VMWARE has two “free” options to get started into virtualization. VMWARE Server 2.0 and VMWARE ESXi. Each has their own advantages and disadvantages. Notably, VMWARE server will run on many different operating systems (Windows/Linux/etc.) while the VMWARE ESXi is limited to certain hardware since it runs on bare metal (has its own hypervisor). No OS is required to run ESXi.
TIP: From personal experience, I recommend only using local storage as opposed to a home built SAN when dealing with VMs. Do not go cheap on storage. If you can, purchase a Sun SAN or equivalent for maximum uptime. Reliable storage will save lots of unnecessary headaches.
VMWARE ESXi for performance
So, whats the main advantages and disadvantages? Well, first of all, if you want to manage your VM server remotely then ESXi isn’t the best choice. They lock down all the remote administration settings on each of the VMs (including remote console). Some scenarios that may require console — you can’t SSH into your VM since the service went down or you did an OS upgrade that hosed your network. If this is an issue, then you need to consider purchasing VMWARE ESX.
However, VMWARE ESXi does have significant performance benefit since you don’t have to dedicate memory to the host operating system (e.g. Windows Server 2008, Linux, etc) and it runs on a lean kernel system. Memory is the main bottleneck since you have to dedicate RAM for each VM. If Windows Server needs at least 1GB to run and you have only 2GB of RAM, then ESXi would be a better choice. ESXi only uses 32 MB. There are some minor drawbacks to the ESXi system. The VM disk files are locked in ESXi, which can be a liability if your VMX files somehow get corrupted. There is also no support for software RAID, so you need to have a hardware RAID based configuration thats supported by VMWARE. This also means ESXi does not support LVM (common w/ RedHat installs) See my link at the end of the post for more information. In conclusion, ESXi is a great way to start learning how to use enterprise VMWARE. They intentionally removed a lot of the features so you can eventually upgrade to a paid version of VMWARE.
VMWARE Server for remote administration
If you want to remotely administer the VM, then either upgrade to the vCenter or take the performance hit and use VMWARE Server instead. In one of my production environments, I have a VMWARE Server 2.0 running on a Windows Server. Its rock solid. VMWARE Server supports a lot more hardware compared to ESXi, so thats something to consider as well. I can control a lot of settings with VMWARE server such as migrating VMX files between multiple servers, console access to all my VMs, and excellent GUI user interface. They made huge upgrades in version 2! My VMWARE server has 16GB of RAM, so I’m willing to take some performance/memory overhead for convenience.
VMWARE hardware compatibility guide