A number of you have reminded me that, even at a fraction of the cost of a similar VMware setup, virtual infrastructures built on Microsoft's Hyper-V can be a lot more expensive than they look.

The consensus of VMware users is that it only makes sense to pay $28 (£15) per server for a hypervisor (plus the cost of Windows Server 2008 and all the upgrades, training, patches and add-ons required to make it run effectively in a data centre, rather than in an email server closet) for a standalone branch-office installation or test/development environment.

And they see the same amount as sensible for a company whose virtual infrastructures are going to be so simple that they don't need sophisticated management, configuration or automation.

And, yes, the depth, track record and capabilities of VMware's live migration, disaster recovery and other automation and management tools make VMware the clear favourite from a technical point of view, according to most of the analysts and all the VMware users I speak to.

The basic VI3 Foundation costs $995 (£536) per dual-CPU server; Standard Edition goes for $2,995 (£1,613) with Virtual Centre and Consolidated Backup; Enterprise lists for $5,750 (£3,098) complete with Distributed Power Manager, VMware High Availability, VMotion, Storage VMotion and Distributed Resource Scheduler.

Even somewhat fringe products like VMware's Lab Manager deliver so much oomph that, you'd think, few customers would think twice about Microsoft's virtualisation stuff.

Patrick Benson, senior systems engineer at financial software developer Trading Technologies, says there is no real competition if you compare VMware and Microsoft virtualisation software, but that does not mean he misses comparisons on cost and technical capabilities.

"I'm looking at Microsoft all the time, and testing out their stuff, and I make sure the VMware people know that," says Benson, an IT guy whose cadre of users is made up almost exclusively of programmers and networking geeks (not an audience likely to tolerate weak IT support).

Benson (and his users) love VMware and, more specifically, Lab Manager for the ability to automate the imaging, provisioning and administration of virtual machines. Unlike users at most companies, who ask for additional servers primarily when their workloads spike or when they launch new projects, developers ask for new VMs almost continually, to test minor configuration or coding changes side by side.

"[With Lab Manager] we went from taking 10 or 15 minutes to provision a new server to less than a minute; the developers love that for their testing," Benson says.

But Benson started using VMware and Lab Manager to save money in the first place - getting funding for it by promising his customers 600 virtual servers for the same price he would have paid for 300 physical servers. "We got so popular now we're up above 1,200 VMs; we're a victim of our own success."

A lot of other companies started out the same way. Server consolidation may be so blasé a capability now that virtualisation gurus dismiss it as the most elementary application of the technology. But consolidation of servers, space and cost of both was the force that drove the virtualisation market to the point that implementations became so complex that sophisticated management is de rigeur.

Cost, of ongoing management and the upfront cost of buying virtualisation software in the first place, continue to play a role. Cost is the threat that VMware to release the ESXi edition for free, for example, and appears to have been a contributing factor in the replacement of founding VMware chief executive Diane Greene with former Microsoftie and hardened OS competitor Paul Maritz as well.

ESXi allows servers to create partitions in which to run virtual machines, but contains none of the higher-level functions on which VMware's high-end-function pitch is based.

Meanwhile, VMware's competitors continue to shift the cost/benefit balance between themselves and the market leader. Microsoft boosting its pitch by preparing to loosen up licensing requirements for virtual servers, which is significant considering how fast application and OS licence costs add up in virtual environments.

Virtual Iron is releasing a free addition to its suite of products that is designed specifically to save customers electricity and money by shutting down underused servers at night and on weekends.

Citrix has reduced the cost of some of its application and server-virtualisation packages as much as 20 percent this year. IBM is pitching not only virtualisation (anybody's), but cloud computing, SANs and everything else in its overstocked closet as a way to consolidate, automate and cut costs for data-centre operations.

And every major virtualisation vendor except VMware is adding the ability to manage one another's products-another way for customers to save both time and money.

The cost competition is spreading, too. Microsoft holds a slight edge over VMware in application virtualisation, according to Yankee Group analyst Laura DiDio, though both trail Citrix.

But Microsoft sells App-V (known as SoftGrid until Microsoft bought Softricity, which developed it) for $10 (£5) per user seat when it's covered by the Software Assurance licensing program. VMware, on the other hand, sells ThinApp (nee Thinstall before VMware bought titular parent company Thinstall) for $39 (£21) per seat.

"That's four times higher than Microsoft," DiDio points out. "It will be interesting to see what Maritz does. I'm expecting him to be very aggressive about addressing price disparities."