Introduction

Hyper-V is free! It really is. This chart shows you the different versions of Windows and the features that are found in each. The left-hand column shows you the features you can use in the free version of Hyper-V while the other three columns show you the features that are found in other versions of Windows Server, which are not free… or are they? We’ll investigate.

The economics of Hyper-V are pretty interesting, actually, and Microsoft has muddied the waters a bit with its new System Center 2012 licensing. To use some advanced functionality, you need System Center 2012 Virtual Machine Manager. I’ll include some System Center pricing later in this post.

Windows pricing

As of this writing, Windows Server 2008 R2 Enterprise carries of list price of $3,919 (with 25 client access licenses), while Windows Server 2008 R2 Data Center carries a list price of $2,999 per processor socket. For a typical dual processor server, this means that you will spend $5,998 for Windows Server Data Center. The Enterprise edition of Windows is licensed per server at that $3,919 price. Windows Server Standard is $1,029 with 5 CALs.

As per Figure 1, the free version of Hyper-V can accomplish many of the same feats as the Data Center edition of Windows. So, why would you spend thousands of dollars on the Data Center edition when the free edition of Hyper-V has the same capabilities?

It’s all about the virtualization rights. If you’re planning to use Hyper-V in a significant way, buying the Data Center edition of Windows can save you tremendous amounts of money and allow you to take a “set it and forget it” approach to virtualization licensing. You see, with that Data Center license comes the privilege to run as many virtual instances of Windows Server as you like on the physical server to which the Data Center licenses are applied. For your typical dual processor server, the breakeven point for Data Center is around six or seven virtual machines. Most of us will run more than that on a single dual processor host.

By the way, for the purposes of server licensing, the number of processor cores and the amount of RAM in the machine and applied to virtual machines doesn’t matter.

Here’s the math:

• Windows Server 2008 R2 Standard licenses: $1,029,
• Six of these = $6,174 (more than the $5,998 you’d spend for the dual processor Data Center license),

If you look at Microsoft’s licensing in this way, Hyper-V really is free. With the DC license, you’re spending your money on the virtualization rights. For every virtual machine beyond six that you install, you save a minimum of $1,029. Better yet, the virtualization rights allow you to run Standard, Enterprise or Data Center in a virtual machine, so you can get the benefits of the more substantial editions without paying more money. Just as a thought exercise, the table below shows you the base cost of a virtual machine running on a Windows Server 2008 Data Center host with dual processors. You can see that the virtual machine cost runs anywhere between $299.90 and $5,998.

Adding System Center to the mix

With System Center 2012, Microsoft has made what I believe to be a strategic error by basically making it more expensive to acquire the product. The company has now bundled all of the System Center tools into a single product available in two editions, Standard and Data Center. We’re going to focus on the Data Center edition here, which carries a list price of $3,607 for a two-socket management licenses. As is the case with Windows Server 2008 R2 Data Center, System Center 2012 Data Center can manage an unlimited number of operating system environments with the single two-socket license. The catch: You need a Data Center license for each of your managed hosts.

If we go back to that quick thought exercise that I postulated before, we can add a column for having to manage that virtual machine, which I’ve done in the table below. I’ve also added a column that shows how much that virtual machine costs in total. This assumes that you use System Center and Hyper-V alone. If you use System Center for something and then use a different tool for, say, backup, you will incur additional costs.

Some conclusions

So, Hyper-V itself really is free. As you start to buy licenses, you’re really buying virtualization rights that allow you to scale your environment. You’re also paying for management software to manage the virtualized environment. As such, the overall solution isn’t free—it certainly carries costs—but Hyper-V itself carries no real additive cost.

Action Item: As a CIO, you may decide to start small and use the free version of Hyper-V and then buy licenses as necessary. I think that’s a mistake for a couple of reasons. If you believe that you’re going to expand your Hyper-V environment in any substantial way, buying the licenses up front allows you to focus on providing the best possible service and not on micromanaging what should be considered incremental licensing costs. As you decide to add additional virtual machines, you can simply do so without having to go through a complex purchasing process to obtain more Windows and System Center licenses. It allows you to focus on the deliverable rather than the mechanics.

Consider this in everything you do. The cost side of your budget is a fixed item that can only be reduced so much. However, the benefit side to what you do is incredibly powerful. Spend enough time on the expense side to stay employed and within your budget, but don’t micromanage it. Focus your efforts on your key business drivers. A 1% positive impact on the productivity of the whole company because of your efforts will yield much more result than a 1% savings in your budget.

Footnotes: A reminder to readers: This is a wiki! Anyone can join in the conversation. If you have comments or would like to add additional information to this post, please do so!