Monday of this week (February 6, 2006), VMware, long considered the market leader for virtualization software, potentially changed the
virtualization software market by announcing that the upgrade to their GSX
product would be renamed VMware Server and made available for free
to anyone that wants it. The actions behind this announcement are significant
and contain proof that virtualization software is going mainstream.

Why free?

their decision to make the server product free, VMware has conceded that
competition in this space is increasing and they are taking steps to keep
people interested in their platform. Microsoft, the 800-pound gorilla in any
market, has been quite aggressive in their efforts to convince customers to use
their virtualization software—Virtual
Server 2005
R2—which, from a functionality perspective, is on par with the
current version of VMware GSX. However, Microsoft’s solution carries a price
tag of only $99 for a server with up to four processors. In contrast, VMware
GSX costs over $2,000 to support a system with four processors. Microsoft also
plans to release an updated version of Virtual Server later this year that adds
support for multiple processors inside a virtual machine, technology that has
not yet made its way to the currently shipping VMware GSX product.

On the
open-source front, VMware is also facing Xen, which is not as much of a threat
as Microsoft due to the Xen software’s current inability to adequately support
virtual machines running Windows. However, in the Linux arena, Xen is
definitely gaining mindshare, if not market share and the price tag for Xen is
$0. Further, once Xen is more stable and is capable of running Windows as
seamlessly as it does Linux, VMware will have a serious open source competitor
on their hands.

does have other competitors, including Virtuozzo and Parallels’ Workstation, but, while Virtuozzo and VMware accomplish similar goals, they do so
completely differently. Parallels’ Workstation is a relatively new product that
is still finding its way in the market and is not yet aimed at the data center.
OpenVZ, an open source product with a subset of Virtuozzo’s features, is also available and being used by
more people every day.

The “gateway drug”

GSX Server, Microsoft Virtual Server, and Xen all require a fat host operating
system, such as Windows or Linux, on which the virtualization software is
installed. VMware’s other server product, ESX, uses its own kernel and installs
right onto the “bare metal”, or right to the server with no
intermediary operating system to eat up resources that could be better utilized
by allocating it to virtual machines. In fact, most of VMware’s revenue comes
from selling ESX Server, its related software, and management tools for the
server products. With the commoditization of products in GSX’s
market space, VMware likely would have begun losing sales to Microsoft’s
lower-cost product anyway.

by making the GSX Server product free, VMware can make the case that customers
have no reason not to try virtualization in their environments. And, once a
customer sees the benefits, VMware can start to pitch the advantages of ESX
Server over VMware Server, sell support contracts for VMware Server, and, once
the capability is available, sell management software that can manage virtual
machines running on VMware Server.

Beware vendors claiming “free”

VMware Server is free to download, test, and deploy, it may not be totally free
to run in perpetuity. VMware plans to sell support plans for VMware Server that
are anticipated to cost $350 – $400 per installation. These
plans will be made available once VMware is out of beta and released, currently
expected to be Q2 of 2006. Now, read this excerpt from the VMware Server FAQ,
right from VMware’s site:

Q: Will patches and new releases for VMware Server be provided for
free in the future?

A: Generally available VMware Server
patches, minor and major releases will be provided by VMware on a regular basis
only to customers that have purchased a VMware Server Support and Subscription
contract. At a later time, VMware may, at its discretion, include the
functionality improvements contained in these patches, minor and major releases
in the freely downloadable product.”

If you
don’t buy a support contract, don’t expect to have access to all of the updates
and enhancements made to VMware Server.

New features in VMware Server

because it’s free, don’t think that VMware Server is a slouch when it comes to
what it can do. Keep in mind that VMware Server is also considered an upgrade
for GSX Server, which has not seen a significant release in well over a year. During
that time, VMware has been working on a lot of new features which have already
made their way into VMware Workstation, VMware’s desktop product. Many of these
features are now finding a home in VMware Server, including:

  • The
    ability to assign multiple physical host processors (up to 2) to a virtual
    machine. This makes virtual machines running in VMware Server capable of
    supporting more demanding workloads. VMware calls this service “Virtual
    SMP”. Virtual SMP, with support for up to two processors is standard in
    VMware Server and can be purchased as an add-on for ESX.
  • Support
    for 64-bit guest operating systems. Keep in mind that, in the not-too-distance
    future, some server products, such as Microsoft Exchange 12, will require a
    64-bit platform. With VMware Server’s 64-bit support, there will be no worries
    about whether virtualization software will be able to support an organization’s
    needs. VMware Server supports all of the currently available x64 editions of
    Windows (Vista x64 support is still in beta) as well as a number of 64-bit
    Linux distributions, including Red Hat Linux 3, SUSE Linux Enterprise Server
    9/10, Ubuntu 5.10, and Solaris 10 (also in beta).
  • Beta
    support for Intel’s Virtualization Technology. Both Intel and AMD are hard at
    work on extending the x86 platform to be more
    virtualization-friendly. VMware Server supports Intel’s effort in this area and
    will likely eventually support Pacifica, AMD’s hardware-assisted virtualization
  • The
    current version of VMware Server cannot be managed by VMware’s VirtualCenter management tool. However, this support is
    slated to be included in a future edition of the product.

What does it mean for VMware and competitors?

has indicated that the intent behind making VMware Server a free product was
not a response to market pressures, but was simply a way to open VMware
products to a new class of users. Regardless of the reasons behind the move, here
are some thoughts regarding the virtualization market and the impact that
VMware’s actions will have.


hard to believe that VMware will actually lose any money as a result of this
announcement. GSX Server was not their primary source of revenue and the
position of VMware Server as an entry-level virtualization platform can only
help to drive sales of services and additional products. VMware has indicated
that VMware Server will eventually be supported under VirtualCenter,
which customers will have to pay for. Further, once customers test the
virtualization waters with VMware Server, they may be more willing to consider
the ROI that could be achieved through ESX’s more
efficient use of hardware resources.

As Xen
gains maturity and a mainstream audience and Microsoft gets their hypervisor product into gear, VMware will begin to feel
more pinched, although VMware has, by far, the most advanced management tools
of the crowd.


$99, Microsoft is already practically giving away Virtual Server 2005 R2 and
has been playing catch-up on the virtualization front for the past couple of
years. With R2 and the upcoming 2006 release of the product, Microsoft’s
product will have a feature set comparable to VMware Server, including support
for Linux guests. However, Microsoft does not yet have the powerful virtual
server management tools provided by VMware, making it less attractive for
larger organizations.

Microsoft to lower the price of Virtual Server to $0 at some point to match
VMware’s play. After all, Microsoft will still make money on the sale of
Virtual Server since a Windows license is required for the host system. Microsoft
wants to keep Virtual Server on a level playing field with VMware Server until
they release their hypervisor-based virtualization
product sometime within the next couple of years.


In a
heterogeneous data center, the current version of Xen—3.0—can’t hold its own
against VMware since Xen cannot reasonably support Windows hosts. However, as
Xen matures, develops better management tools, and gains the ability to run
Windows through Intel’s VT and AMD’s Pacifica technologies, expect Xen to
become a more serious contender and threat.

will VMware’s announcement affect the open source Xen project? Probably not too
much, although some people testing virtualization with Xen may now give VMware
a shot, too.


is one virtualization product that I have not yet had the opportunity to
evaluate, so I can’t really comment on how it compares with VMware.

A good thing

To be
sure, VMware’s release of VMware Server as a free product is a good thing for
customers that want to be able to truly evaluate virtualization in their
environments. It’s also a good thing for VMware, a company that has long led
the pack in the virtualization market. Although the company insists that their
decision was not market motivated, the decision does show that the company
continues to be open minded to making changes that will help maintain and increase
the market that they have built over the past few years.