Provoking IT from Good to Great
Virtualization Barrier #3: VMware is Too Expensive
Loadsa money
I was at the London VMware User Group last week, and Stuart Thompson did a quick session on the new vSphere licensing. This gave a couple of people the impetus to approach me over a beer later and say, “VMware is too expensive!”.
Isn’t VMware a company, not a product?
Of course, if you want to buy VMware then I would agree that at $10.7B, it is a touch rich. “Oh, Steve, come on! You know I’m talking about the products, not the company!”
Oh, I see, you mean VMware products are expensive. VMware Server? ESXi? “Oh, Steve, come on! You know I’m talking about the vCenter and ESX products!”
Oh, so you mean the Essentials package, which costs a few bucks per processor? “Oh, Steve, come on! You know I’m talking about the enterprise products!”
Damn, I must be real stupid not to realise that when you say VMware is expensive, you mean that the Enterprise/Enterprise Plus packages are expensive. OK, we’ve cleared that up, but what do you mean by “too expensive”?
What does “too expensive” mean?
Expensive is a comparative term just like “bigger” and “smellier”, but comparing costs instead of size or smell. Notice that cost doesn’t equal value: a Ferrari is more expensive than a Lada, but which is the better value? Of course, there are two different products even though they share the same attributes of four wheels and an engine: you might say that was an apples-to-oranges comparison.
Perhaps, when someone says “VMware is too expensive”, what they might be trying to say is one of the following:
- Enterprise Plus is more expensive than Essentials, or VMware Server – but of course, this is like the Lada vs. Ferrari / apples-to-oranges comparison because Enterprise Plus has a wealth of features that Essentials doesn’t have.
- Enterprise Plus is more expensive than the competition – again, this is Lada vs. Ferrari, Apples-to-Oranges, because nobody does what VMware does as well as VMware does it. If you don’t need VMware’s reliable, feature rich platform and can live with downtime and difficult to manage environments, go for it!
- Enterprise Plus is more expensive than I’m willing to pay – ah ha! Is that really true? Perhaps you don’t perceive the value of what you are getting. If you buy one Enterprise Plus license and run 20 virtual machines on it, how does that compare to deploying 20 physical machines?
So if we agree that we are talking about VMware products, not the company, and that expensive means we are comparing the price of the product to the money we are willing to pay, then I guess it all comes down to finding the inflection point where before the point the value is less than the cost, and after the point the value exceeds the cost.
Break-Even point
This break-even point is very dependant on your business case, TCO etc., but it can usually be expressed in the number of virtual machines deployed, which represent capital expenditure avoidance: ie. the more virtual machines you deploy, the more capital expenditure you avoid. In your case, if you buy Enterprise Plus, it might mean that after you’ve deployed 10 virtual machines, and avoided 10 physical machines, then you’ve reached break-even, and any VMs deployed after that represent a “profit”.
Everything over B-E is Upside!
These three alternatives to vSphere are expensive
Buying VMware products like Enterprise Plus costs you money. But not buying it doesn’t mean you don’t spend money, unless you freeze your current capital and operational expenditure, which means no more projects! Like anything, whether you buy vSphere, and how much vSphere you buy, is defined in your business case. But make sure that your business case also covers these expensive items:
- The cost of doing nothing: if you don’t buy vSphere, and don’t virtualize, then you either keep buying physical (ouch!) or don’t deploy projects unless you can keep re-using your old kit. Watch out for hidden OpEx costs.
- The cost of under-virtualizing / too little-too late: if you have purchased vSphere but you don’t deploy enough VMs, and your Guest:Host ratio is low, then your return on investment will be low and this makes vSphere expensive. Key word here is Shelf-ware
- The cost of a cheaper alternative: why are clothes cheap at the market? because they are rubbish and only worn once. Why is a Lada cheaper than a Ferrari? Why do Ferrari’s continued to be sold? Why is the Mini such a great seller even though it is the most expensive car in it’s class? In virtualization, cheaper products have serious flaws: Hyper-V can’t run many VMs on one host which makes it, application-for-application, more expensive than vSphere (no, Hyper-V is not free!). Xen<whatever> is a pig to manage, being a part of the Linux Religious Movement where CLI and Kernel Recompiles are King!
There are many other avenues of discussion, such as “How much of a solution cost does VMware products take up?” – how much are the applications, the OS, servers, the SAN, the network vs. the little hypervisor?
So my response to the folks who talked about “VMware is Too Expensive”, in between sips of Staropramen lager, was: “when you do the business case, take a complete view of what value vSphere provides in terms of CapEx and OpEx savings, with the increases in availability and throughput of projects and change, then I hope you’ll find that VMware is not expensive compared to the alternatives.” In fact, it might be the Sale of the Century!
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| Print article | This entry was posted by Steve Chambers on 21 May, 2009 at 21:27, and is filed under Barriers. Follow any responses to this post through RSS 2.0. You can leave a response or trackback from your own site. |
about 1 year ago
Hey Steve – you nailed it! Great job of entertainingly conveying the compelling vSphere ROI. Regarding Hyper-V, to use Microsoft’s own verbiage when describing Linux, it’s free like a puppy.
about 1 year ago
Hi Steve,
So you tell us that VMware will be very soon like Ferrari, limited; see VMware only in special enterprises which can afford the unreasonable price.
People in VMware should understand that Hyper-v R2 is coming, it is not Lada, it is Toyota man, and VMware will be the GM story; every day we will hear story of closing factory here and there. Not because people don’t like their cars, but the cost of their car from OPERATIONAL perspective is very high.
Just one example, VMware introductory training online cost you $3000 for 4 days, where is the features here, it is training to know how to operate the solution!!!!
I think if VMware keeps their licensing formulas in this way; they will face big challenge to justify their features which now offer out of the box from MICROSOFT promising operating system Windows 2008 R2.
about 1 year ago
Ram, all I know is when I’ve done TCO, ROI, NPV, IRR and Payback calculations with VMware products, the returns are breathtaking. I repeat that “expensive” is a relative term: expensive compared to what? In your case, you are saying it is expensive compared to Hyper-V but I know the ROI model tells a different story. You are focusing on the TCO which is only one part of the story: if you close one eye and say “product X is better because it is cheaper” then you are missing the other part of the story. Open the other eye and look at the return on that investment: “product Y is better because it gives a better return on the investment”. Cheaper is not always best and it isn’t always cheaper. Assume you have to deploy a thousand servers in a month then there is a cost to that – is that cheaper with Hyper-V or with VMware? The only way to find out is to analyze the capex and opex: and IMHO you will find VMware a better investment.
Thanks for your comment, Ram