The Desert Schools Federal Credit Union has gotten bottom-line results from the high-tech trick of server virtualization. The organization estimates it saved $100,000 this year in server expenses by using 54 ESX Servers from VMware Inc., a unit of EMC Corp.

Top management likes the savings that virtualization has generated but is nervous about whether the strategy can deliver the high availability expected of the credit union's customer-facing applications. So Doug Baer, systems engineer, is paying attention to VMware's latest products. "In a financial-services firm, high availability is critical. It's too scary that we might lose nine applications on one server," he says. "It's a constant worry."

VMware last week introduced ESX Server 3.0 and VirtualCenter 2.0, which lets a failed virtual machine shift to a new server without skipping a beat in the application's operation. The virtual machine is assigned the same memory, disk, and network-access resources on the new host that it had on the old one, ensuring that the app will continue to meet service-level agreements, according to VMware.

More With Less
Desert Schools already runs an average of nine virtual machines on each of its seven Hewlett-Packard ProLiant DL 360 servers. Now Baer is about to buy more-powerful HP dual-core servers, and he's confident that VMware's virtualization technology will let him push that ratio higher, resulting in increased savings. Instead of seven new servers, Baer says he can get by with two or three dual-core ProLiant 585s.

For its critical branch-operation servers, Desert Schools uses fault-tolerant servers from Stratus Technologies International, with their dual-power supplies and other redundant components. But with the new virtualization products from VMware, Baer says he'll get similar high availability from new HP ProLiant servers without the hardware redundancy. By demonstrating that he's proactively monitoring the virtual environment and able to seamlessly pick up the processing of any failed virtual server, "I can convince management the virtual infrastructure is also highly available," Baer says.

With RAM growing along with processing power on dual-core machines, ESX Server 3.0 makes use of four processors instead of two and works with 16 Gbytes of memory, instead of 3.6 Gbytes. That makes it a candidate to run Microsoft SQL Server database applications for the first time, Baer says.

Other Players
VMware wouldn't disclose pricing for its new products, which won't be available until early next year, but the company's existing ESX Server and VirtualCenter together cost $5,000. VMware is the market leader on x86-type hardware, IDC analyst Dan Kusnetzky says, with revenue of $101 million in its third quarter. Microsoft also is a player in the market with its Microsoft Virtual Server, and IBM, which has long dominated virtual machines on mainframes and high-end proprietary servers, teamed up with VMware last week to offer the IBM Virtualized Hosted Client Infrastructure.

Virtualization is a niche market today, with IDC predicting that virtual client and server software will account for $360 million in revenue this year. But IDC forecasts a market boom, leading to $15 billion in spending in 2009 on virtual-machine software and associated hardware and networking.

Key to that shift is the ability to achieve greater server utilization while easing management issues through virtualized data centers. Baer knows about that: Desert Schools' server utilization went from less than 10% on average up to 75%, with some servers achieving 90% utilization.