Microsoft flaunts customer dumping VMware

Microsoft is still refusing to showcase Hyper-V at VMworld in protest of VMware rules that Microsoft believes are designed to limit competition, but that doesn’t mean the Microsoft hype machine will abstain from anti-VMware marketing.

In advance of next week’s VMworld, Microsoft is touting a customer that is implementing a long-term plan to replace VMware with Microsoft and claims the move will provide savings of $3.2 million in the next three to five years. The customer, CH2M Hill, is ranked just outside the Fortune 500 at No. 520 and has corporate headquarters in Colorado.

VMware doesn’t deny that the price of its virtualization software is higher than the competition’s. But VMware has long argued that vSphere, its primary virtualization platform, and the related management tools are so efficient that the total cost of ownership is actually the best in the industry when measured on a per-virtual machine basis.

It is becoming harder for VMware to make that argument as competitors Citrix and Microsoft are acknowledged by analysts to be closing much of the gap in features and functionality.

VMware notes that every company in the Fortune 100 uses VMware, but the growing viability of alternative platforms has made it easier for customers to choose less expensive virtualization software. In many cases, they only do this for a subset of their virtualization deployment, and leave their most important virtualized applications on VMware-based hosts. That is precisely why Microsoft is touting the CH2M Hill story — the customer is planning to dump VMware entirely.

“We’re not seeing a problem putting anything we have on ESX into our Hyper-V deployment,” CH2M Hill’s Greg Barton, a senior analyst in charge of the company’s virtualization project, says in an interview. Especially with new Hyper-V memory oversubscription features CH2M Hill is testing, Barton says “we’re not seeing a huge difference in either product.”

But CH2M Hill’s move from Hyper-V to VMware is not exactly as cut and dry as Microsoft’s public relations department would like.

Because of existing software licenses and maintenance contracts with VMware, and CH2M Hill’s strategy to lease servers on a 3- to 4-year basis, Hill says the plan to switch from VMware to Hyper-V will take between three and five years.

“We have an investment with ESX. We’re not going to just dump it right now. But we’re going to augment and eventually move toward Hyper-V,” with the end goal of getting rid of VMware entirely, Barton says. The main driver is cost: “This last couple of years haven’t been great for the IT budget,” he says.

Naturally, the project’s extended time span could let CH2M Hill officials change their minds and scale back their Hyper-V plans. But Hill says VMware would have to make a pretty “compelling” move to make up for the difference in price, now that “the [Hyper-V] functionality is on par.” Hyper-V is available either as a free stand-alone product or as part of Windows Server 2008 R2.

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