1. VMware Virtualization: The Right Investment For a Tough Economy VMware June 2009

2. Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Additional Cost Savings with vSphere 4.0 Proven Customer Success

3. The Rough Road Ahead…. Source: Goldman Sachs IT Spending Survey, March 9th, 2009 Source: IMF World Economic Outlook Report, Nov 6 th 2008 Our IT spending indices dipped further to new lows in our latest survey, deep in contraction territory. - Goldman Sachs A global economic recession is forecasted for 2009 The economic environment is a leading indicator of tech spending 71% of CIOs anticipate flat or decreasing IT spending budgets IT budgets in developed countries set to decline by 12% in 2009 and 9% globally

4. The IT Dilemma I am supposed to do the same job, but with less budget and headcount?!?

5. Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Additional Cost Savings with vSphere 4.0 Proven Customer Success

6. Recent CIO Surveys Agree: Virtualization is the Top CIO Priority in a Tough Economic Environment Source: Merrill Lynch CIO Survey, Oct 28 th, 2008 Source: Goldman Sachs IT Spending Survey, Nov 2nd, 2008 The current environment has moved virtualization toward the top of the priority list for CIOs. Total cost of ownership (TCO) reductions will be a key driver of the acceleration in server virtualization deployments as CIOs are forced to cut capital spending and reign in management, administrative and power/ cooling costs.

7. Customers Are Still Moving Ahead with Virtualization in 2009 CIOs expect to double the percentage of servers virtualized in 2009 Source: Goldman Sachs IT Spending Survey, Nov 2 nd, 2008

8. Which software providers are gaining share of your IT spending dollars? 1 13 Quarters # Source: Goldman Sachs IT Spending Survey, March 9th, 2009 VMware Continues to be the #1 Software Investment for CIOs in a Tough Economy Gaining 1.VMware 2.Citrix Systems 3.Cisco Software/ Security 4.Oracle 5.Symantec VMware

9. Source: Goldman Sachs IT Spending Survey, Nov 2 nd, 2008 VMwares incumbent position at the top of the rankings demonstrates that server virtualization momentum remains alive and well with a strong ROI case for a declining budget environment. - Goldman Sachs Which software providers are gaining share of your IT spending dollars? VMware is the Proven, Trusted Leader Providing the Highest ROI and Lowest TCO

10. Top 3 Reasons Why VMware is the Right IT Investment in a Tough Economic Environment Minimize Lost Revenue Due to Downtime 3 Reduce Datacenter Operating Cost (e.g. Power & Cooling) 2 Reduce Physical Infrastructure Cost 1

11. Business Loss Due to Datacenter Outage** Sys Admin per 100 Apps* * Source: IDC and VMware TAM program ** Source: VMware customer – a $2bn insurance company. Estimates based on 40 hrs needed to recover before virtualizing and 4.5 hrs needed for the same recovery after virtualization. Infrastructure Cost per App Reduction in Datacenter Capital Expense 2.0-3.0 $14,235 $5,694 0.3 – 1.0 Reduction in Datacenter Operating Expense $30 MM $4 MM Reduction in Risk VMware Delivers Tangible Business Outcomes

12. 12 Reduce Server Spend Through Consolidation VMware… Decouples software from hardware Encapsulates Operating Systems and applications into Virtual Machines A Server or Desktop Virtual Machine Typical Consolidation: 10:1 Typical Excess Hardware Capacity: 3 Years!

13. Copyright © 2005 VMware, Inc. All rights reserved. Reduce Energy Consumption Copyright © 2005 VMware, Inc. All rights reserved. Highest consolidation rates on most secure and reliable virtualization platform Safely improve utilization rates 80% energy reduction Dynamic server and storage migration Power off unneeded servers in real-time Migrate storage dynamically 25% energy reduction Host desktop PCs in the datacenter Use thin clients, double refresh cycle Reduce storage for similar desktop images 70% energy reduction

14. Total Savings Per Workload Servers100080$5,816 Network Switches8410$296 Real Estate (Sq ft) 2053257$431 Power (kWh) 40752$759 Cooling (kWh) 50964$949 Savings per Workload (Over 3 years) $8,251* BEFOREAFTERSAVINGS Actual customer savings per application; represents typical savings Includes estimated cost of VMware licenses, Support and Subscription VMware consolidates servers, storage and networking infrastructure to safely achieve higher utilization Reducing Capital Cost 1 Reducing Operating Cost 2

15. Improving Operational Efficiency Source: IDC and VMware TAM program Do more work with the same number of people = operating cost savings Free up resources and budgets from day- to-day maintenance to focus on future innovation and strategic projects Drivers of productivity improvements: Instant provisioning Dynamic patching Zero downtime maintenance Reducing Operating Cost 2 Double the time for innovation: from 28% to 55%!

16. Achieve OpEx Savings of $40k per Admin Annually Over 66% of VMware customers state their Admin staff is 25%+ more efficient. This is equivalent to 1.25 days saved per week or 65 workdays per year per Admin. Source: VMware TAM program survey, January 2009

17. Ensuring Business Continuity Source: IDC and VMware TAM program Reduce business risk without increasing costs or complexity Minimize lost revenue from and avoid costs of business downtime Drivers of productivity improvements: Built-in high availability Automated recovery Reducing Operating Cost Minimize Lost Revenue 3

18. A Typical VMware Customer… VMotion – Avoided downtime due to planned server maintenance Storage VMotion – Avoided planned storage downtime DRS – Automated monitoring and load balancing Update Manager – Automated host and guest patching = $ 450,000 = $ 430,000 = $ 390,000 = $ 360,540 HA – Simple, cost effective high availability SRM – Automated site recovery = $ 480,000 = $ 615,385 A typical VMware customer has 1000 VMs, realizing over $2,725,925 of savings annually, or $8,177,774 over 3 years See Appendix and ROI/ TCO calculator for detailed models

19. Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Additional Cost Savings with vSphere 4.0 Proven Customer Success

20. Introducing VMware vSphere 4.0 EFFICIENCY CONTROLCHOICE CapEx reductions 100% greater consolidation ratios Up to 50% in storage savings OpEx Reductions Up to 20% additional energy savings Saves more than half person/year in sys admin time Business Risk Mitigation One-mouse-click control over application service levels Continuous availability with Fault Tolerance Security with vShield Zones Freedom of choice Any server Any storage Any OS Numerous partners products And soon – on- and off-premise

21. 100% Higher Consolidation Ratios Unparallel performance improvements: Over 100% greater consolidation ratio with new hardware* For our customer example: Consolidation ratio of 20:1 instead of 10:1 with new hardware. This eliminates an additional 50 servers … representing approximately $66,667 in annual hardware savings … and $61,578 annual power and cooling savings Based on VMmark benchmark studies

22. Additional 20% Reduction in Power Costs Assumptions: 50% of 50 servers can be powered down for 8 hrs/d ay on weekdays and 16 hrs/day on weekends. Total power consumption per server ( operating power + cooling power) = 1424 watts/hr Cost of energy = $ 0.11 per kWH (source: Energy Information Administration) For our customer example: Additional power and cooling savings of $10,296 NOTE: vSphere 4.0 model is based off 50 servers due to the 100% better consolidation achieved

23. Up to 50% Storage Savings Assumptions: 50% storage deferred due to thin provisioning Storage costs are $3/GB and RAID5 is used Storage savings with Thin Provisioning: Reduced storage purchases due to less over provisioning 50% reduction in storage costs: $99,750 (over 3 years)

24. Upgrading to vSphere 4.0 Higher Consolidation Ratio Distributed Power Management Storage Savings Avoided downtime Configuration Efficiency = $ 128,245 = $ 10,296 = $ 99,750 = $180,000 = $ 56,338 By upgrading to VMware vSphere 4 this customer will: Save additional $575,599 annually or $1,726,678 over 3 years Free up more than half person/year in sys admin time Reduce business downtime by additional 30 min a year By upgrading to VMware vSphere 4, this customer will: Save an additional $408,129 annually or $1,224,386 over 3 years See Appendix and ROI/ TCO calculator for detailed models

25. Agenda Economic Environment in 2009 Why VMware is a Strategic Investment Additional Cost Savings with vSphere 4.0 Proven Customer Success

26. 26 Meet Service Levels Efficiently Using VMware virtual infrastructure, we can offer the same levels of service and more flexibility for up to 40 percent lower server and operating costs. Rob Jones, Director of Technology, ALSTOM Reduce Costs Using VMware software has brought a huge cost benefit to IT - avoiding costs by $1.1 million is fantastic. For every production virtual machine, we estimate a $7,500 cost avoidance per server. We multiply 150 applications by $7,500 and estimate a $1.1 million cost avoidance. Barry Naber, Technology Manager at International Truck and Engine Corporation Customer Testimonials Simplify Management The net impact of utility computing with VMware Infrastructure 3 for the business is higher service levels, for IT - it is simplified and easier to manage infrastructure. Fazil Habibulla, Vice President and System Architect, NATIXIS Capital Markets

27. Available Resources Online ROI/ TCO Calculator: Robust and customizable analysis of virtualizations impact on your IT budget and datacenter costs www.vmware.com/calculator Why Choose VMware: Vendor selection checklist to ensure a Complete, Robust, Proven Virtual Infrastructure www.vmware.com/technology/why vmware/

28. Thank You!

29. Appendix Detailed CapEx and OpEx models

30. Value of Zero Downtime Server Maintenance Server Maintenance is required for Updates to component hardware Updates / patches to the hypervisor Migration to newer servers Cost savings from zero downtime server maintenance with VMotion Avoid overtime cost to perform maintenance Avoid administrative time in scheduling downtime Business costs of downtime is specific to each industry and not included here For a 100 physical server, 1000 VM environment, assuming: 2 hardware/ BIOS upgrades per server + 4 hypervisor patches = 6 maintenance activities per server per year 100 X 6 X + X $150/hr 2 hrs Overtime Cost Time to perform upgrade Overtime $/hr 0.75 hr 10 Scheduling Downtime # of apps per server Time spent scheduling downtime per app $60/hr Admin $/hr X X = $ 450,000 VMware VMotion # of servers # of updates ( )

31. Value of Zero Downtime Storage Moves Maintenance Storage Maintenance is usually required for LUN optimization Upgrades to better hardware Cost savings from zero downtime storage maintenance with Storage VMotion Avoid overtime cost to perform maintenance Avoid administrative time in scheduling downtime and planning the move Avoid cost of buying an alternate data mover tool For a 100 physical server, 1000 VM environment (50GB per VM of storage), assuming: ~20GB can be moved an hour. Storage is moved once in 3 yrs, annualize 1/3 of the 50TB environment every year (16.67TB). X $150/hr 833 hrs Overtime Cost Time to move 16.67 TB each yr Overtime $/hr X $60/hr 1667 hrs Scheduling Downtime Time spent scheduling downtime Admin $/hr X $60/hr 3333 hrs Planning Move Time spent planning the move Admin $/hr $5000 Alternate Tool Cost + ++ = $ 430,000 VMware Storage VMotion

32. Value of Dynamic Load Balancing Customers report that without DRS automatically balancing their environments, they would either: Decrease their consolidation ratio – this means that the full HW cost savings are not realized. Customers report up to 30% decrease in consolidation ratios. Spend more time to manually monitor and manage VMs. For a 100 physical server, 1000 VM environment, assume that the consolidation ratio decreases by 30% from 10:1 to 7:1. Alternatively, administrators would have to spend time monitoring the cluster or responding to customer calls every day Cost of monitoring time Decreased consolidation ratio means OR X $8,000 43 servers Increased Hardware Cost Additional servers needed Hardware, license, power/ cooling, space costs per server 260 2.5 hrs Cost of Extra Admin Time $60/hr Admin $/hr X X = $ 342,857 $ 390,000 OR VMware DRS Hours per day Workdays in a year = 10 X Number of 10- host clusters

33. Offline machine patching Reduces exposure from non-compliant offline/suspended virtual machines Systems have NICs disabled during patching to reduce risk Value of Automated Patching Guest Patching Administrative time – 6,009 hrs, $360,450 saved annually Calculated for 1000 virtual machines, assuming 40 patches per machine > Scan machines > Assess patch requirements > Remediate > Troubleshoot > Rollback – 10% Manual 24 min Automated 15 min Annual Savings for 1000 VMs 6000 hrs, $360,000 Manual 156 min Automated 21 min Annual Savings for 1000 VMs 8.6 hrs, $540 Manual 180 min Automated 36 min Annual Savings for 1000 VMs 6,009 hrs, $360,540 Per virtual machine Per patch VMware Update Manager $360,540

34. Value of Automated Site Recovery VMware SRM VMware Site Recovery Manager provides cost savings from: Reduced recovery infrastructure requirements Fewer hours spent creating and maintaining DR plans and processes Significantly reduced cost of DR tests; eliminates IT staff overtime and application impact Recovery in a matter of hours, not days or weeks – greatly reducing the financial exposure a company faces during a major outage The below captures an estimate of the cost savings provided by SRM when used to recover from a major outage or disaster Company that does $25M in revenue a year = ~$96k/weekday. Assume that SRM can achieve RTO of 12 hours instead of 72 hours compared to traditional DR plan. = $ 615,385 (per disaster) X $96,153 Value of Lost Revenue Days of faster recovery Lost revenue per workday X + X 500 Value of Lost Time by Workers Days of faster recovery Number of workers X X $300/day Cost of worker wages 2.5

35. Value of High Availability High Availability cost savings can have several contributions: Cost of lost business, lost work Cost of lost productive time The sheer simplicity of VMware HA and reduced time & effort compared to other clustering solutions is not captured The below only captures a conservative estimate of savings from lost productive time For a 100 physical server, 1000 VM environment, assuming 2 failures a year: X 10 4 hrs Value of Reduced Lost Productive Time Hours of downtime Number of users per VM 10 Number of VMs per host X X $60/hr Cost of productive time X 2 X = $ 480,000 VMware HA Failures per year 10 X Number of 10- host cluster

36. Value of Zero Downtime, Zero Data Loss Application Availability VMware Fault Tolerance prevents lost business revenue from mission-critical, high-revenue applications outages Simplicity of FT reduces the time and effort required to implement complex hardware and software solutions for continuous availability For a 77 physical server, 1000 VM environment, assume: - approximately10% of VMs are protected by FT (100 VMs). On average, number of VMs protected is 100 / 77 hosts = 1.3 VMs. - 2 host failures in the cluster per year - Lost revenue per minute of high-revenue apps can range from $2000-15000 per minute depending on type of transactions being processed. OpEx Savings 4 Cost of Lost Revenue Minutes of downtime prevented $6000 Lost revenue/ minute X X = $ 188,062 1.3 Avg number of FT protected VM/ host X 8 $8,000 Extra Hosts for FT Costs of hardware Number of extra Hosts X 1 Failures per year in 10-host cluster - NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved X 77/ 10 Number of 10- host clusters

37. Value of Thin Provisioning For a 77 physical server, 1000 VM environment of 50GB average size (mix of web, print, email and database), assuming: - Entire storage is RAID 5 with 4 disk and is replicated to secondary site - Average cost for storage according to IDC in price band 3-4 is $3 per TB 1000 x X Production Site $3/GB = $99,750 Reduction in storage vStorage Thin Provisioning cost savings can have several contributions: Reduce up to 50% of storage costs Reduce time for planning and scoping Faster deployment and higher application uptime Thin Provisioning saving comes from: Reducing power, cooling and floor space costs Reducing application downtime for future growth 1.33 X $3 50 GB RAID 5 Number of VMs CapEx savings 50% x Capacity per VM NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved

38. OpEx Savings Value of Built-in Configuration Management VMware Host Profiles and vNetwork Distributed Switch simplifies the provisioning, configuration and administration of Hosts and virtual machines, through centralized management. VMware vDS and Host Profiles cost savings come from: Simplify initial setup, change management and easy auditing Avoiding costly errors and time consuming troubleshooting and debugging For a 77 physical server, 1000 VM environment, assuming: - On average, 5% error rate for each change. For a 77 host environment, this is equal to 12 errors per year to troubleshoot > Setup > Change > Audit VI 3 10hr 20min vSphere 4 1hr Annual Savings 709 hrs, $53,175 VI 3 40hr vSphere 4 30min Annual Savings 456 hrs, $34,118 Manual 50hr 20min Automated 1hr 30min Annual Savings 1165 hrs, $87,293 Avg per Host or virtual machine $87,293 > Troubleshoot NOTE: vSphere 4.0 model is based off 77 servers due to the 30% better consolidation achieved