With 170,000 customers, including every member of the Fortune 100, you might think VMware's toughest task is stocking enough paper to print up new customer contracts. But the industry's biggest x86 virtualization vendor is facing a strong challenge from Microsoft, which is enticing IT executives with Hyper-V, an alternative that may not be quite as sophisticated as VMware but is less expensive.
2010 will be a crucial year for both VMware and Microsoft in the virtualization race. Here is a list of five things VMware and its CEO -- former Microsoft executive Paul Maritz -- have to do to stay ahead of their biggest rival.
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1. Cut prices
If there's one major complaint customers and analysts have about VMware, it's that prices are too high.
"Are you going to spend five times the cost [of Microsoft]?" asks Burton Group analyst Chris Wolf. "Is it five times the features? Most folks, looking at their wallet, would say, 'I don't think it is.'"
VMware has several different pricing schemes, and the price each customer pays depends heavily on which version of the software they use and how many servers and workloads they have virtualized. According to a vSphere pricing document, "VMware vSphere Advanced" costs $2,245 for every processor, allowing up to 12 cores and 256GB of memory.
VMware's management software, known as vCenter Server, costs $1,500 for three hosts, or $5,000 for unlimited hosts. Numerous add-ons sold by VMware can raise a customer's bill significantly. VMware offers a free version of its hypervisor, but with limited functionality.
Microsoft offers Hyper-V, including advanced features such as live migration, as a free download. Customers planning big virtualization deployments are likely to buy management tools as well, and Microsoft's Virtual Machine Manager costs $869 per physical server.
VMware has argued that its software can be less expensive than Microsoft's on a per-workload basis, because VMware achieves higher levels of virtual machine density on each physical server. VMware also offers a small business version of its hypervisor that starts at just $166 per CPU, says Bogomil Balkansky, VMware's vice president of product marketing.