Microsoft Windows Server 2012Customer Solution Case Study

Lower Cost and Higher Quality for Public Cloud Service with Windows Server 2012

OverviewCountry or Region: KoreaIndustry: IT ServiceCustomer ProfileHostway Korea is a Korean branch of Hostway, established to expand its business into Korea and other parts of Asia. Hostway provides cloud, server hosting, colocation and other services through its 12 data centers in 11 countries around the world.

Business SituationIn an era when cloud services are widely used, competition for the lowest prices has been really heating up between companies. And reduction of costs has to be combined with high quality to stay afloat in the competition.

SolutionHostway Korea meticulously evaluated the improved scalability, network functions, etc. of Windows Server 2012 before it was officially released, and became the first in the industry to use Windows Server 2012 for IaaS services.

Benefits Economies of Scale Securing Cost Competitiveness Meeting Demand for Private Clouds

Sweetly Strengthening Operation of Cloud

Infrastructure

“We found ways to reduce costs by actively accommodating a new technology. A customer's perceived quality of service will always be better when high-cost equipment is put to use. In this case, however, Windows Server 2012 made it possible for us to use equipment that is readily available to achieve a higher level of service quality. Believing that we could continue to offer high-quality service at competitive prices by optimizing our cloud service, we adopted Windows Server 2012 for the commercial IaaS service.”

Lee Dong-ho, Hostway Korea

As cost competitiveness continues to heat up in the cloud market, Hostway Korea participated in the Windows Server 2012 Rapid Deployment Program (RDP) with the intention of avoiding reckless cutthroat competition and building on its technical excellence instead. Through the RDP, Hostway Korea learned that it could achieve economies of scale with Windows Server 2012. They also found ways to increase cost competitiveness. The RDP allowed Hostway Korea improve its quality of service. Leveraging on its IaaS, Hostway Korea has not only allowed its customers to select CPU, memory, etc. to suit their needs, but has also given them a wider choice of operating systems to run on Hyper-V. But with introduction of Windows Server 2012, the range of options has expanded to include CentOS, Red Hat, SuSE, Ubuntu and FreeBSD, thus satisfying the customers’ increasing need for diversity. Hostway Korea has also just adopted System Center Operation Manager to improve monitoring of the large-scale infrastructure for an even higher quality of service.

SituationIn 2011, with its FlexCloud Servers, Hostway Korea also set a milestone in the cloud market by becoming the first to announce the pay-per-use Infrastructure as a Service (IaaS). FlexCloud Servers surprised the hosting industry with a stunning architecture and entered the market. Unlike most hosting companies, this architecture meant that the user could be charged only for what they had used for all computing resources such as CPU, memory, disk, network, firewall, and load balancer, enabling truly realistic pay-per-use packages. Hostway Korea also became the first in the industry to build a public cloud service infrastructure on Windows Server 2008 R2.

Flying the flags of differentiated architecture and Windows Server, FlexCloud Servers successfully grabbed customers' attention, as expected. Branch Officer Lee Dong-ho of Hostway Korea remarked, “We made it easier for our customers to use Windows Server, CentOS, RedHat, Ubuntu, etc. to run virtual machines on Hyper-V. Customers especially like our service and the workload on Windows Server. Previously, the ratio of our customers choosing Windows Server over Linux was about 25:75, but the introduction of FlexCloud Servers has closed the gap to about 40:60.”

As its FlexCloud Servers customers increased, however, Hostway Korea faced a problem. As Windows Server 2008 R2 Hyper-V had limits on the vCPU and vRAM each virtual machine could support, it was difficult to meet the demands of customers requiring machines of 4 or more cores. As a solution, Hostway Korea launched a service called FlexLink, a hybrid cloud service. When a FlexCloud Servers customer needed better performance, a private VLAN could be set up to link the service to server hosting and colocation resources.

Having had much experience with Windows Server and successfully establishing its FlexCloud Servers service, Hostway Korea encountered yet another challenge in the middle of 2012. The cloud market became highly competitive. The key phrase for the Korean cloud service market in the second half of 2012 was ‘price competition.’ As the big players began to use pricing as a means to secure their position, the market showed signs of cutthroat competition. Hostway Korea responded to this market climate by focusing on technology and quality instead of pricing. Their first step was the official launch of a cloud service based on Windows Server 2012.

SolutionHostway Korea decided to use Windows Server 2012 as a trump card to strengthen the competitiveness of its FlexCloud Servers because the company had previewed the possibility of lower costs and better quality of service through the RDP in the middle of 2012. In the RDP, Hostway Korea meticulously studied the new features of Windows Server 2012 to see whether previous shortcomings had been resolved.

In fact, Hostway Korea had experienced some problems with Windows Server 2008 R2 when they built a large-scale IaaS infrastructure on it. The two main issues were scalability and networking. So, during the RDP, these became the two main focus areas. In terms of scalability, the first thing that they studied was how many resources could be allocated per virtual machine and how many virtual machines could be included per cluster. Hostway Korea could not believe the results. Up to 64 vCPU and 1 TB of memory could be allocated per virtual machine, and 8000 virtual

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machines could be configured on up to 64 codes in a cluster environment.

Hostway Korea were also satisfied with the networking capabilities. When Hostway Korea was designing its FlexCloud Servers architecture, they determined that Windows Server 2008 R2's networking was less capable, and used Linux-based equipment which was developed in house. Separate network switches had to be used for processing ARP/ND spoofing and DHCP guard. But in the RDP, Hostway Korea learned that the separate equipment would no longer be needed because Windows Server 2012 supported the network functions within the operating system. The switching functions such as PVLAN (Private VLAN), ARP/ND positioning/spoofing, DHCP guard, port ACL per virtual machine, VLAN trunk mode for virtual machines, and port monitoring (mirroring) provided by Hyper-V were as powerful as those provided by dedicated equipment.

Lee said of the RDP participation, “As we discovered the improved scalability and networking of Windows Server 2012 Hyper-V, we thought that the Microsoft developers must have experienced the same issues as we did with our FlexCloud Servers. Better scalability means that we have a lot more freedom in running our cloud service compared to running a large-scale IaaS. Also, processing network switches within the virtualization hosts makes more detailed management possible.”

In the RDP, Hostway Korea also made a point of checking that running Linux on virtual machines with Windows Server 2012 Hyper-V was much easier. Previously with Hostway Korea’s FlexCloud Servers, customers could choose from Windows Server, CentOS, and Ubuntu for their operating systems. If a

customer wanted Linux, an integrated service had to be installed on the virtual machine. Windows Server 2012, however, has built-in integrated service and this makes the process much easier. Hostway Korea also liked the fact that the range of options could be extended to include CentOS, Red Hat Enterprise Linux, SUSE Linux Enterprise Server, Ubuntu and FreeBSD to satisfy the customers’ increasing need for diversity.

In the RDP, Hostway Korea also carefully studied SMB 3.0 support of Windows Server 2012. Previously with FlexCloud Servers, the storage environment was configured in Cluster Shared Volumes (CSV). Hostway Korea was fascinated by the fact that SMB 3.0 support of Windows Server 2012 would enable the storage operation without shared storage. They performed a technical inspection to see if file server clusters can be applied to actual services.

Benefits

First in Korea to Launch Cloud Service with Windows Server 2012 In the second half of 2012, Hostway Korea officially launched its IaaS service based on Windows Server 2012. Having studied key features of Windows Server 2012 as a cloud OS in the RDP, they quickly applied the solution to a commercial service. This was a major move in the sense that Hostway Korea made a breakthrough in the ever-growing cloud service market in the second half of 2012. While everyone else was focusing on lowering prices to stay in the competition, Hostway Korea chose technical excellence as its strategy.

Lee said, “We found ways to reduce costs by actively accommodating a new technology. A customer's perceived quality of service will

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always be better when high-cost equipment is put to use. In this case, however, Windows Server 2012 made it possible for us to use equipment that is readily available to achieve a higher level of service quality. Believing that we could continue to offer high-quality service at competitive prices by optimizing our cloud service, we adopted Windows Server 2012 for the commercial IaaS service.”

Economies of Scale With the launch of IaaS based on Windows Server 2012, Hostway Korea was able to achieve economies of scale. This means that, with the increased size of the IaaS infrastructure, the investment costs for various equipment could be kept low and therefore high profitability was achieved. Lee said, “previously with Windows Server 2008 R2, we had service zones of 16 clustering nodes and 1000 virtual machines each, with each zone featuring its own server, network, and storage devices. Now, with Windows Server 2012, we can manage our virtual machines in zones of 64 clustering nodes and 8000 virtual machines. This means that we need fewer pieces of equipment, which translates to lower investment costs and fewer points of management. This change brings many managerial benefits.”

Securing Cost Competitiveness Offering a better price is a highly important competition strategy for service providers like Hostway Korea. But lowering prices is not something that everyone can do. This is because acceptable levels of technical and operational capabilities should still be guaranteed with lower prices. If a company does not have these capabilities, it may encounter side effects. In the case of Hostway Korea, the company was able to add cost competitiveness to its technical and operational excellence by adopting Windows Server 2012.

Lee said, “Most service providers try to lower the costs by making the best use of their strengths. For us at Hostway Korea, we see SMB 3.0 support of Windows Server 2012 as a key factor in cost reduction. The most difficult element when it comes to reducing costs is probably storage. But if we can expand the use of file server clusters instead of using high-cost dedicated storage, we should be able to reduce disk costs.” Meeting Demand for Private Clouds Sweetly Hostway Korea is paying close attention to the market trend of increasing demand for private clouds. And they believe that Windows Server 2012 will prove highly reliable in responding to such a trend. IaaS based on Windows Server 2012 will allow an uninterrupted and smooth transition for customers moving on from public clouds to private clouds as their businesses grow.

Lee said, “We often see customers who start their businesses with one or two virtual machines but grow so rapidly that they need tens or hundreds of virtual machines in no time. Such customers demand that we respond quickly to their expansion. Windows Server 2012 is a very viable option that helps us to do this in addition to implementing hybrid configurations with VLAN.” Hostway Korea believes that rapid expansion will be made easier by utilizing the network virtualization and the shared-nothing real-time migration function of Windows Server 2012.

Strengthening Operation of Cloud Infrastructure While preparing for the service based on Windows Server 2012, Hostway Korea also worked on reinforcing its management tools. As opposed to only using System Center Virtual Machine Manger in the past, they adopted

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System Center Operation Manager in time for the IaaS service expansion to improve large-scale infrastructure monitoring.

Microsoft Server Product PortfolioFor more information about the Microsoft server product portfolio, go to:www.microsoft.com/servers

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For More InformationFor more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:www.microsoft.com

For more information about Hostway Korea’s ervices, call 82-1544-2233 or visit the website at: www.hostway.co.kr

Software and Services Microsoft Server Product Portfolio

− Windows Server 2012 Datacenter− System Center Operation Manger