In vSphere 5 you can migrate VM with snapshots – it's supported. I had this question through an e-mail, from one of my readers and so I thought that I'd share it…
In previous versions of vSphere and ESX, (ESX/ESXi3.x and ESX/ESXi4), one had to delete snapshots before migrating a VM into another location. In vSphere 5 now it's supported to migrate VM with snapshots.
A VMware KB article number 1035550 gives you all the different possibilities you have when it comes to moving your VM elsewhere.
Cold migration – Powered-Off VM can be moved to another datastore or ESX(i) host. The VM can have snapshots. The virtual machine files, such as .vmsd, .vmsn, -delta.vmdk, and redologs, that support snapshot functionality are moved with the .vmx configuration file.
Storage vMotion – The limitation of moving VMs with snapshots applies to ESX(i) hosts version 3.X and 4.X. In the version 5 of vSphere you can migrate VMs with snapshots.
vMotion – You can migrate VM to another host, but the disk and snapshot files are staying at the same location, so we cannot really talk “moving VM files”.
In vSphere 5.0, great enhancements have been done to the snapshot removal. You have now the possibility to see via the GUI if the consolidation part of a RemoveSnapshot or RemoveAllSnapshots operation has failed. A new option, Consolidate, is available via the Snapshot menu to restart the consolidation.
If you're have some VMs which uses RDM I invite you to check this KB – Migrating virtual machines with Raw Device Mappings (RDMs).
Source: VMware KB 1035550
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Nice ! Now that is useful functionality !