My favorite economist, Milton Friedman once observed that "There is no such thing as a free lunch". This is a good thing to remember as a great deal of hype gets generated by VMware, Microsoft, and Citrix about various parts of their virtualization offerings being "free". However, before we get into a detailed breakdown of why these things are not really free, let's helicopter up and understand the basic economic principles behind Milton Friedman's observation.

1. Everyone's time is valuable. As a matter of fact, if you think about the one thing that you cannot replace it is time. If you spend a day doing something, you cannot get that day back no matter what. Our time is each of our ultimate finite resource. This concept is often called the money value of time. It directly leads to the idea that if someone's time is valuable, they will not "give" you the fruits of their labor without getting something in return. Everyone who contributes to an open source hypervisor like Xen expects to get something back from that investment in one way or another.
2. Given that our time is valuable, the cost of spending that time doing activity A, and not doing activity B is not the cost of doing A. Rather it is the forgone benefits of doing B. If you spend a week in Hawaii on vacation, the cost of that week is not what it cost you in money, but rather the value you could have gotten using that week for its next most gratifying use. If the vacation cost you $2000 and you could have earned $3000 in that week, the true cost of the vacation was the $3000 you could have earned. This concept is called opportunity cost.
3. Just like there is no such thing as "free time" there is no such thing as "free money". You can borrow money, but you will pay interest to the lender for the privilege of being able to use their money for a period of time. You can exchange assets (portions of your company otherwise known as stock) for money, but your investor will expect to be able to resell the asset for more than what they paid for it, or else they will find someplace else to invest their money. This is how capital gets allocated in a global economy.
4. Since people do not like to be slapped in the face with the realities of 1 -3 above, many organizations hide the true cost of one product or service within other products or services (governments are great at this). This is the art of getting you to pay more than you should for something that you want, in return for giving you something else for free. Economists call this cost shifting. Note that the net effect of this is that you pay more for one thing while paying less or nothing for something else.

Nothing Is Free, Not Even The Air That We Breathe

Before we get into applying these concepts to "free" hypervisors, let's apply them to something that my kids think is free, which is the air that we breathe. Dad - "Kids, nothing is free". Kids - "Dad we do not pay for the air that we breathe". In particular let's apply these concepts to the difference in air quality between any city in America or Europe and Beijing, China. In other words, why is the air in Atlanta GA (where I live) cleaner than the air in Beijing, China (see picture below), if both are supposedly "free":

1. Because American's have higher rates of pay than do typical Chinese workers, we demand that our governments provide us transportation methods that can get us to work within reasonable amounts of time (I know - for those of you who do two hours a day each way this is a stretch but it is worse in many other places in the world). Driving to work in an hour creates less air pollution than driving to work in two hours. So the value of our time causes us to pollute the air less.
2. Because the value of our time is high, we are very focused upon the quality of our life. So we place a very high value on the quality of our environment, which we in turn reflects upon how we elect our governmental representatives.
3. In addition to being consumers and voting with our dollars as we spend them, many of us are also investors (think your 401K or IRA), and many of us consider "green" initiatives when making our investments. This is why every large publically held American company has a "green initiative", to save some money and to attract these investors.
4. We accept massive cost shifting to get our clean air. No one in America pays a bill every month entitled "Your Monthly Bill For Clean Air". But we do pay more for our cars, our appliances, our homes, our electricity, and our fuels, because all of these products and services are subject to regulations and taxes that promote clean air and that make them more costly for us to buy. We also pay vastly more in taxes for all of the Federal, State and Local government employees that are needed to create, administer and enforce the regulations that provide our clean air.

One more point about clean air in China. Now that the Olympics are about to happen, the government is shutting down entire parts of the economy in an attempt to clean up the air enough so that it is not an embarrassment to the regime and a hazard to the athletes. Entire factories have been relocated or shut down, and entire commute routes have been closed. So the Chinese people are starting to pay for cleaner air at least for a while in a very painful way.

"Free Hypervisor" Is An Oxymoron

The rest of this article will use the principles of value of time, the time value of money, the cost of foregone opportunity and cost shifting to analyze "free hypervisors".

Let's start with Citrix. Citrix sells four editions of Xenserver. Only one, the Express Edition is free. So you can in fact get the Xen hypervisor for free. But if you want any of the things that you really need in order to deploy virtualization in an enterprise, then you will pay. Here is how:

1. You will pay upwards of $2000 per physical host server for Xen Enterprise which includes things like Dynamic Provisioning, Live Migration, and Resource Pools.
2. Want to virtualize applications and not just servers. Well you need Xenapp.
3. Are you going to do virtualized desktops? Well then you need Xendesktop and an expensive Citrix Netscaler to be the connection broker and load balancer for your implementation.
4. Do you want support and upgrades to that "free" hypervisor? Will then you had better buy Subscription Advantage.
5. Do you have a Xen skill set in your company today? That will be expensive to acquire via hiring and training, or expensive to rent from a VAR or Service Provider.

Microsoft is next. Let's just assume that Hyper-V is free with Windows Server 2008. Here is how you pay:

1. Let's start with the commitment to upgrade to Windows Server 2008. This means paying for the upgrade project, and committing to several more years on the Windows platform (and paying the associated maintenance to Microsoft).
2. Committing to Windows as a platform means committing to Windows applications, and foregoing (at least in the same slice of a machine) applications that are not written to Windows.
3. Who is the leading provider of Windows applications? Why Microsoft of course. Think of all of the layered Microsoft middleware (Exchange, SharePoint, SQL Server) and applications (Office, Outlook, etc.) that you are making an implicit commitment to.
4. Of course if you go with Hyper-V then you will want Systems Center Virtual Machine Manager to manage it.
5. You really like SCVMM? Well have you decided to use SCOM to manage the rest of your Windows server environment yet?
6. Did you know that SCOM uses SQL Server and Microsoft Reporting Services? Well if we are going to learn all of that then let's leverage that knowledge across all of IT (see where this is going).

Finally VMware. Do you really think that the employees of VMware and the investors in VMware are putting their time and money to work for you in order for you to get the results of their efforts for free? Of course not. Here is how you will pay for the "free" version of ESXi:

1.  ESXi seeds the market with VMware technology. In order to use this technology, people (you) to invest time and money into understanding it.
2.  Once that skill set exists in your company, VMware is betting that the you will find that you really need the enterprise version of VMware (VMware ESX)
3.  Once you know you need ESX, then they are betting that you will need the add-ons like DRS, HA, and VMotion
4. Once you have bought into ESX then you will need to performance manage it which means buying into the entire VMware management stack including the recently acquired B-hive.
5. Of course you will need VMware maintenance and support once you make the commitment to the real enterprise versions of the VMware products.
6. Finally the most insidious investment you will make is one of culture and attitude. The world divides neatly between those who are anti-Microsoft and those who are pro-Microsoft. To embrace VMware means that you will need to build a certain amount of anti-Microsoft culture and expertise in your company. Once you make this investment, every decision will take longer and cost more, as you will always evaluate the two camps against each other.

There is no such thing as a free lunch, a free hypervisor, or even free (clean) air. There are only different ways of paying for things. You will always pay for your choice of hypervisor - it is merely a matter of choosing the indirect method by which you pay. Furthermore since VMware, Microsoft and Citrix are all public companies who must deliver a return to their shareholders, when they make one thing free, the have to make up for the lost revenue from the free product by either raising prices on other products, or causing more of those products to be sold. Right now, all three companies are probably making the volume bet (assuming that their free products drive a higher volume of sales of their other products). However, if this turns out not to work the net effect of the free products will be that the prices of the products that you pay for will have to go up to compensate for the lost revenue from the free products. So, you may end up paying more for the hypervisor you want, just because the one that is not good enough for you is free.

Leverage and the Cost of Having Only One Platform

Given the above analysis, what should you do. This depends upon where you currently stand with your investments in virtualization:

• If you currently are a VMware shop with lots of Windows Guests (the most common case among large enterprises), then you already have a VMware and a Microsoft skill set in your company. If this is the case, then the most rational course of action is for you to evaluate Hyper-V, and to see what portions of your applications are appropriate for Hyper-V (those that do not need the advanced management and reliability of VMware).
•  If you do not have VMware in house yet, and you are a large enterprise with significant business critical applications, then you should probably take a look at both Microsoft Hyper-V and VMware. The reason for this is that you are probably going to end up with both anyway, and it is better to figure out which applications below where at the outset of the virtualization project than after you have already done it.

In summary, if you are a large enterprise, you will probably want to have both VMware and Hyper-V so that you can effectively match platforms to applications requirements and so that you can play VMware and Microsoft off against each other when it comes time to negotiate enterprise license and maintenance agreements. Just remember, that whatever is promised to you for "free" really is not.

Bernd Harzog
CEO
Application Performance Management Experts
bernd.harzog@apmexperts.com
http://www.apmexperts.com/

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