Will vSphere 4.1 help VMware compete with Microsoft, Citrix for small-business users?

VMware cut pricing and added features such as vMotion to SMB editions of vSphere 4.1. The company also changed VMware vCenter management product pricing to a pay-as-you-go model.

With the release of VMware vSphere 4.1 this week, VMware hopes to lure the elusive and price-conscious small and midsize businesses that are still, in many cases, in the early stages of trying to figure out their virtualization strategies.

Among the laundry list of new features in VMware vSphere 4.1 are changes to VMware's licensing at the low end of its product line -- changes designed to appeal to the small-business market that has been complaining about high prices and missing features. While VMware has the lion's share of the enterprise virtualization market, the SMB market is splintered among VMware, Microsoft, Citrix, Parallels, and other Xen and KVM offerings. Microsoft Hyper-V and Citrix XenServer have been gaining a lot of attention in the small-business market because of their free and low-cost small-business offerings that include such customer feature favorites as live migration and high availability (HA).

[ Check out the InfoWorld Test Center's first look at VMware vSphere 4.1 | And find out more about breaking through the second phase of virtualization and getting beyond VM stall ]

With vSphere 4.1, VMware answers that challenge by making its vMotion live migration feature available for the first time in the VMware vSphere Essentials Plus and Standard editions. As a bonus, VMware has upgraded its vMotion technology to deliver a five-fold increase in migration speed while supporting up to eight simultaneous migrations between two physical servers.

In an effort to entice small-business customers, the company has been running a promotional price on its entry-level Essentials license, lowering the price from $995 to $495. Evidently it helped because VMware now says it is going to make the price cuts permanent. At a price of $495 for six CPUs, that brings the price down to $83 per processor -- a very affordable price for a small-business shop. The only problem is that this edition doesn't offer live migration or HA capabilities, both of which can be found in the free version of Microsoft Hyper-V R2.

But adding new features such as vMotion comes at a cost. The price of the VMware Essentials Plus bundle, which offers virtualization across three machines or six processors, has gone up 15 percent from $2,995 to $3,495. The Standard Edition, which was $795 per processor, has gone up 20 percent to $995 per processor. Will that make a difference to small businesses?

VMware also announced it was going to modify its pricing model to offer a more pay-as-you-go style of pricing for its VMware vCenter management solutions. Under the new pricing plan, VMware would charge on a per-virtual-machine basis rather than on a per-processor basis as it does today.

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