Quite surprising, isn’t it? Before you cry blasphemy, read the disclaimer from that comes with the graph:

We realize that many readers of this e-mail are going to say our level of virtualization (images per server) is significantly higher than MBA’s.  That may be true for the servers that you have virtualized.  We obtain our average by dividing the number of images for all servers in a platform by the number of servers supporting the platform. Our best participant for each server platform averages approximately 2.5 images per servers as shown below:

Windows – 2.57
UNIX – 2.46
Linux – 2.52.

Indeed, our own shop is much higher than this, 6.63 to be exact, but it’s important to note that they’re throwing in the non-virtualized servers still on the floor, which one could easily be tempted to overlook. Clearly, there are a lot of shops out there that haven’t yet ventured into the deep end of the virtualization pool. It doesn’t look like the world is going to reach Gartnerian Nivrana on schedule, but there does seem to be compelling evidence to continue moving in that direction. Consider these numbers, also from MBA:

From 2007 to 2008, the percent decrease in the average cost per server image was:

Windows – 8.8%
UNIX – 8.1%
Linux – 10.2%

Our current best participant for each server platform is:

Windows – $9,031
UNIX – $13,965
Linux – $10,827.

This graph makes it quite clear that costs per image are dropping. How so? Unless you just moved your shop to India, your labor costs are the same as last year or more. Facilities costs (power, cooling, space) are going up, not down. Taking a look at the Windows category above, hardware price decreases alone could not have accounted for an 8.8% average decrease per image – it seems like way too much. Chairman Steve hasn’t offered any fire sales on Windows in recent memory, so it can’t be that either.  What gives?  The decreasing cost of hardware is certainly a factor, and we would expect to see the biggest savings in the pay-for Unix world because it’s not running on commodity hardware. Yet regardless of platform, the savings are apparently quite substantial. There has to be something more going on here. Could it be correlated to the rise in virtualization?

The folks at MBA tend to factor in everything when they calculate costs, including the kitchen sink. Software and hardware acquisition costs, facilities costs, the cost to virtualize – it’s all baked into the numbers. Could it be that as the level of virtualization increases, even just fractionally, the amount of annual savings across the enterprise increases significantly?  Looking at our own shop, we have roughly 48 Windows images trundling along. Let’s suppose we had increased our number of images per server just .08 as shown above from 1.27 to 1.35.  Our annual savings would seem to be $81,600.

Hmm, that seems like financial voodoo, you say. Perhaps so, but how do we explain the huge savings?  New hardware avoidance is certainly one way to generate numbers this big, and reduced software costs might also be in play depending on how your software is licensed, both of which are natural outcomes of virtualization.

Without seeing a more detailed breakdown of the numbers it’s hard to be absolutely dogmatic about these savings, but it’s an interesting thought to mull over.  Could there be onging opportunity for significant cost savings by continuing to crank up the virtualization factor a few clicks every year, or is there a practical upper limit?

//spk

p.s. See you in a few weeks.  It’s vacation time!

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