New Report: Competition heating up among all the virtualization vendors as companies start to look at TCO

The vast majority of corporations believe it’s a question of when, not if, they will transition their data centers to a virtualized environment.  Intensifying competition among leading virtualization vendors and increased demand by end users is creating a price and performance war. To help corporations make upcoming purchasing decisions, a new Yankee Group report, titled “Virtualization Price War: VMware’s Little Big Horn?”, looks at the pricing and performance/feature differences among the top virtualization offerings, including Microsoft, Novell, Oracle, XenSource and VMware.


While VMware is the established market leader, rival vendors are closing the gap with significantly less expensive products. The report states: “In the past year, all the virtualization vendors charged between $700 and $800 per socket for their commercial server products while VMware’s product retailed for a whopping $3,000 per socket, a 75% premium.”


For example, Microsoft Virtual Server offerings are from 40% to 70% less than VMware’s ESX3 and Vi3 platform offerings, depending on specific configuration, volume and licensing factors, and Microsoft’s Systems Center Server Management Suite Enterprise retails for $860 compared with $5,000 list for VMware’s VirtualCenter, an 82% price differential.  Citrix’s retail pricing is 66% lower than VMware solutions. Novell’s list pricing ranges from 35% to 70% less than similar VMware offerings, and Oracle claims its open source solution that runs on top of the Xen 3.0 hypervisor is three times more efficient than rival products at a fraction of the cost. 


Virtualization’s relative ease of deployment and maintenance enable customers to lower their TCO and quickly realize a return on their investment, although corporations remain extremely cost conscious. It will be a buyer’s market for the foreseeable future and vendors must deliver more reliable, feature-rich products at lower price points.  The report advises vendors to show corporate enterprises how virtualization can improve business processes and how much money can be saved in the immediate and long term and notes that Microsoft, the number two player in the server virtualization market, with a 30% market share, is the biggest threat to VMware’s dominance but competition will be fierce among all the virtualization vendors for the foreseeable future.


*This is not a Microsoft commissioned report.