I have a few questions on a potential server setup. First, the situation:

Last year we bought an IBM x3500 server with 2 Xeon E5410's, 9GB RAM, 6 HDDs. The original intent for this server was to replace the old exchange e-mail server. It was brought in, set up, and then shortly after we switched to gmail. Shortly after that my predecessor left for greener pastures, and finally I was hired.

So this nice server is now sitting (mostly) idle. This year I have budget again for one server, and of course I want to put this other server to work. I'm thinking about the best use for the two server, and I think I finally have a plan for what I want to do with them.

The idea is to use the two newer servers as a pair of VM hosts. I will set up each server with the same 8 VMs, but divide up the load so that only 4 are active per physical host. That means I've normally got >2GB RAM + 2 cores per host. I've done some load testing to pick out what servers to convert to virtual, and chose them so that each host will be capable of handling the entire set of 8 by itself in a pinch with 1 core and 1GB RAM, but would be very taxed to do so. This should take our data center from 13 total servers down to 7. The "servers" I'm replacing are mostly re-purposed desktops, so I'm more than happy to be able to do this.

Now it's time to go shopping for the new server. I'd like my two hosts to match as closely as possible, and so I'm looking at IBM again. It also helps that we have some educational matching grant money from IBM that I need to use to help pay for this system (we're a small private college).

So finally, (if you're not bored already), we come to my questions:

1. Am I missing anything big or obvious in this plan? I'm a little worried about network performance since the VM hosts will only have 4 nics total where 8 used to be, but I don't think it will be a problem. Is there anything else like this I might be overlooking? Am I making it even too complicated?

2. IBM no longer has a good analog to last year's server. If I want to match the performance (8 cores, 9GB RAM, 1333mhz front side bus, 6 spindles), I have to spend quite a bit more than we paid last year: $2K+, or nearly a 33% cost increase. This only brings a marginal increase in performance. The alternative to stay in budget is to take a hit on the fsb down to 800mhz or cut the number of cores in half, neither of which is attractive.

   The main cost culprit is the processor. IBM no longer offers the E5410. It's listed as a part, but not available in any of the server configs I've looked at. I'm considering getting the cheapest 800mhz fsb dual core xeon I can configure and then buying the E5410's separately. That's still an extra $350 I wasn't counting on, but that's better than $2K. I want to know what others think of this - will it work or will I end up with the wrong motherboard or some other issue? Am I missing a simple way to configure the server I really want?

3. I don't really intend to do this, but one option to save some money back is to omit the redundant power supply. Since my redundancy plan for these system is to switch over to a completely different host, the extra power isn't fully necessary. That said, it's still very helpful to avoid even short downtimes while I switch over VMs. Has anyone done this?