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March 23, 2005

VMware bundles freebie software on IBM’s blades

Server virtualization software vendor VMware has announced a deal with long-time partner IBM whereby Big Blue will bundle a free, uncrippled version of its virtualization and management products on its blades. The idea is simple: if you can get customers to try virtualization, you can get them to buy virtualization.

By CBR Staff Writer

While perfectly justified given the inefficiencies in the way that modern X86 servers are used in data centers, VMware’s software is not inexpensive–which is one of the reasons why storage array maker EMC paid $635m for it in December 2003. In that time, VMware has seen its installed base for server products increase from 2,500 customers to over 10,000 customers, according to Brian Byun, vice president of alliances at VMware, but consider that the market consumed 6.7 million servers in 2004 (most of them using X86 processors) and there are tens of millions of other servers out there in the installed base worldwide, it is hard to say that server virtualization has gone mainstream. It is very much an early adopter technology, and one that large organizations with complex IT issues are trying to figure out so they can simplify their infrastructure.

Byun was not able to say what the penetration of VMware’s GSX Server and ESX Server virtualization products were on blade servers, but he did say that two years ago it was nil and now it is appreciable and that the penetration on blades was higher than on more traditional server designs. The reason why VMware is doing the try-and-buy deal with IBM on its blades is because of the affinity between customers who understand virtualization and who understand blades.

Virtualization and blades are complementary technologies, and customers who tend to buy one tend to buy the other, said Byun. He said further that VMware has also found that once it can get customers to try its software, it gets a high percentage of them to buy it. He would not say what the conversion rate was. Giving the software away on blades is also a way to test such an approach before introducing it to the much large rack-mounted and tower server installed bases. The blade server market is a relatively small one, comprising about 4% of server shipments with just under 300,000 units shipped for 2004.

The deal between VMware and IBM is not an exclusive one, and it won’t be long before Hewlett-Packard Co and Dell Inc are asking to be able to offer a similar try-and-buy option. Under the deal, VMware allows IBM to ship the top-end ESX Server (which provides the hypervisor on which virtualized server instances run), Virtual SMP (which allows a virtual machine partition to span two processors and soon will be boosted to four processors), and VirtualCenter with VMotion (which allows workloads running on partitions to be shifted across physically distinct servers) on two of the blades in any Xeon-based BladeCenter chassis. Customers can use the software for free for six months, and it has all features enabled so they really get a feel for it. After that, they have to get out their checkbooks or ditch the software.

Back in November 2003, VMware launched a blade bundle for the software stack that is being given away for six months as a freebie; this software was available for $10,000 per two-way blade and was available for both IBM and HP blade servers. This discounted bundle is still in effect, according to Byun.

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