Virtualization benefits are worth the extra cost over physical servers alone

Physical servers alone may cost two and a half times less, but the benefits gained by purchasing virtualization software such as VMware are more than worth it, argues the author of Virtualization Viewpoints.

Virtualization Viewpoints is a semi-monthly column that discusses current VMware- and virtualization-related trends, news and topics. Here we offer opinions and viewpoints on the competitive, quickly growing and ever-changing virtualization industry with a focus on VMware, the current virtualization market leader, which is in an ongoing battle to remain on top and distance itself from its competitors.

I recently came across an article "Server hardware cost comparison: Is virtualization cheaper?" that questioned why companies are using virtualization if it costs more than separate physical servers and doesn't necessarily yield administrative cost savings.

The article made the conclusion that the higher cost of virtualization may not be worth it and that many companies are virtualizing because it's in the "in" thing to do right now.

The comparison that was made in the article between physical and virtual costs is below:

Physical: eight dual-core servers, 4 GB RAM, 1-2 Ethernet ports, 150 GB disk for $1,339 each, for a total of $10,172

Virtual: 1 – 16 core server, 32 GB of RAM, several 4-port Ethernet cards, 1 TB – 2 TB disk, for a total of $45,196

He then doubles the virtual price to include a second server to provide failover capacity for mission-critical applications. His comparison ends up with spending only $11,511 for physical servers (he added a ninth server for failover) compared to spending $90,392 for virtual servers, and this didn't even include virtualization software.

If it was really that expensive, nobody would buy it

If there was truly that much difference in cost not many companies would be virtualizing at all regardless if it's "in" or not. I felt the cost comparison numbers where way off on the virtualization side as you do not need to match server hardware exactly when going from a physical server to a virtual machine. The reason for this is that most servers do not fully utilize all of their resources, which is one of the reasons virtualization was invented. Therefore, just because you have eight dual-core physical servers with 4 GB of RAM doesn't mean you need a 16 core host with 32 GB of RAM to handle them all.

Because of the technology built into virtualization like memory page sharing, thin-provisioned disks and the hypervisor CPU scheduler, you can get away with fewer resources then you would need with physical servers.

Since I didn't agree with the cost comparison I thought I would do my own using HP server and storage hardware. For the virtual environment I will do a comparison using both a single virtual host using free ESXi and two virtual hosts with shared storage using the Essentials Edition of vSphere for failover capability.

For both the physical servers and virtual host I included RAID storage which you will typically want with all servers in your data center. Let's start with the cost of the small physical servers. I chose a basic Hewlett-Packard (HP) DL120 with the following specifications:

  • HP ProLiant DL120 G5 Server
  • Dual-Core Intel® Xeon® processor E3110 (3.0GHz, 6MB L2 cache, 1333MHz FSB)
  • HP 4GB Unbuffered ECC PC2-6400 DDR 4x1GB Memory
  • HP Embedded SATA Controller
  • HP 160GB 3G SATA Non-Hot Plug 7,200rpm 3.5" ETY Hard Drive (Qty 2)
  • Embedded HP NC105i Gigabit Server Adapter

The individual cost of this server as configured above is $1,135.00. For nine of them the total would be $10,215. Now on to our virtual hosts. A DL380 G5 with two quad-core processors should be sufficient to handle eight virtual machines. A general rule of thumb in virtualization when computing the number of single vCPU VMs per single processor core is 4:1, so having eight CPU cores should be enough for eight virtual machines. The HP DL 380 for this has the following specifications:

  • HP ProLiant DL380 G5 Server
  • Quad-Core Intel® Xeon® X5450 (3.00GHz, 1333MHz FSB, 120W) Processor
  • Quad-Core Intel® Xeon® X5450 (3.00GHz, 1333MHz FSB, 120W) Processor
  • HP 32 GB Fully Buffered DIMM PC2-5300 8X4GB Memory
  • HP Smart Array P400/256 PCIe Controller
  • HP 300GB Hot Plug 2.5 SAS Dual Port 10,000 rpm Hard Drive (Qty 5)
  • HP 1000-W Hot-Plug Power Supply
  • HP 1000-W Redundant Hot-Plug Power Supply (NEMA)
  • HP Redundant Hot-Plug Fans
  • Embedded NC373i Multifunction Gigabit Network Adapter
  • HP NC364T PCI Express Quad Port Gigabit Server Adapter - Low Profile

The total cost for this server to be used as a virtual host is $9,548; to add virtualization software to this server costs nothing if you use the free edition of ESXi. This gives us a host with 8 processor cores, 32 GB of memory, 1 TB of disk and 6 network interface cards (NICs). So if we chose the no failover route the cost comparison between eight physical servers and one virtual host is $9,080 vs. $9,548. Now this is a pure hardware cost comparison and doesn't take into account the many advantages that virtualization provides in features and energy savings. As you can see the cost of the hardware is about the same, so why wouldn't you choose the virtual route instead of sticking with physical servers? If you wanted to add High Availability (HA) to your virtual hosts (which you will want if you are running critical applications) you will need to add a second virtual host and shared storage so you can utilize the VMware HA feature.

Adding in shared storage

You have a couple options for shared storage. For a small environment, using a fibre channel SAN is not cost effective so you can instead go with a lower cost iSCSI, Network File System (NFS) or direct attached storage device. For this, the HP Modular Smart Arrays (MSA) is a perfect low-cost solution that provides very good performance. I've chosen the iSCSI version with the following specifications:

  • HP StorageWorks MSA2012 3.5 inch Drive Bay Chassis
  • SAS / SATA drive interface; 1 GbE iSCSI host interface
  • HP StorageWorks MSA2300i Controller
  • HP StorageWorks 146GB 3.5" SAS HDD (10 pack with bulk shipping)
  • HP NC110T PCIe Gigabit Server Adapter - Low Profile

The cost of this unit, which includes dual 1 GB interfaces and 10 146 GB drives for over 1 TB of disk space, is $8,769. Since we are using shared storage with our virtual environment we no longer need five 300 GB disks in each virtual host; two 72 GB disk will suffice which drops the cost of our DL380G5 server from $9,548 to $7,401.

Adding virtualization software

Next we need to add virtualization software. You could use the free edition of ESXi, but it does not support the HA feature, so you would have to manually restart VMs on another host in case of a failure. Instead we'll use the low-cost VMware Essentials Plus Bundle that supports up to three hosts with two physical processors each and up to six cores per processor. At $3,624, this is the lowest cost edition that supports the HA feature and also includes vCenter Server.

Our grand total for this whole setup is below:

  • DL380 G5 -- $7,401
  • DL380 G5 -- $7,401
  • MSA2300 -- $8,769
  • VMware Essentials Plus -- $3,624

The grant total is $27,195, more than two times the cost of the nine physical servers at $10,215 but nowhere near the $90,000 that the author estimated it would cost for just two servers. While going virtual may be $17,000 more expensive then using physical servers you are getting a lot more for the extra money spent, including the following:

  • Capacity for additional servers -- You will typically not want to exceed 60% resource capacity for two hosts that are using HA so there are sufficient resources available on one host to handle the VMs from a failed host. But that still leaves enough resources available to add additional VMs to each host if needed. If you need to add three more servers to the physical environment, it's going to cost you $1,135 for the hardware for each one. Adding three new servers to a virtual environment that has capacity available will cost nothing for hardware.
  • Additional features like the ability to snapshot and clone VMs and to easily build new VMs in minutes from templates.
  • Energy savings result in lower operational costs by having to power and cool a lower number of servers, plus a reduced data center footprint.
  • Centralized management of all virtual machines from a single console.
  • Less server hardware to install, maintain and upgrade, reduced costs for hardware support.

As you can see there are many advantages to virtualizing, which is the reason it is the "in" thing to do. Depending on your environment the initial costs of server hardware and virtualization software may cost more than using physical servers, but that additional cost is offset by the many advantages and cost savings that virtualization provides. Let's recap the cost of each solution:


  Physical Virtual no HA Virtual with HA
Number of physical servers 9 1 2
Virtualization software N/A Free ESXi Essentials Plus
Physical server total cost $10,215 $9,548 $14,802
Shared storage cost 0 0 $8,769
Virtualization software cost 0 0 $3,624
Total cost $10,215 $9,548 $27,915

The cost of physical vs. virtual without failover is about the same. To gain some advanced virtualization features including high availability it's going to cost you more, but you end up with a environment with plenty of room for additional VMs. You can also grow your environment relatively inexpensively by adding another virtual host for $7,401.

Since the Essentials Plus bundle included licenses for three hosts there would be no additional virtualization software cost for the third host. You could also add additional shared storage relatively cheaply to increase the amount of space available to your virtual machines disks.

Perhaps one of the biggest challenges when deciding to virtualize your environment is determining how to size your virtual server hardware for the workloads that you are planning to put on it. There are some general rules of thumb for this but to ensure you don't under-size your virtual hosts or buy more hardware than you need you should make sure you understand your requirements. To do this, consult with your server vendor or a partner that can help analyze your environment to make sure you purchase the proper hardware.

Virtualization isn't just the "in" thing right now, it's here to stay and every year larger percentages of servers will be virtualized. So when it comes time for your next hardware purchase make sure you explore the virtualization option -- it's not as expensive as some people might think it is, and the benefits are definite and real.

Eric Siebert is a 25-year IT veteran with experience in programming, networking, telecom and systems administration. He is a guru-status moderator on the VMware community VMTN forums and maintains, a VI3 information site.

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