VMware slashes vSphere pricing in half to capture the small-business market

VMware announced sub-$500 pricing on its vSphere Essentials virtualization solution to reach cost-conscious small businesses

For many years now, one of the major differentiators in the virtualization market has been centered on price. When a company hasn't yet reached feature parity with its competitor's product, a great place to shine a spotlight is on the difference in price between it and the competition. In the virtualization space, Microsoft has been doing that for years, going back as far as Microsoft Virtual Server versus VMware ESX Server. Citrix has been singing a similar tune, showing the cost savings between going with a virtualization solution like XenServer over VMware VI3 or vSphere 4.0.

Even as media and industry luminaries continue to chant that the hypervisor is commodity, VMware has remained adamant about its product's superiority and, for the most part, has refused to compete on price. Within the enterprise market, price hasn't necessarily proven to be a major motivating factor when selecting a hypervisor to power the virtual data center -- especially a virtual data center powering production or mission-critical applications.

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While VMware vSphere 4.0 may be considered the most sophisticated and enterprise-ready server virtualization solution on the market today, it is still finding it tough to crack open the small-business market that typically run Microsoft Windows Server environments.

To get in front of these companies that want to virtualize but remain cost-conscious, VMware is going to play where Microsoft and Citrix have been winning, with a story around affordable pricing. VMware announced a VMware vSphere Essentials package that is being discounted and sold for 50 percent off its $995 list price now through June 15, 2010. This is probably one of the most aggressive price moves yet by VMware to try and win the small-business market.

"VMware vSphere allows SMBs [small and midsize businesses] to do more with less," said Timothy Stephan, senior director of product marketing at VMware. "We've helped thousands of SMB customers more effectively utilize their storage, network, and computing resources to control costs and respond more quickly to business demand. With this promotion, we are happy to make the benefits of virtualization more affordable for offices of all sizes."

Designed for small IT environments with fewer than 20 physical servers, the Essentials bundle of vSphere 4.0 includes enterprise-ready ESX and ESXi virtualization and VMware vCenter Server for Essentials, which offers provisioning, centralized management and performance monitoring, physical-to-virtual machine conversion, and wizard-based deployment.

But what I find interesting here is that VMware has decided to strip away much of the cool and useful functionality that has helped separate it from the competition. VMware has maintained all along in this virtualization war that platform consideration shouldn't be about price, but instead about feature and functionality. But as competitors continue to close ranks on VMware feature and functionality parity, it seems odd that VMware would choose to strip away those very features that make it stand apart and simply lower the price to try and compete at the small-business market. Small businesses may not have as many host servers as large enterprise organizations do, but they are still looking for cheaper alternatives for clustering and business continuity.

The vSphere Essentials edition supports up to three ESX/ESXi host servers, each with up to two CPUs with no more than six cores per processor, and up to 256GB of memory. Each virtual machine is limited to a maximum of four vCPUs, and the bundle includes a scaled-down version of vCenter Server.

While this bundle is missing many of the bells and whistles that make VMware famous such as vMotion, Fault Tolerance, High Availability, and Data Recovery, it isn't completely devoid of functionality. The Essentials bundle does include vCenter Server Agent, vStorage APIs, VMware Consolidated Backup (VCB), and vCenter Update Manager.

The other problem with this specially priced bundle is that it doesn't include any product support. The price does include one year of software subscription, which is great for software updates. But as most people know, smaller shops are typically more likely to need and use software support, more so than larger organizations. This is probably why VMware offers per-incident support as an add-on option for this bundle, starting at $299 per incident. At those rates, the "cost effectiveness" of VMware Essentials could become obsolete pretty quickly for a small business.

This article, "VMware slashes vSphere pricing in half to capture the small-business market," was originally published at InfoWorld.com. Read more of David Marshall's Virtualization Report blog and follow the latest developments in virtualization at InfoWorld.com.

Copyright © 2010 IDG Communications, Inc.

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