Cost to Build a New Virtualized Data Center

VMware, Microsoft, Citrix, and Red Hat Cost Comparison
VMware, Microsoft, Citrix, and Red Hat Cost Comparison

Over the last couple of weeks, I have been thinking about costs relating to a building a new virtualization-based data center. “What?” I hear you say. “Everywhere is virtualized—there is no such thing as a greenfield site anymore!” I would have said that myself, but in the last month I have come across three, one of which is a company worth over a billion pounds.

During a conversation I had with that company, they informed me that they were going to use a certain vendor for their hypervisor, because it was cheaper. This got me thinking: how much cheaper is it, really? As a result, this is the first in a series of articles looking at a generic cost breakdown for a general-purpose virtualization infrastructure.

Before we move on, we are going to make a couple of assumptions and draw some lines in the sand. This environment will require ten hosts, and those hosts will have enough CPU, memory, and other resources to carry out business requirements.

Therefore, for the purpose of this article, we are using a current-generation Dell 730xd with two 10-core CPUs and 256 GB of RAM as the compute unit of choice. This is a reasonably specified machine of the sort that is currently being provisioned as a general virtualization workhorse. Other working assumptions are that all physical networking, storage, and power requirements are available. This lets us concentrate on the costs commensurate with the virtualization software and associated management programs. We will use list price for all comparison costs. I know that in the real world, companies will receive a discount for bulk purchases, but this is the fairest way of doing a side-by-side comparison.

An upcoming article will compare a SAN to moving out to a fully SDDC-based data center.

This article concentrates on the hypervisor and associated management for the most popular products, these being vSphere 6; Hyper-V 2012 R2 and 2016, as the latter is just around the corner; XenServer, as it is still quite a popular choice for those using XenDesktop and XenApp; and finally, Red Hat Enterprise Virtualization (RHEV). We therefore cover all four major hypervisors: vSphere, Hyper-V, Xen, and KVM. A final assumption is that all products are purchased with one-year production-grade support.

vSphere 6–Based Data Center

vSphere comes in many editions, including a free version (but the less said about that version, the better). Below is an edition comparison that comes directly from VMware’s site:

  vSphere Standard vSphere Enterprise Plus vSphere with Operations Management Enterprise Plus
Overview Server Consolidation and business continuity Resource management, enhanced application availability and performance Intelligent operations, consistent management and automation with predictive analytics
License Entitlement Per one CPU Per one CPU Per one CPU
vCenter Server (sold Separately) vCenter Server Standard vCenter Server Standard vCenter Server Standard
VMware Integrated OpenStack Support for VMware Integrated OpenStack, is sold separately. Support for VMware Integrated OpenStack, is sold separately.

Business Continuity and Security


(+ Cross Switch)

(+ Cross Switch /Cross vCenter / Long Distance)

(+ Cross Switch /Cross vCenter / Long Distance)

Storage vMotion

High Availability

Data Protection

Fault Tolerance

2 – vCPU

4 – vCPU

4 – vCPU

vShield Endpoint

vSphere Replication

Hot Add

Resource Prioritization and Enhanced Application Performance

Virtual Volumes

Storage Policy-based management

Reliable Memory

Big Data Extensions

Virtual Serial Port Concentrator

Distributed Resources Scheduler (DRS)

Distributed Power Management (DPM)

Storage DRS

Storage I/O Control

Network I/O Control

Single Root I/O Virtualization (SR-IOV)


Automated Administration and Provisioning

Content Library

Storage APIs for Array Integration Multi-Pathing

Distributed Switch

Host Profiles and Auto Deploy

Operations Management

Consistent Management

Intelligent Operations

Operations Automation

Workload Balancing

As our requirements include the need for operational management, we are going to go with the vSphere with Operations Management Enterprise Plus edition; the cost is $4245 per CPU.

There is an acceleration pack, which consists of six CPU licenses and a vCenter Server license. This costs $23,495. There is also a requirement to purchase a year’s service and support. As this will be a production environment, we have opted for the more expensive production grade.

Product Description Number Unit Cost (USD) Sub-Unit
vSOM Ent+ Acceleration 6 CPU Acceleration SKU vCenter included 1 $23,495 $23,495
vSOM Ent + 1 CPU 14 $4,245 $59,430
1 yr SnS vSOM Acc Production support 1 $7,615 $7,615
1 yr SnS vSOM Production support 14 $1,061 $14,854
Total $90,540

Hyper-V 2012 R2–Based Data Center

Next, we move on to the Microsoft offering. Hyper-V has oft been lofted as a cheaper option. However, until recently it has not really been production ready. Hyper-V, like vSphere, has a free version, but like VMware’s it is of little to no use for a production environment: no GUI support, no management, no failover support, no support from Microsoft other that via TechNet. Further, even the free vSphere is a much more mature product and has more bells and whistles than its Hyper-V equivalent.

We make the following assumptions regarding Hyper-V: Data-center licenses will be used throughout, as this is the most cost-efficient method of deploying a Hyper-V environment due to the unlimited Windows virtualization rights included with the license. These servers will have Linux Integration Services installed to allow better Linux virtual machine compatibility.

Windows 2012 R2 also has several editions. These are shown below:

Features Foundation Essentials Standard Data Center
CPU Socket Limit 1 2 64 64
Memory Limit 32 GB 64 GB 4 TB 4 TB
License Model Per Server Per Server Per CPU (Pair) + Cal Per CPU (Pair) + Cal
User Limit 15 25 Unlimited Unlimited
Access Service Limits 50 RRAS / 10 IAS 250 RRAS / 50 IAS / 2 IAS Server Groups Unlimited Unlimited
Virtualization No Either 1 VM or 1 Physical Server 2 VMs Unlimited
Hyper-V No No Yes Yes
Sever Core Mode No No Yes Yes
ISS Yes Yes Yes Yes
File Services Limits 1 DFS Root 1 DFS Root Unlimited Unlimited

Again, the same hardware is specified as the compute node, and the same assumptions are made regarding storage and network resources. Now, as we require full management from within the Hyper-V environment, a full SCOM environment is costed, too. SCOM requires a Microsoft SQL license. However, if this server is to be used only for SCOM-based databases, the cost is included in the cost of the product.

Product Description Number Unit Cost (USD) Sub-Unit
Windows 2012 R2 DC Per 2 CPU 10 $7,850 $78,500
SCOM 2012 R2 DC Per 2 cores 100 $450 $45,000
Total $123,500

Hyper-V 2016–Based Data Center

For completeness, we include Hyper-V 2016, Microsoft’s next major operating release. However, full details about this version’s editions have not been finalized to date. We will update this article when new information becomes available.

The costing is similar for Windows 2016 Server Hyper-V. However, Microsoft has changed the way licenses are purchased to a core-based model. The Microsoft Server 2016 data center and SCOM 2016 data center editions are purchased in two processor core packs. The cost of these is the current cost divided by eight (remember, the data center edition is currently purchased in two-CPU units).

This creates an issue for our chosen compute model, as it has ten cores. We have to purchase two extra licenses per node for both Server and SCOM.

Product Description Number Unit Cost (USD) Sub-Unit
Windows 2012 R2 DC Per 2 cores 100 $981 $98,100
SCOM 2012 R2 DC Per 2 cores 100 $450 $45,000
Total $143,100

Citrix XenServer 6.5–Based Data Center

Citrix XenServer is dead!” I hear you say. This isn’t quite true. There are still a lot of environments utilizing this venerable hypervisor. As with vSphere, there is a free edition, but as with VMware, the free version is functionally hampered in key areas. Crucially, this can be managed.

Feature XenServer 6.5 Free XenServer 6.5 Standard XenServer 6.5 Enterprise
64-Bit Xen Hypervisor

Active Directory Integration

Role-Based Administration and Audit Trail

Multi-Server Management with the XenCenter GUI

Live Migration with XenMotion

Live Storage Migration with Storage XenMotion

Dynamic Memory Control

Host Failure Protection with High Availability

Performance Monitoring and Alerting

Mixed Resource Pools with CPU Masking

GPU Pass-Through for Desktop Graphics Processing (AMD and NVIDA)

InteliCache for XenDesktop Storage

Live Memory Virtual Machine Snapshot and Revert

OpenFlow Capable Distributed Virtual Switch

VMware vSphere to XenServer Conversion Utilities (Conversion Manager)

Support for Intel TXT

HotFix Deployment using XenCenter

GPU Virtualization (vGPU) with NVIDA GRID

Dynamic Workload Balancing and Audit Reporting

Export Pool Resource List (minor feature)

In-Memory Read Caching


Support and Maintenance

Cost-wise, this comes out significantly cheaper than both VMware and Microsoft, as shown below. There is, however, a requirement to have a Windows machine to run the management software.

Product Description Number Unit Cost (USD) Sub-Unit
XenServer 6.5 Enterprise Perpetual 1 CPU license with 1 yr software maintenance 20 $1,525 $30,500
Windows 2012 R2 Standard to run XenCenter 1 $882 $882
Total $31,382

Red Hat Enterprise Virtualization

Red Hat Enterprise Virtualization (RHEV) comes in one flavor and is based on the Red Hat Enterprise Linux and oVirt project.  As such, it is quite a bit different than the other products. In addition, you can easily use both without support via open source versions of oVirt and CentOS. We went the subscription route to include adequate production level support.

Feature Capability
Red Hat Enterprise Virtualization Hypervisor
  • Image-based, small-footprint (<200 MB) hypervisor with minimized security footprint
  • Text-based user interface for enhanced manageability and easier installation
  • Host scalability: Supported limit of up to 160 logical CPUs and 4 TB per host
  • Guest scalability: Supports up to 160 vCPU and 4 TB vRAM per virtual machine (VM) guest
Self-Hosted Engine
Enhanced Disaster Recovery

Live Migration

Storage Live Migration

High Availability


As you can see, RHEV is pretty compatible with all the other options. Licensing is quite a bit different, however. You need not only a RHEV license but also a RHEL license for each node. We have chosen to go with a standard one-year subscription for RHEL for the physical hosts. However, to run more than two Linux VMs per host, you need the RHEL for Virtual Datacenters or a subscription per VM.

Product Description Number Unit Cost (USD) Sub-Unit
RHEV Per 2 CPU 10 $1,499 $14,990
RHEL (physical)
Per 2 CPU
10 $799 $7,990
RHEL for VDC Per 2 CPU 10 $2,499 $24,990
Total $47,970


Now, it is difficult to calculate like for like, as Windows Software Assurance covers a two- or four-year period, VMware and Citrix offer service and support or maintenance for a one- or three-year period, and Red Hat handles support annually. On the face of it, it seems that a VMware infrastructure is less expensive than that of a corresponding Hyper-V environment. However, Citrix comes out the cheapest, with Red Hat nestling in the middle. Note, though, that this comparison ignores the benefits of unlimited Windows virtualization rights for your users in a Hyper-V environment. Windows Server is still the most-installed operating system in the enterprise. Unfortunately, this is not the case for the VMware, Citrix, and Red Hat environments. For their solutions to become truly functional in an enterprise environment, there will be an additional expense of $78.5K in the case of Windows 2012 DC edition, or approximately $98K in the case of Windows 2016, to enable full virtualization of Windows environments. While Windows Server is the most-installed, there is often also a need for Linux to run side-by-side. Given this there will also be additional expense for non-Red Hat installations for the running of Linux workloads to tune of $24.9K for vSphere, XenServer, and Hyper-V.

This article is obviously rudimentary in its focus, in that it only concentrates on cost as differentiating factor. It does not highlight the benefits of a particular hypervisor over another, such as vSphere’s better memory management than Hyper-V’s, which could lower the vSphere hardware investment or increase the Hyper-V hardware requirements, for example, or other functional elements. Nevertheless, it does highlight the differences in pricing for the different software stacks  that are the basis for virtualized data center: the hypervisor and its management tools.

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Tom Howarth
Tom Howarth is an IT Veteran of over 20 years experience and is the owner of PlanetVM.Net Ltd, Tom is a moderator of the VMware Communities forum. He is a contributing author on VMware vSphere(TM) and Virtual Infrastructure Security: Securing ESX and the Virtual Environment, and the forthcoming vSphere a Quick Guide. He regularly does huge virtualization projects for enterprises in the U.K. and elsewhere in EMEA. Tom was Elected vExpert for 2009 and each subsequent year thereafter.
Tom Howarth

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4 Comments on "Cost to Build a New Virtualized Data Center"

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Jeff Chase
7 months 5 days ago

seems kind of deceptive to me in regards to Costs; Most companies run windows VM’s and therefore with M$ DC license all Windows licenses would be part of that cost where all others would have additional cost of those windows cals.

Christian Weidelman
7 months 5 days ago
I agree, Tom is not being deceptive. I will admit as I was reading the article I started to ask similar questions as Jeff, but once you read to the end Tom does a good job at summarizing the additional costs of a shop that is predominately Microsoft, but runs a VMware or Xen based hypervisor. It’s all in the authors way of conveying information. I don’t see it as deceptive, just Tom’s style he was writing the article in and as he pointed out at the start of the article the concentration was visualization costs. Excellent work Tom, if… Read more »
Mike Savage
2 months 7 days ago
Good article on the latest virtualization cost comparisons. One note to make: you can run RHEV without having to purchase a subscription for the underlying physical hypervisor…a RHEV subscription includes the lightweight, RHEV-H hypervisor for the physical hypervisor installation. Now, some do choose to instead utilize a full RHEL installation as the basis for their RHEV hypervisors if they desire the ability to install additional packages for monitoring, security, drivers, etc., and that does incur the additional subscription cost of a full RHEL OS purchase. A good overview of the differentiation between RHEV “Thin” or “Thick” hypervisors is provided by… Read more »