Official: Revisions to VMware vSphere 5 Licensing

It’s official, VMware is changing the vRAM licensing in response to the feedback they’ve received. And, from the sounds of it, lots of feedback. They read every single vRAM post and thread in the Communities, read all the blog posts and comments, read all the feedback that was sent to them through the sales representatives and technical account managers. As they put it to me, most of the feedback was along these lines:

• It was less about the conversion to vSphere 5 than future growth, and the fact that the business case for future growth was drastically different now [and quite a bit more costly] than under the vSphere 4 licensing model.
• The new license model “introduced additional hesitation for virtualizing business-critical apps.” I think this is them saying customers were balking at the fact that big VMs, which often power business-critical apps, were going to cost a bunch of money. The pervasive example of a 1 TB VM needing $38,445 in licenses comes to mind.
• The new licensing tracking system penalized short-lived spikes in usage, like for dev & test scenarios, and any other situation that had transient VMs. The yearly “high water mark” doesn’t accurately reflect usage patterns for a lot of people.

So VMware revised their licensing:

• Enterprise Plus is now 96 GB per socket, up from 48, and soft-limited.
• Enterprise is now 64 GB per socket, up from 32, and soft-limited.
• Standard, Essentials Plus, and Essentials are now 32 GB per socket, up from 24, and hard-limited.
• Free is now limited to 32 GB per host, up from 8, and hard-limited.

By soft-limited I mean that it will permit you to exceed your license levels, and hard-limited will not.

Additionally, they made three additional changes:

• Each VM will only count up to 96 GB of RAM towards the license. So a 1 TB VM will now cost $3,495, not $38,445.
• The yearly licensing will be done on a 12-month average, which they think is more fair to people with transient VMs that cause short-lived spikes in vRAM allocation.
• vSphere for VDI is a new licensing mechanism that is per-VM, which resolves complaints about vRAM licensing for virtual desktops.

vSphere for VDI isn’t strictly new, as it was announced a few weeks ago. It is worth noting, though, that its mostly an honor system right now, and will require a separate vCenter instance to account for Enterprise Plus licenses that are being used for VDI. Most View deployments are being done with a separate vCenter instance anyhow, so they didn’t feel it was a big problem, plus the separation allows people who are currently using Enterprise Plus to move exactly what licenses they need for VDI prior to their next SnS renewal. I like that.

One other pretty big thing to note is that the new license levels & per-VM caps will not make it into the first release of vSphere 5 code. A subsequent update will fix them. For users of Free, Essentials, Essentials Plus, or Standard the lower hard limits will be in place initially, and they’ll have to wait until the next release to begin testing & upgrading. While this is a hindrance, and annoying, it’s certainly less annoying than paying a lot more money, long term. Perhaps VMware will commit to releasing the update inside 60 days from GA, meaning that testers can use the default evaluation licenses (which are Enterprise Plus) for now.

What do I think about all of this? Personally, I think it’s still a tax on usage, and I wish they’d just gone the whole way and removed the per-socket portions of the license so that it’s much simpler to compute. These new levels do mean that my current “fewer, bigger machines” strategy goes right back to where it was, price-wise. I like that, because it means my budgets through next year don’t need radical adjustments. I still like the usage-based model because it fits nicely into my chargeback model.

I also think that competitive pressure played a big role in this. Say what you want about Hyper-V, KVM, Xen, Oracle VM, etc. but those solutions are getting good enough for many shops. Especially the small & medium-sized businesses, where a large licensing fee jump almost guaranteed a switch to a cheaper platform. It is in no way a scientific survey, but nearly every person I talked to that does IT in the SMB market is ceasing their VMware deployments for now and looking around at their options as a result of all of this.

I’ve also been asked if, given the speed by which they responded, VMware had this up their sleeve the whole time anyhow, and just trialled the other scheme to see if they could get away with it. First, I really don’t think they had this up their sleeve the whole time, else the GA vSphere 5 release would have had both sets of code in it. Second, I think the data they collected in support of the “old new plan” (48/32/24/24/24) was fundamentally flawed, and they didn’t know that until everybody rose up against them. I don’t know who they polled initially but they’re certainly not representative of any IT environment I’d want to be part of.

Third, everybody who heard the “old new plan” (48/32/24/24/24) went nuts, from the moment they heard it. The VMware sales guys hated it, mainly because they were going to have to sell it to everybody as somehow being a good thing. The customers hated it, because it was going to cost them a bunch of money. So I think that, from the first pushback more than a month ago, they’ve probably been thinking about an alternate strategy, even at a low level. Fourth, VMware is a company out to make money. Period. More power to them if they could get away with tripling the price of licenses. The problem is that all of VMware’s customers are companies out to make money, too. Customers looking seriously at competitors is a real strategic problem. VMware wants more money, but also wants to keep their customer base intact in the process. If you make 30% more money but lose 50% of your customers you lose, too.

Last, I’ve been asked quite a few times whether I think the free version’s hard vRAM limits are ridiculous (leading question, I know). To most people’s surprise I actually feel pretty strongly about this. At 8 GB, yes. At 32 GB, no. There are a lot of examples of companies out there abusing the free ESXi to run their enterprises, and whole ecosystems of management tools designed to help them do that. Users of free ESXi pollute the communities and forums with questions that could easily be answered by reading the documentation or a through a simple support call. As a paying customer I think there is a time and place for free ESXi, but I don’t like the idea that I’m subsidizing their use, and I’m glad VMware is putting some now-reasonable limits on it. 32 GB per host still encourages education, training, labs, and the like, which I do think are great causes to support, and you can always use the evaluation license if you want a sample of Enterprise Plus.

Overall, I think this will put things more closely back to the status quo. A big thanks to all the folks inside VMware, and all the customers outside, that professionally and calmly worked on this problem. I just hope that now, maybe, we can talk about some of the other new parts of vSphere 5 for a change. :)