[Reposted 2/11/08 - somehow this post disappeared from the blog]

Sometimes it amazes me when large organizations tell me that the "entry costs" for server virtualization are too high.

I shouldn't be amazed. There are two good reasons when even large enterprises may build out in small pieces.

• Branch or remote offices that do not benefit from centralization of infrastructure (sites like this number in the hundreds for some organizations)
• Small, tactical, project-based deployments with self-contained budgets

In either case, the question of breakeven point comes up: what is the minimum number of servers required for financial breakeven of virtualization (relative to traditional, physical servers)?

So, of course, I built a little spreadsheet to find out.

Most of the assumptions are outlined in the corresponding spreadsheet, but here are the high-level assumptions:

• Costs are a 3-year TCO, including server hardware, shared storage (where applicable), VMware ESX host software, and respective 3-year 24x7 support & subscription
• No discounts applied to hardware or software (discounts are generally better for software, which would improve breakeven point for virtualization
• The average cost per kWh of input power is $0.10 (power) plus $0.12 (cooling), but can be adjusted based upon location (the model contains data for all 50 US states, plus various European countries
• Costs are calculated with and without energy cost savings
• "Soft" dollar savings in the form of management and refresh costs are excluded

It turns out that without High Availability, the breakeven point is two servers. With two hosts, some basic replication and manual restart of VMs, the breakeven point is 4 VMs. With two hosts, entry-level shared storage, and VMware HA, the breakeven point is 5 VMs.

The full analysis is here, and it includes a detailed Bill of Materials, energy costs, and cost-per-VM detail for each option.

One might argue that with only two hosts, you would only want to run up to 50% utilization - but 50% utilization could still be 20 VMs on two hosts, with redundancy. I could also extend the calculator to determine the breakeven point when a third host is added.

Those of you who were at VMworld 2007 can view the session "IP29: Virtualization of Remote Sites", which explored two main ways that customers are handling remote offices. The first is to bring infrastructure into a centralized data center (leveraging things like VDI, WAN Acceleration (e.g. RiverBed), and cheap bandwidth). The second is to leave infrastructure at the remote sites, but use virtualization to reduce costs and simplify management.