Web Hosting Strategies for Virtualization

In our series of articles about using VMWare in a web hosting business we are going to discuss strategic related issues today. Why should web hosting businesses look at virtualization instead of building larger data centers? It almost seems like that the web hosting industry is running behind the trend of consolidation in the IT industry. It is kinda a thing of the past to build more and more data centers. A smart company looks to expand and to reduce cost at the same time. This can be done with virtualization. Here is an approach that could fit well for web hosting businesses.

Many web hosting businesses are growing one server at a time. They run hosting specials to utilize more hardware faster to be able to buy in bulk and to getter better prices. But this approach is coming at a price and it does not represent a well thought-thru strategy. Electricity and cooling are not going to be cheaper going forward. Faster processors with more cores are going to be overkill for many servers because no longer will CPUs the performance bottleneck, but disk and memory. And who wants to have dual-quad-core server run at 10% utilization? That is just a waste.

So, for a web hosting business it would make sense to look at virtualization. The center of operations should be a SAN or iSCSI based storage device that allows to share storage access for several host servers. With enough room to grow this provides redundancy and flexibility at the same time. Any new server just needs basic small local disk storage to run an operating system (preferably in a RAID 1 scenario) and an HBA (or iSCSI) connection to access the shared storage. The only other requirements for servers are dual-quad-core CPUs, 4 NICs and appropriate memory. A common ratio for server virtualization is 10:1 – often even more, but for this strategic approach we will stick to a 10:1 model.

Let’s look at this approach a little more in detail. What does a web hosting dedicated server look like right now? Dual CPUs, 4 GB RAM, one or two NICS, and a lot of local disk storage (SCSI, IDE, SATA). What is the cost of such a server? Probably somewhere around $6K – maybe a little more, maybe a little less depending on your discount level or if you build a server yourself. What does a comparable host server would need to play well in a VMWare farm environment? Dual-Quad-Core CPUs, 4 NICS, 2 x 73 GB SCSI disks, 16 GB RAM dual HBAs. This server would probably cost around $11K – maybe a little more, maybe a little less. Again, this price depends on your overall discount level with a vendor and if you buy a server or build it yourself. We also have to put into consideration that a SAN needs to be bought and loaded up with disk. For this example we assign a cost of $3K per server (that is a conservative number!), which brings a VMWare server to a price of $14K. On top of that we have to pay for the virtualization software. List price for VMWare Infrastructure 3 is about $6K with no discounts applied. Keep in mind that for a long-term strategy you would work with a vendor like Dell who provides the hardware and the software and would give you discounts as well. Now that we have the numbers we can start playing the number game.

Example 1: The physical server web host needs a new server because his other servers are reaching their limits and he buys 1 new server at a cost of $6K. 3 weeks later he sees the growth pretty consistent and would run out of resources on the server he just bought in 2 weeks. So, he needs another server and this time he orders 2 servers to have a spare machine to bring online fast and quick enough to cover potential growth. Delivery time per server is about 2 weeks from placing the order until it arrives in the data center. The servers are brought online and are getting populated with new customer websites. The second server sits idle because the first server still needs to be filled up with new customers. Growth continues and he buys more servers. Then he needs an additional rack and another switch, too. Soon this web host has 40 servers and 4 switches spread out across two racks. Approx. cost: $245,000.00 (40 x $6K + 2 racks and 4 switches)

Example 2: The Virtual Web Host has put the infrastructure for his operations into place. A SAN and 4 host servers are ready to be populated. He builds his virtual server the same way as he would build a physical server. Dual CPUs, 4 GB RAM, and appropriate disk space assigned on the SAN. As he grows he sees that he can fill a physical machine with about 10 virtual machines (10:1 ratio). Business grows and he starts populating the 4 host servers with 10 VMs. As virtual machines don’t need extra rack space or more physical switches he is just fine with one rack. Approx. cost when he reaches 40 virtual servers: $85,000.00 (4 x $14K + 4 x $6K + 1 rack and 2 switches)

This high level example gives you a pretty good idea of how the cost factor comes into play. Host 1 pays as he goes and buys physical machines. Host 2 has a higher investment upfront, but then has a dramatic reduction in cost as he goes. He needs a new server and it takes only minutes to bring up a new virtual machine. Even if you would double the cost of the virtual web host, this business model would be so much cheaper to implement. If you don’t have your own data center and you need to pay for rack space and power, the virtual host has a clear advantage. He could leverage his hardware even better if he uses servers that allow to be loaded with 16 RAM sticks instead of the standard 8. If you buy RAM you know that if you go beyond the 2 GB RAM sticks prices go really up. A 4 GB RAM stick is so much more expensive compared to 2 GB stick. So, if your servers can be loaded up with 16 x 2 GB RAM sticks you can easily host 15 – 25 virtual machines on a host server. As mentioned before today’s CPUs provide so much power that usually disk or memory are the bottlenecks.

As an experienced web host you might raise the question about bandwidth. VMWare’s virtualization software allows for easy NIC teaming and therefore providing you with a load balanced 2 GB pipe per server. And again, if you look at the cost of implementation you can work with how many VMs you put on a physical host server and still easily break even at a much earlier point compared to the physical approach.

Disclaimer: We are aware of the higher cost associated with implementing a SAN solution. The example above is based on the assumption of continious growth and expansion and therefore reducing the overall cost of the SAN as it gets spread out across more servers. Dell and other vendors are also releasing lower cost storage solutions that are worth looking at for shared storage.

Web Hosting Strategies for Virtualization

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