The answer? You guessed it, virtualization.
In production environments, MS IT has already achieved a consolidation ratio of 8 physical servers to 1 in its data centers. In its development and testing environments, which as you can imagine are expansive, the consolidation ratio is 16 to 1. But what does it really mean for data center managers who are sweating trying to figure out where to rack and how to UPS all those servers? It means going from a 32U rack footprint to 2U, it means going from 525 Amps of power used down to 8 Amps. Now I'm not an electrician, but that sounds like a pretty nice savings on your electric bill. Having problems cooling 32U of servers? That problem just went away too.
By the way, have you recently looked at the average CPU utilization across the servers in your enterprise? If it???s around 5-15%, then you are indeed, average. What that means is that many IT shops are actually underutilizing their hardware. Because IT shops tend to deploy servers in a role based fashion (i.e. DHCP, DNS, file and print servers), it not surprising that after a while, you find yourself with a million servers running independent, low overhead services.
When you consider all of these efficiencies in tandem, its really not too hard to believe that when multiplied across the tens of thousands of servers that the MS IT group manages, the savings can jump into the millions.