Any time one vendor gets acquired by another, it's an opportunity for a third party to come in and steal some of the accounts unhappy with that acquisition. Oracle has made VMware's job of stealing away customers using Virtual Iron's enterprise-grade Xen hypervisor for server virtualization a whole lot easier by killing off the VI products.
But VMware's shiny new ESX Server 4.0 hypervisor and its vSphere 4.0 virtual server management tools are not compatible with the Xen hypervisor and the related VI toolset, so VMware has to give a little to try to convert the estimated 2,000 to 3,000 customers that Virtual Iron sold tens of thousands of VI licenses to over the past several years.
Plenty of those customers are annoyed that Oracle stopped selling new VI licenses on June 30, even if it is supporting Virtual Iron Extended Enterprise Edition through September 3, 2009 for version 4.4 and through January 14, 2010 for version 4.5. But the question is whether they will be annoyed enough to move to ESX Server rather than jump to another commercial Xen implementation, such as Citrix Systems' XenServer 5.5.
To help answer that question in the affirmative for vSphere, VMware is offering a "safe passage" promotion to VI customers who have the Enterprise 4.0 or later or Extended Enterprise 4.0 or later products. VMware is giving such customers a 40 per cent discount off the list price for vSphere 4 Advanced Edition and vSphere 4 Enterprise Plus Edition (these are the two bundles of the ESX Server 4.0 hypervisor and features that most closely resemble the two VI products). It's also giving a 40 per cent discount for its vCenter Server Foundation and vCenter Server Standard management tools.
Customers can also get a 10 per cent discount on the first year of support for these contracts if they are VI shops. Two-year and three-year contracts are not eligible for the discount. The number of x64 processor sockets that customers put under control of vSphere has to be equal to or greater than the number that were under control of the VI stack.
The safe passage deal runs retroactively from July 1 through September 30, and vSphere buyers cannot combine this deal with other discounts. They can acquire the vSphere software either directly from VMware or through its reseller channel, but it does not apply to licenses and support contracts acquired through VMware's online store. (As if anyone seriously deploying server virtualization paid list price through the store anyway).
It is debatable how good of a deal the VMware offer is. If VMware was really serious, it would simply do a license-for-license swap and be happy to have a few thousand customers paying maintenance in the future that would have been giving money to Virtual Iron anyway or that will - if this deal isn't sweet enough - be giving it to Oracle or perhaps Citrix in the future. It would have also been good to see VMware talk about virtual machine conversion services and training for VI shops who are unfamiliar with vSphere, which is, after all, a new product.
The strange thing is that Citrix, which as a distributor of a Xen virtualization stack and a competitor to VMware, has not yet launched its own deal to entice Virtual Iron's customers to side-step over to XenServer 5.5. Given the number two status that Citrix has in x64 server virtualization, you can bet a deal is in the works and that it will cut a lot deeper than VMware, the industry juggernaut.
That doesn't mean VMware will budge one penny more on its discounts, since it is under pressure to boost revenues and profits from Wall Street. But having both VMware and Citrix in on the deal - and maybe even Oracle if the product roadmap for Oracle's future mish-mash of server virtualization tools in the wake of its acquisition of Sun Microsystems next week and the acquisition of Virtual Iron - makes sense. No matter what platform VI shops choose, having the most vendors in contention for the deal will yield the best price and the most features. ®