What is the real effective cost of Microsoft Hyper-V for data centers using Microsoft Windows Server-based products? Scott Lowe, former CIO, founder and managing consultant of The 1610 Group, and Wikibon.org analyst, argues that effectively Hyper-V is free in his latest Wikibon post, “Leveraging Hyper-V economics to simplify the CIO role”.  And he proves his point with an analysis of Windows pricing.

Of course Hyper-V is free in the sense that Microsoft gives away a basic version of Hyper-V. The problem is that while that version might be sufficient for small installations, it does not provide the advanced features that large, highly integrated environments need. For that, he says, companies need System Center 2012 Virtual Machine Manager.

His analysis starts with the pricing of Windows Server 2008 R2 Enterprise and Windows Server 2008 R2 Data Center, with Windows Server Standard thrown in for good measure. He points out that the free version of Hyper-V can do many of the same things as Windows Data Server, but the latter actually can save iHyper-V users with large numbers of virtual machines large amounts of money and simplify virtualization licensing to a “set it and forget it” level. This is because Windows Data Center allows an unlimited number of virtual instances of Windows Server, while with Hyper-V alone users have to license each Windows Server instance. The break-even point, he says, is at six or seven virtual machines. Users save a minimum of $1,029 in licensing fees for every VM beyond that. And the licensing covers the Standard, Enterprise, or Data Center versions of Windows Server.

He then adds System Center 2012 into the analysis with a note that Microsoft may have made a mistake in its pricing for this product. While the overall solution is certainly not free, he argues, what customers are paying for are virtualization rights and management software that support scaling the environment. Hyper-V itself, he says, comes for free.

He recommends that instead of starting small with the free version of Hyper-V and buying licenses as necessary, CIOs should buy the licenses they will need up front. That allows them to focus on providing optimal service rather than micromanaging incremental licensing costs. His philosophy is, “The cost side of your budget is a fixed item that can only be reduced so much. However, the benefit side of what you do is incredibly powerful.”