The conventional wisdom in the admittedly brief tradition of x86-based server virtualization, predicts that when money gets tight, Microsoft Corp. does well with its all-but-free Hyper-V, while VMware, Inc. and its comparatively expensive ESX loses ground. Money in IT is unquestionably tight. But for every slashed technology budget is an IT manager screaming for better manageability, more efficient consolidation and greater power for lower cost, according to a range of analyst surveys and reports. Cost relates more to the number of virtual machines that can be effectively housed in one physical server, however, a measure in which VMware has a distinct advantage, according to a recent report from the Taneja Group. Physical hosts running VMware software can pack in 1.5 VMs for every 1 VM on a Microsoft Hyper-V server, according to the report. Comparing costs based on the number of VMs a host can support, Taneja Group concluded VMware is actually cheaper by between five percent and 29 percent than Hyper-V. With a higher VM density per server, customers have to buy fewer physical servers, fewer OS licenses, fewer licenses or instances of management software, and simpler configuration because fewer machines are involved, the report concluded. Even without a straight dollar-cost comparison of the purchase and licensing costs, however, VMware still has a considerable advantage over Microsoft, according to Bob Laliberte, an analyst at Enterprise Strategy Group. VMware's track record, management tools and technical maturity are all advantages Microsoft struggles to match, he said. In surveying customers on which vendor they're likely to favor, about 20 percent said they'd choose Microsoft even before they did any serious testing, Laliberte said. "Even before Hyper-V came out, we got these answers that some places are just a Microsoft shop, no matter what," he said. "The rest is still divided up. Microsoft has a good share in test and dev, but when you get into production, you want that extra support. So the level of interest in test and dev is probably higher than in the rest of IT." "So far it hasn't made too much of a dent in VMware," Laliberte said. Wall Street seems to agree. While almost all tech stocks have dropped dramatically, and the comparison is unfair because Microsoft is involved in so many more markets than is VMware, the 57 percent drop in VMware's stock price between April 1 of last year and March 23 of 2009 is significantly lower than the 63 percent Microsoft's dropped. VMware has also improved its standing with a number of analysts, who upgraded their recommendations from Sell to Hold, or even Buy, following a series of VMware-benefitting announcements from other vendors and VMware's own February announcement that it had exceeded market expectations in its Q4, 2008 financial results. The $515 million it brought in during the quarter was $3 million more than analysts had expected, and VMware's sales growth was 25 percent. Its total income for the year, $1.9 billion, was 42 percent above the previous year. That rosy picture might change in the future, or at least become more complicated, according to a Forrester Research study released last month. The survey asked SMB customers what virtualization product they'd buy if they were to do it this year or in 2010; 52 percent picked VMware this year, but only 45 percent expect to in 2010. Microsoft's numbers increased from 18 percent this year to 24 percent in 2010. That's a relatively small percentage given the increase in the size of the virtualization market Forrester expects between now and then, according to Frank Gillett, Forrester VP and principal analyst. More than half of user companies\u201454 percent of enterprises and 53 percent of SMBs\u2014have already virtualized some servers or will during the next 12 months, the survey showed. More than 70 percent of each said they hope to lower PC costs with virtualization or other technologies that can consolidate their hardware. "The important thing is that virtualization projects are continuing," Gillett said. "With most projects, for companies that aren't very good at ROI, or where someone jumps up and down and talks about cash flow IT projects will slow down. We haven't really seen that in virtualization; those projects seem to be proceeding, though there's more squinting at the cost." The larger the virtualization project the more focus there is on the cost of management, according to a report IDC released this month on the state of server management and virtualization. In a survey of 100 virtualization managers in North American companies, IDC found that 79 percent of those with more than 50 virtual servers said they plan to apply ITIL or other process-control disciplines to the management of their servers. Only 48 percent of those with fewer than 50 VMs planned so formal a set of management guidelines. Organizations with substantial virtual-server deployments have to invest in management tools, management-automation software and best-practices management processes or risk server sprawl and rogue servers eating up their computing resources and management time, according to Mary Johnston Turner, lead analyst on the study. The survey showed 70 percent of large VM shops already use or plan to deploy management tools that can span both physical and virtual servers, compared to 53 percent of the smaller shops. Seventy percent of the large shops also expect automation to be an important part of their management process in the future, compared to 37 percent of the less complex organizations. "VMware is obviously much more mature in management and support," Laliberte said. "I'm not going to bet against Microsoft being able to develop that ability, but once a customer makes the switch from having VMs in their test and dev environment into having them in production, with tier-1 apps, the ability to troubleshoot and manage them becomes really critical."