How to Decrease Hardware Total Cost of Ownership with Virtualization


Use virtualization to help control the high total cost of ownership (TCO) associated with server hardware. A typical IT organization allocates 70 to 80 percent of its budget simply to managing existing systems and applications.1 One source of these costs is the large number of underutilized servers in the average data center. In the past, IT organizations have tended to host just one application per server. Given the affordability of industry-standard servers, this was a cost-effective strategy that simplified deployment and reduced potential software conflicts. Yet server numbers continue to increase, and so do the costs associated with maintaining these systems.


Virtualization helps IT organizations take advantage of the extra power of modern server hardware by consolidating multiple applications and operating systems onto a single machine. That increases server utilization and reduces management, power and cooling requirements.2 Today’s solutions also enable flexible allocation of resources to handle unexpected workloads. With these tools, many IT organizations will find they can reduce their server-related costs (both capital and operational), while simultaneously improving data-center agility.

VMware, a leading developer of server virtualization software, cites dramatic customer savings in server TCO via virtualization and consolidation:3

  • Hardware cost reductions: 28-53 percent
  • Operations cost reductions: 72-79 percent
  • Overall cost reductions: 29-64 percent


VMware also cites up to 20 percent savings in software licensing costs.4 With benefits of this magnitude, it is little wonder that server virtualization technologies are expected to be widely adopted over the next few years.

Virtualization enables a single computer to function as multiple computers, each with its own operating system in a separate environment. Intel VT builds support for virtualization into the chip, helping accelerate industry innovation, and enhancing manageability, ease of use and security on server and client platforms.


Enhanced Virtualization on Intel® Architecture-based Servers

1 Based on a quote by Kevin Rollins, President and COO, Dell Corporation, as reported in Dell and Sun Offer Different Visions,, by Larry Greenemeier, September 17, 2003.

2 Note: There are several kinds of server virtualization, including OS emulation (e.g., a Java* Virtual Machine) and workload management (multiple applications sharing an OS). This paper focuses on Resource Management, which enables multiple OS instances to share platform resources. For more information about other virtualization models, see The Future of Server Virtualization, T. Bittman, a Gartner Research Note, July 17, 2003.

3 For details, visit the VMware Web site at: /sites/default/files/m/5/0/f/vi_intel_vmware.pdf* [PDF 500KB].

4 Source: Michael Mullany, vice president of marketing at VMware, as referenced by Mark Hall in his article, MAC Attracts New Support From…, Computerworld, January 10, 2005; available at,10801,98824,00.html*.

For more complete information about compiler optimizations, see our Optimization Notice.