ESX Server vs. VMWare Server

We are currently working on beginning to virtualize some of our servers, mostly for the added convenience of easy recovery.  That being said, the methods available to backup the virtual servers are very important in my decision of what product to choose.  I have already virtualized a few, and they are running on VMWare Server, with Windows Server 2003 x64 as the host OS.  The server has 4 15,000 RPM SAS drives in RAID 10 for storing the VMs, 8 GB of RAM, and an LSI MegaRAID SAS 8308ELP Controller, with dual Gigabit LANs.  The host OS boots off of a seperate RAID 1 array made up of 2 36GB WD Raptors.  It also has dual 2.00 GHz Intel Xeon Processors.  As stout as this system may seem, it seems I am having some performance degradation with just two virtual servers running, one Exchange Server with about 100 mailboxes that average around 200MB a piece, and one web server that runs a specialized non-intensive web application with DB2 and Apache.  Should I be seeing this?  Would my performance be significantly better with ESX Server as the host?  Are there any weak spots I may have in the hardware?  I know for a fact that hardware virtualization is being used on the Xeons.  My big worry with going to ESX is that the VM files are not as readliy accessible via a Windows share as they are when W2K3 Server is the host, therefore making backup a more complicated process.  I also then lose the abililty to easily move the files from a failed host to another operable one, and just boot it up quite as easily.  Anybody have any suggestions for what route I should go?  Any insight from someone who has already done some of this?  Perhaps there is another virtualization product I should consider?  Thanks for the info in advance, I know this is a complex question, but its also a complex problem.
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If you want to do some serious virtualisation, you really need ESX. VMWare server is great for testing, developement, ... but not for things like a production Exchange server. ESX works directly on the hardware and has a lot less overhead.

Of course ESX is more complex, e.g. if you want to be able to move hosts between machines, you need VMotion or High Availability. This in turn requires that you have some kind of shared storage (ISCSI or FC SAN).

Backups are slightly more complex and may need scripting.

In short, setting up ESX is a major project and needs careful study beforehand.


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robocat is right on.
Even if I did have ESX, I am not sure would run exchange in VM.
You should really virtualize other types of servers... create a couple new domain controllers... then demote the old DCs and rebuild/reuse the real hardware for an exchange server.

I would also recommend to maybe think about moving away from the VMServer host OS being Windows...
I am running a server with similar specs to yours but with 4 GB Ram, and am using Centos linux
I have VMs running squid linux proxy server, couple DCs, 2003 server for ERP developers, and some other server I forget right now.
On the host OS there is no gui... i manage server with webmin because I am almost linux illiterate...
Everything is so rock solid... I love free software.
An added benefit is you save the MS license on the host OS for something else.
I know I am late to the party, but I just had to give my 2 cents.

1.  Exchange runs just fine in a virtual machine.  We do it here with an Exchange 2000 server with 500 users and about total mailbox store of about 60GB.

2.  Your Raid 1 array is a waste.  Your host OS does not require a fast system drive at all.  It will have zero affect on the performance of your virtual machines if you put your host OS on an old ide desktop drive.  Keeping your vms on separate, fast drives is a very good idea.

3.  VMWare Server on Windows is a slug compared to VMWare Server on Linux.  I would suggest Ubuntu Dapper Server (be sure to stick with an LTS release, Hardy due in a few months will also be LTS, but check the VMWare Server documentation and make sure whatever version you use is supported).  Ubuntu Server is great because it is very minimalistic which frees up lots of resources for your virtual machines.

4.  VMWare ESX Server is WAY overkill for this.  Unless you just can't handle linux, wait until you plan to put in like 3 physical servers and a SAN before upgrading to ESX Server.  ESX Server is just a modified Redhat Enterprise Linux 3 with VMWare's software built-in, by the way.
I'm going to have to disagree with you on points 2. and 4., jdinkel.  I'm not 100% positive on this stuff, but from what I understand:

2.  With VMWare Server being a hosted platform, the host OS provides hardware emulation.  Basically all communication between the VM and hardware go through the host OS, so host OS performance is extremely important.  Not so with ESX, which is a bare-metal hypervisor where the VMs communicate directly with hardware (there's still a thin abstraction layer), hence the performance advantages of ESX.

4.  Exchange + DB2 running on emulated hardware on top of a fat Windows OS will suck down a lot of resources.  I wouldn't even run both of these together on a standalone box!  Also, ESX is NOT a modified version of RHEL.
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