Microsoft's Hyper-V VMware Advantage

Michael Goldstein has made a career out of providing his small business customers with the biggest IT bang for their buck.

That's why the president and CEO of LAN Infotech, Fort Lauderdale, Fla., is putting his company's solutions muscle behind Microsoft's Hyper-V rather than VMware's vSphere software virtualization offering.

Goldstein says Hyper-V, which comes lock, stock and barrel as part of Microsoft Server 2008, simply provides more bang for the IT buck than VMware. He says it's a more cost effective solution for his customers. That's why he sells five Microsoft Hyper-V solutions to every one VMware solution. And his virtualization sales are up some 80 percent this year.

Goldstein estimates that his profits on those Hyper-V solutions are 25 percent greater than the VMware solutions' sales.

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"VMware is just not as friendly a product for small business customers," says Goldstein. "What Microsoft has done is made virtualization affordable. What it comes down to is small business wants the same virtualization feature set that large enterprise businesses enjoy, but they can't afford to pay for the software." That's not the case now that Microsoft has gotten into the virtualization game with Hyper-V.

The attractively priced Hyper-V solutions on are boosted by the fact that most of LAN Infotech's customers already have Windows Server 2008. That means all LAN Infotech has to do is effectively turn Hyper-V on and those small businesses don't have to dig into their pockets for hefty VMware software licensing fees to get the benefits of virtualization.

Goldstein estimates that more than 50 percent of LAN Infotech's customers already have a Microsoft Software Assurance licensing plan. That means they already have effectively paid for Windows Server 2008 Hyper-V. "We have been preparing these Microsoft Software Assurance customers to go implement virtualization solutions," he says.

"Software Assurance is not just a budget line item. There is real value to it. It gives small clients the ability to start creating an IT budget. The majority of small businesses buy IT when they need it. They don't necessarily budget for IT. "

So just how much is Goldstein saving his clients? It's substantial even for customers who don't own Windows Server 2008. For example, compare straight up the Manufacturers Suggested Retail Price (MSRP) for a virtualization solution for three physical servers with nine virtual sessions: the VMware total software licensing cost is $24,075 compared with $13,965 for the Microsoft solution set. That's a whopping $10,110 savings for a cost-conscious small business.

NEXT: The Detailed Hyper-V Vs. VMware vSphere Price Comparison

The detailed software licensing cost comparison between Windows Server 2008 Hyper-V vs VMware are eye popping.

Check out the details from this scenario comparing straight up licensing costs for a customer that does not have either Windows Server 2008 or VMware.

In the $13,965 Microsoft corner: Microsoft (3 copies Microsoft Server 2008 R2 Enterprise (includes 1 host license, 4 guest licenses & 3 years support at $4,145 each), (1 Microsoft System Center Virtual Machine Manager at $1,530).

In the $24,075 VMware corner: vSphere Advanced Acceleration Kit including 6 CPU's " Vmotion - vCenter Server Foundation (1) Year Support - $12,600, plus (9 client licenses for) Microsoft Server 2008 R2 w/(3) year support - $1,275.

It is that kind of cost advantage that is driving Microsoft Hyper-V market share gains.VMware should be worried. Microsoft, is using the same strategy that it has successfully used in countless other markets where it faced long odds and staged big market share comebacks from email to network operating systems and servers to Web browsers.

Goldstein, by the way, is plowing those big Microsoft Hyper-V cost savings back into better solution sets for his customers. "We take the VMware licensing line item and throw it back into higher end hardware, better backup or other applications," he says.

Goldstein says his big bet on Microsoft Hyper-V came when the software giant introduced the much improved Server 2008 R2 last year. That version of the product effectively put Microsoft on a level playing field with VMware. Now Microsoft is getting its partners primed and pumped up to sell virtualization solutions. And it's paying off in bigger profit increases for partners who were previously selling VMware.

That's because cost of sales for solution providers selling Hyper-V is a lot lower than the VMware cost of sales. "As a business owner it's easier for me to have engineers install and maintain Hyper-V than it is to install and maintain VMware," Goldstein says. "Hyper-V looks and functions just like a Windows Server so your classic Server 2008 engineer already knows most of Hyper-V."

There's another big difference between Microsoft and VMware, says Goldstein: Microsoft is more partner friendly. "Microsoft takes the time to understand how my business works," he says. "In my opinion, VMware only cares about how many licenses we sell." One reason for that high touch partner relationship that Microsoft has with Hyper-V partners is the software giant's long standing legacy in the channel and a software portfolio that runs from the smallest business to the biggest business.

"I find that VMware fits into the upper, mid-business to the higher-end enterprise business," says Goldstein. "As a business owner I need the ability to offer virtualization solutions to every segment of the market." Microsoft Hyper-V is a lot better platform for moving that small business customer into higher end solutions, said Goldstein.

Goldstein is optimistic about the future for Hyper-V solution sales. He sees Microsoft increasing its market share against VMware."It is very hard to bet against Microsoft," he says. "I put a lot into it and I get a lot out of it."