Lower cost rivals challenge VMware lead

Virtual Iron and XenSource both are introducing new virtualisation software to undercut on price the dominant player in the field, VMware.

Virtual Iron will offer Version 3.1 of its enterprise-class virtualisation platform for a license price of $US499 per socket, which is less than 20 per cent of the $US2875 per socket price for a comparable VMware license, according to Virtual Iron.

It argues that VMware's pricing is a barrier to more widespread adoption of virtualisation in data centers, citing IDC research that only 6 per cent of data center operators deploy any type of virtualisation. XenSource has introduced new and upgraded virtualisation products, also at sub-$1000 prices.

Both XenSource and Virtual Iron build their proprietary products on top of the open-source Xen platform for virtualisation hypervisors. A hypervisor is technology that makes it possible for one computer to run multiple operating systems at the same time. VMware's products are not based on open source.

Virtualisation refers to software and other system management tools that are used to better utilize servers. virtualisation makes it possible for one physical server to run multiple applications simultaneously. Advanced virtualisation features include tools to seamlessly move computing workloads from one physical server to another, set up infrastructure and test new software.

Revenue at VMware, a wholly owned subsidiary of storage vendor EMC, grew 86 per cent in EMC's fiscal third quarter to $188.5 million. If that pace keeps up, VMware's annualised revenue would be $US750 million, VMware said.

Virtual Iron and XenSource intend to slow that pace.

"We are taking a very aggressive stand on pricing," chief marketing officer for Virtual Iron, Mike Grandinetti, said.

The Charlotte Observer newspaper in North Carolina uses Virtual Iron. It took 45 minutes to run a particular job on its legacy Unix-based servers, the Observer's IT infrastructure manager, Geoff Shorter, said. VMware completed the same job in 11 to 13 minutes, but so did the less expensive Virtual Iron.

The license for the high-end VMware product cost $US5750 to run on a dual-socket server, Shorter said. Virtual Iron's license was $499 per socket, so the total cost for a dual-socket machine license would be $US998.

Pricing for XenSource's XenEnterprise starts at for $US488 for an annual subscription license for a dual-socket server or $US750 for a perpetual license. Newly-introduced XenServer for Window sells for $US99 per dual-socket server, per year. It has fewer features than XenEnterprise.

"Our intention is to dramatically shift the landscape under VMware," XenSource's chief technology officer, Simon Crosby, said.

Virtualisation was following a classic economic model of an early mover dominating a market and charging a premium, soon followed by challengers competing on price, principal IT advisor at Illuminata, a technology research company, Gordon Haff, said.

Haff said enterprises that had deployed VMware were seeing a positive return on their investment despite the price. Price alone wasn't keeping enterprises from adopting virtualisation.

"Even if virtualisation software were free, it wouldn't become ubiquitous because of the complexity of the implementation," he said.

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