Will Windows Server 2025 release spark VMware migrations?
Can Microsoft capitalize on VMware customer concerns by touting enhancements to its next version of Windows Server along with its cloud and hyperconverged infrastructure options?
After years of running behind VMware and its leading virtualization technology, Microsoft looks primed to pick up migrating customers through a multi-pronged effort that includes improved functionality in the upcoming Windows Server release.
The November 2023 acquisition of VMware by Broadcom for $61 billion stunned the tech industry, unnerving many VMware customers as Broadcom began its consolidation work. For Microsoft, the timing couldn't be better. The company plans to unveil Windows Server 2025 later this year and has been touting the new and updated features in its Hyper-V virtualization platform.
Meanwhile, Microsoft offers VMware customers steep discounts to migrate their environments to the Azure cloud with its new VMware Rapid Migration Plan. Microsoft also presents its Azure Stack HCI platform as another choice for enterprises that need to run workloads on premises but also want hybrid cloud capabilities. This combination of market dynamics, technological advancements and changing customer sentiment might cause a fundamental shift in Microsoft's favor.
"Since the Broadcom acquisition, my phone has been ringing off the hook with customers asking about newer alternatives to VMware," said Paul Delory, a Gartner analyst. "And Hyper-V is coming up a lot on these calls. It does have some built-in advantages, and it is the number two hypervisor on the market."
Hyper-V's upgrades could expand Microsoft's virtualization footprint
Historically, VMware has been the gold standard in virtualization since it essentially founded the x86 server virtualization market in 2001 with the release of the VMWare ESX hypervisor. But it was VMware's continuous stream of ground-breaking innovations -- live migration of VMs, distributed resource scheduler and high availability -- and comprehensive management tools that cemented the company's status in the enterprise.
Microsoft's first foray into server virtualization was Microsoft Virtual Server in 2004. It offered basic virtualization capabilities but was discontinued in favor of the more advanced Hyper-V in 2008. In the meantime, VMware parlayed its first-mover advantage to build a community for users and partners as well as forged strategic partnerships with software developers, service providers and hardware vendors to build a far-reaching ecosystem.
While Hyper-V initially struggled to measure up to VMware's feature-rich offerings, Microsoft has steadily improved its virtualization platform with a series of enhancements to give customers a viable alternative to VMware. One of the most notable additions coming in the upcoming Windows Server 2025 operating system is the revised GPU partitioning capability, which Microsoft calls GPU-P. This feature is key for organizations that run high-performance computing workloads and AI-driven applications in areas related to engineering and data analytics.
"GPU partitioning is essentially GPU virtualization. It's a feature they need to better compete in the virtualization space," Delory said. "What you're doing is presenting a virtual GPU that can be shared. It brings them on par with VMware feature for feature. It's not groundbreaking, but it is important."
Keith Townsend, chief technology advisor with the Futurum Group, said this is one example where VMware's deep relationships with vendors gave it a head start with innovative features to help it stay ahead and maintain its dominance.
"Many of the Nvidia virtualization capabilities have come directly from their partnership with VMware," he said. "They have equal … or greater capabilities for virtualizing GPUs already on the market. It's one of the few areas where a competitor is well ahead of Microsoft."
Microsoft addressed another pain point in its upcoming Windows Server release for enterprises related to live migrations of VMs between two hosts. If the source and destination hosts did not have identical CPUs, then VM performance could suffer by not using the full capabilities of the newer model CPU on the destination server. Microsoft will introduce dynamic compatibility in Windows Server 2025. Hyper-V will automatically compare CPUs across hosts and use the CPU functionality that supports both processors, even if those processors are not identical.
Security -- a top concern for many enterprises -- has received significant attention in Windows Server 2025 with improved virtualization-based security (VBS) and expanded hotpatching capabilities. Hotpatching isn't new. It debuted in the Windows Server 2022 Datacenter Azure Edition. But Microsoft will make it available in the Standard and Datacenter tiers of Windows Server 2025 as an add-on subscription. These upgrades could appeal to security-conscious VMware customers who might be wary of changing platforms.
"From a cybersecurity standpoint, most of my customers are trapped on this merry-go-round they can't get off because everything they do is focused on security with no time to devote to other projects. They don't have time to innovate anymore," said Dave Kawula, principal consultant at TriCon Elite Consulting. "The one feature most users I talk with at recent conferences are most excited about is the new patching functionality."
The new version of Windows Server will also introduce workgroup clusters for building failover clusters without the need for an Active Directory domain. This simplifies deployment and management for smaller organizations or edge computing environments.
Despite all these updates, Microsoft faces a challenge to chip away at VMware's entrenched position and its extensive ecosystem. Microsoft has made repeated attempts to pull market share from VMware via partnerships, acquisitions and new technologies. But it has failed to make much progress and eventually settled into a coopetition relationship.
"Between 2012 and 2016, Microsoft tried to capture the virtualization market from VMware," Townsend said. "But by 2016, we slowly saw them conceding the market to VMware. Since then, they have been friendly and supported each other's technologies. VMware relies heavily on Windows Server for a lot of their management software."
Broadcom's history with acquisitions a concern
The acquisition of VMware by Broadcom is a prime opportunity for Microsoft to gain ground in areas it once yielded to VMware. Given Broadcom's track record with other software acquisitions, Microsoft might sense blood in the water.
If history is any indication, Broadcom will continue to follow the same playbook it executed after its acquisitions of Symantec and CA Technologies: sell off products and units of the company that either don't perform well or don't easily integrate with the Broadcom portfolio or just reduce investments in offerings with a low profit margin.
Broadcom has already rankled the VMware community by ending its VMware IT Academy and Academic Software Licensing programs on Aug. 15 which gave price breaks on VMware licenses and training for students. Broadcom gave educators until Aug. 31 to buy one more year of services and licenses before it shuttered these initiatives.
"Ending free licensing kills our ability to teach VMware in the classroom," said Brian Kirsch, an IT architect and Milwaukee Area Technical College instructor. "The VMware class is such a key part of our program that many students have benefitted from. Without [free licensing], our ability to offer the class will be done in a year. Already, the people running the Academy are all gone. RIP VMware Academy."
The chain reaction of this decision could adversely affect VMware in the commercial markets. Many of its competitors, such as IBM, Microsoft and Cisco, continue to support universities financially via generous discounts on software taught in the classroom.
"Cisco has always gone the other way, pouring a lot of money into their education programs," Kirsch said. "They have dedicated people at these companies and universities that bleed green. VMware's approach is probably not going to pay off."
Microsoft tempts VMware customers with multiple choices
VMware customers are already reevaluating their long-term options after Broadcom introduced subscription-based licensing, consolidation of products and price increases for some customers.
In June, Broadcom bundled dozens of products into two main products: VMware Cloud Foundation and the VMware vSphere Foundation, which forced customers to purchase these suites whether they needed all the components or not. Forrester Research estimates that 20% of more than 300,000 VMware customers will move to another platform at some point.
This change in sentiment underscores an opportunity for Microsoft to attract VMware customers who want stability and innovation. Microsoft's strategy goes beyond just Hyper-V. The company's multi-pronged approach to attract VMware customers includes the Azure VMware Solution for a lift-and-shift migration to the cloud and Azure Stack HCI for organizations that want to use hyper-converged infrastructure.
The Azure VMware Solution runs the VMware stack on Azure servers to take advantage of the scalability and flexibility of the cloud. This option might appeal to a business that wants to modernize its operations without a complete overhaul.
In May, Microsoft announced its VMware Rapid Migration program to make the Azure VMware Solution even more attractive by offering several incentives. These include fixed prices for reserved instances from one to five years rather than the standard consumption-based pricing and $120,000 in Azure credits when purchasing a new reserved instance. Some of the discounts have a cutoff date of Dec. 31, 2024.
Mike Stump runs an IT infrastructure consulting firm that does much of its work with the federal government.
"In the last two months, I have decommissioned probably two-thirds of our VMware environment, and we are going full bore with the migration to Azure -- and not even the Azure-VMware service, just straight Azure," Stump said. "Whether it's Windows Server 2025 or [2022 or 2019], the version doesn't matter. We just want to get away from the VMware products because everybody's so upset about the changes."
Azure Stack HCI is a hyper-converged infrastructure product that integrates with Azure services for organizations interested in hybrid cloud. This system requires an Azure subscription, and Microsoft charges based on the physical cores used. An advantage of this product is Microsoft rolls out new features frequently for enterprises that rely on innovation to stay ahead of competitors.
Microsoft positions Azure Stack HCI as a vSphere alternative for organizations that want a virtualization platform with an integrated infrastructure management via Azure Arc. If an organization has Software Assurance and Windows Server Datacenter licenses, Microsoft will cut the cost of the Azure Stack HCI host service fee and Windows Server guest subscription.
"You're going to see a turning away from the big three cloud providers," said Stump. "VMware is no longer going to be the de facto, on-prem virtualization platform. So we need to be ready to live in a non-VMware, on-prem world. Users will be running on Hyper-V, which will get rebranded at some point to be an Azure Stack-like product, which means going to bare metal installs."
Advances in Windows Server present attractive option to enterprises
User optimism about the new security features in Windows Server 2025 shows Microsoft is aware that many enterprises still have Windows Server workloads that run on-premises. Some of those customers might have felt the company was focused too much on Azure and neglected its Windows Server base. Particularly with the last few Windows Server releases, the company focused on security, baking in protections into the default configuration, such as enabling TLS 1.3 and Windows Firewall. These small moves lift some of the pressure off the IT staff to hunt down every possible vulnerability across a Windows Server domain.
"Microsoft now has a brand-new development team fully dedicated to the product," Kawula said. "It's good to see they've come to the realization that about 99% of customers are still using the on-prem version of Active Directory, for instance. They're trying to go with a 'start secure' model, not just cheap security. It's a pretty good decision."
Microsoft began easing admins into the cloud in Windows Server 2016 with its Nano Server for running containers in Azure and connecting on-premises workloads to Azure for backup and storage needs. In the Windows Server 2025 version, Microsoft has improved the way users can use the product in hybrid, cloud and edge environments, such as removing the need for an Active Directory domain controller to run a failover cluster in a remote office. The company has also made it easier to use Azure services, such as monitoring and policy application, with on-premises servers via the Azure Arc management tool.
Windows Server 2025 presents an intriguing option for organizations that are evaluating their virtualization strategies. The potential for cost savings, enhanced features and improved security could be attractive enough for some enterprises that want to avoid uncertainty with VMware and stabilize their IT infrastructure needs.
"I'm getting strong feedback from users that having more options in deploying Hyper-V into different environments is important to them," Kawula said. "People are now strongly considering retiring a lot of their VMware licenses in favor of going right to Microsoft. This could be a watershed moment for Windows Server 2025."
Ed Scannell is a freelance writer and journalist based in Needham, Mass. He reports on a wide range of technologies and issues related to corporate IT. He can be reached via email.
