microsoft is enlisting partners to help battle VMware in the virtualization trenches and encouraging them to invest in obtaining the virtualization competency in the Microsoft Partner Network. Combined with Microsoft's customarily aggressive sales and incentives programs, VARs are finding it easier to position Hyper-V as a viable alternative to VMware.

"What's happening is that Microsoft technology is maturing, and they're maturing their sales process, investing lot of money in getting customers to test pilot virtualization solutions. And so we are seeing some impact from that," said Mike Strohl, president of Entisys, a Concord, Calif.-based virtualization VAR that partners with both Microsoft and VMware.

Mike Ritsema, president of i3 Business Solutions a Grand Rapids, Mich.-based solution provider that also partners with both companies, is seeing steady gains for Hyper-V in the lower end of the market, a phenomenon he attributes to the training and incentives offers to partners that get their customers to switch from VMware to Hyper-V.

"We can definitely feel the push from Microsoft from just a couple of years ago. The advancements are showing," Ritsema said.

Next: Examining The Cost Structure Of Hyper-V

i3 Business Solutions earlier this year certified two members of its IT staff on Hyper-V, and Ritsema said this investment is helping his company win more business in the SMB space. Cost is a key factor here, of course, and Ritsema estimates that Hyper-V deployments can displace VMware licensing costs of between $2,000 and $2,800 per customer.

At Microsoft's Worldwide Partner Conference in July, which took place just after VMware unveiled vSphere 5 and vRAM, COO Kevin Turner spoke of the "tremendous progress" Microsoft had made and claimed that Hyper-V is three times cheaper than VMware for deployments of 500 virtual machines.

"Now, as a partner why is that beautiful for you? Because you don't want the customer spending money on a bunch of licensing from VMware," Turner said in his WPC keynote.

Hyper-V has advanced to the point where Microsoft can position it as "good enough" to fit the needs of most customers. Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based solution provider, said the performance of Microsoft and VMware's hypervisors are essentially identical and are equally appropriate for most workloads. But when it comes to virtualization management, Microsoft has a clear advantage with its System Center products, he said.

"Management tools are where the expense of virtualization comes into play, and VMware is more expensive there," said Sobel. System Center Essentials, which includes all virtualization management pieces for Hyper-V, costs around $700, he added.

Microsoft is also working with distribution partner Avnet to get the word out about System Center and the cost savings these products can bring to customers. In August, Avnet began selling System Center products along with education and training programs for VARs that haven’t previously worked with Microsoft's virtualization management offerings.

Avnet's System Center initiatives include readiness assessment services and demand generation initiatives aimed at getting partners up to speed on selling Microsoft products to smaller customers that are beginning to dip their toes into the virtualization waters.

"System Center provides resellers within the SMB space a key differentiator. Its cost structure is very attractive," Steve Gereb, director of Microsoft solutions at Avnet Technology Solutions, told CRN last month. "The products are competitively priced to win in the SMB space."

Microsoft may be gaining traction with SMBs, but much larger battles lie ahead. Since virtualization is a key foundational technology for cloud computing, inroads in this market are of great strategic importance. So it's a given that Microsoft will continue hammering home the point that customers can get what they need from Hyper-V for less money that vSphere 5.

Next: Microsoft Takes The Fight To Private Cloud

Just as likely is that Microsoft will continue poking holes in vRAM licensing. vSphere licensing was previously based on the number of server cores, but vRAM pertains to the memory that customers allocate to virtual machines on the host.

Although VMware loosened its vRAM terms, Microsoft still insists that VMware customers will be faced with higher licensing costs when creating larger virtual machines, and in memory over-commitment and scale-up scenarios. As a result, VMware customers will get fed up and start looking for lower cost alternatives, Microsoft says.

"I think we will definitely see customers that will come over as a result of the vRAM change," Edwin Yuen, director of virtualization and cloud strategy at Microsoft, told CRN earlier this month. "VMware shifted from an unlimited model to one where every time an administrator presses a button, they'll have to think about the financial costs."

In cloud environments, these costs will be magnified, according to Yuen. "Our cloud is still licensed on a per-processor, per-server basis, and the customer decides the size of the VM and the density," he said. "As customers buy next generation servers, and get more power out of the systems, they'll get more of the economic benefits.

Microsoft is striking at the heart of where VMware channel partners are making the most money right now -- the private cloud -- in an effort to lure away partners and customers. Microsoft claims that over a three-year period, its private cloud is one-fifth the cost of a comparable VMware private cloud when configured for 6 VMs per processor. At 15 VMs per processor, Microsoft says its private cloud is one-eighth the cost of VMware's.

However, John Ross, CTO at Greenpages, a Kittery, Maine-based solution provider, said vRAM might actually end up being VMware's ace in the hole in the private cloud competition. Despite the negative initial reaction to vRAM, the new model is a much better fit for the cloud because it'll enable customers to realize greater economic advantages, Ross said.

"With physical resources, customers are used to buying the biggest, baddest thing on the market because they know they won't be replacing it for three to five years. But in the cloud, they can just buy what they need. The vRAM model will help customers realize that they need to right-size their infrastructure."