Are virtual guarantees concrete?

InfoWorld talks about VMWare's new VMWare Guarantee Promotional Program.

The VMware Professional Services Guarantee Promotion guarantees at least a 50% reduction in your x86 server infrastructure costs or you do not have to pay for the services. By engaging VMware Professional Services to provide assessment, logical architecture design and deployment services to virtualize and consolidate your server environment, you can realize a significantly more efficient and less costly infrastructure. If you cannot achieve at least a 50% reduction in your x86 server infrastructure costs by the end of the engagement (or by the end of a Resolution Period), you do not have to pay for the services. Payment for the services is not due until the end of the engagement if the cost savings calculation indicates a 50% or better cost reduction over your old server infrastructure.

See here for the caveats and all that.

So how do you save? Steven Warren presented some examples back in 2006:

You just recently purchased five licenses of Windows 2003 for five servers about to implemented into your infrastructure. This would roughly cost you $10K-to-$15K in licensing fees.

What if I told you I could give you the same infrastructure for $2K-to-$5K? How? By simply buying one license of Windows Server 2003 R2, you get up to four virtual instances free-of-charge. Simply download any virtualization software you desire and install four more virtual operating systems for free.

OK, but that's just a licensing issue - and for all I know, Microsoft may have closed that licensing loophole. But this is potentially more substantial.

Server rooms are the energy vampires of technology's new millennium. How can we face this increasing cost head on? Virtualization.

You could have a software and server inventory done and see how many servers are simply just running one application-maybe even a legacy application. By taking advantage of virtualization, you could easily consolidate 20 servers down to five.

And, of course, consolidation increases utilization.

As a consultant working deep in the trenches, I can't tell you how many times I've seen a huge Quad processor server running a miniscule app and the utilization of the server is not even registering.

That same box, if utilized to its potential, could host three-to-five virtual instances. It is not uncommon these days to gather up all the legacy applications you are still running and place them on one server with several virtual instances.

By properly utilizing your servers with virtualization, you will reduce costs and consolidate servers in your environment.

But not always:

Adding virtualization to your data center can actually be extremely expensive. There are so many new considerations that have to be factored in when virtualization is introduced.

In addition to license issues, there are two other issues that Alan raised:

New Hardware Platforms (Virtual Hosts): These are typically more powerful boxes than the ones you’re replacing, have more CPUs and usually many, many additional drives and things like RAID controllers. These cost more up front than your single-purpose boxes and consume more power than individual, single-purpose boxes. It’s not a 1:1 power trade-off; a box that can run 50 OS images doesn’t consume 1/50th of the power that the physical farm consumed....

Management: You’re going to need to manage this new virtual data center, most likely in a different manner than you do with your physical servers. You now have to monitor performance and events of the virtual infrastructure and each individual hypervisor. So you’ll probably need to buy new management software as part of the migration, and your incident/event processes will probably change as well.