Dell embeds VMware ESXi in PowerEdge servers, sells direct on Web

With its new virtualization push, Dell is emphasizing direct sales. But the company says partners can also sell its servers with embedded hypervisors.

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Dell PowerEdge servers will feature embedded VMware ESXi and Citrix XenServer hypervisors as part of a new virtualization initiative announced Wednesday.

The announcement itself stated that customers can custom-build and buy virtualization solutions direct through Dell's website. There is also a site, VMwareNow, where customers who buy Dell PowerEdge servers with VMware ESXi embedded can upgrade to full VMware Infrastructure 3 licensing.

There was no mention of the channel in the announcement, but the company said in a follow-up statement that all Dell PowerEdge servers are also available for partners to sell.

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"With all of these offerings, Dell is helping customers virtualize at the speed of their business with solutions that can be customized to their specific needs, whether direct from Dell or via [the] channel partner of their choice," the company said in the statement.

The virtualization option is available on two Dell PowerEdge servers, the R805 and R905. Customers can choose whether they want the VMware ESXi 3.5 or Citrix XenServer Dell Express Edition hypervisors embedded on the servers.

The R805 server starts at $3,049, and R905 starts at $6,499. The VMware ESXi option costs an extra $99, plus a required $399 service contract. The Citrix XenServer option costs $299, and support is neither included nor required.

Even though customers can buy the PowerEdge servers with embedded hypervisors direct, they are better off working with channel partners who can help them tailor the virtualization solutions to their specific business needs, said Greg Donovan, president and CEO of Alpheon Corp., a Dell managed service provider (MSP) in Morrisville, N.C. Partners can help customers determine if virtualization is the right move for them, Donovan said.

"We see a defined market for where virtualization belongs," he added. "If you don't have a defined focus, you can get yourself into sprawl. … Until technical knowledge is ubiquitous, customers are always going to need advisors."

At VMworld 2007 in September, VMware said that Dell and other original equipment manufacturers (OEMs) would integrate ESXi -- then known as ESX 3i -- with their servers. But details about each OEM's specific products and pricing are just starting to come out now.

Some VMware partners feel the OEM deals will take away their hypervisor sales, because customers have no incentive to buy from them instead of Dell and other vendors. But David Lynch, marketing vice president at Embotics in Ottawa, said if more customers buy VMware ESXi from OEMs, it will create more service opportunities for VMware partners.

"We all rely on sales to help grow the market," he said. "Anything that can create the sales of virtualization products helps folks like ourselves who provide products and services around virtualization."

Dave Malcolm, vice president of technology for Surgient Inc. in Austin, Texas, agreed. VMware's OEM deals are a response to Microsoft, which will embed its new hypervisor, Hyper-V, with Windows Server 2008 starting later this year, he said.

"VMware announced this knowing that Hyper-V was coming," Malcolm said. "This is the way that hypervisors are going to be delivered into the marketplace from now on."

Microsoft will charge $28 extra for Hyper-V, which could start a price war with VMware.

"Only time will tell," Malcolm said. "Over time, the hypervisor will become commoditized, so it will end up at a low price. Initially, VMware will be able to maintain their prices for a while. They're the market leader."

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