In September, possible with a launch at VMworld 2007, VMware will announce a new promotion called Foundation, bundling together three ESX Servers Started Edition and one VirtualCenter (capped to manage those three virtualization hosts) for $3,000.
VMware have three versions of VI3, so it will be interesting to know which is being offered as part of the package. VirtualCenter also requires a fourth machine to operate, and is probably the big saving. It currently starts at $5000 as is required to “enable distributed virtualization services such as VMware VMotion, VMware High Availability and VMware Distributed Resource Scheduler”. Both XenEnterprise and VirtualIron do the same without the fourth computer, but are probably not as mature as VI3 in this area.
If the VMware SME package offers shared storage and vmotion then it will certainly cut the legs out from under XenSource in a key market. In that situation it will be 3000USD and 4 machines vs 7500USD and three machines. If it does not offer those extra features then it likely to be comparable to XenServer and a very similar 3000USD vs 2250USD. In that situation it is likely to be purely a case deciding between management tools, upgrade path and brand.
Either way it is a classic market position play against a new entrant. Given that virtualised servers have only 1% of the total market, and now both main players have similar channels and technological value in the long run I think it will be a tight interesting race. Can only be good for the end customer.