vSphere 5 Licensing

[SuperSpike]

I took a minute to read the licensing guide for vSphere 5 and I'm still trying to pull my jaw off the floor. VMware has completely screwed their customers this time. Why?

What I used to be able to do with 2 CPU licenses now takes 4. Incredible.

Today

BL460c G7 with 2 sockets and 192G of memory = 2 vSphere Enterprise Plus licenses
DL585 G7 with 4 sockets and 256G of memory = 4 vSphere Enterprise Plus licenses

Tomorrow

BL460c G7 with 2 sockets and 192G of memory = 4 vSphere Enterprise Plus licenses
BL585 G7 with 4 sockets and 256G of memory = 6 vSphere Enterprise Plus licenses

So it's almost as if VMware is putting a penalty on density and encouraging users to buy hardware with more sockets rather than less.

I get that the vRAM entitlements are for what you use, not necessarily what you have, but who buys memory and doesn't use it?

Forget the hoopla about a VM with 1 TB of memory. Who in their right mind would deploy that using the new license model? It would take 22 licenses to accommodate! You could go out and buy the physical box for way less than that today, from any hardware vendor.

Anyone else completely shocked by this move?

[wdroush1]

Bilal wrote:

Thank you! And thank you everyone who has voted on my blog. I am waiting till I get a decent sample size. So far I have recieved 60 votes. The feedback has been interesting and I am glad I did this. If you haven't voted please do so. I can't gaurantee anything will come out of this, but I will be sure to forward these numbers to a proper channel and also blog based on the feedback I recieve. Let's continue to be be honest and realtic in out feedback though.  You can hit the view result button on the poll to see the results we have so far if you are interested to see that.  Thanks again.

You do realize all 3 polls completely miss the point of the problem, right? :smileysilly:

It's like buying a car, and then suddenly they add a govenor that limits it to 20mph unless you pay more, sure, you can just drop 20mph everywhere and not increase costs, but you're missing like 66% of your available car.

Polls will say customers will pay exactly the same, victory will be claimed, ignorant hilarity will ensue.

[exEMCfan]

Unfortunatly it is the same for us as well. We do a lot of Essential Plus installs for customers in our region and do not get any support from our rep and was basically told "off the record" that his job was to focus on the partners with 1MM annual spend or higher.

Reviewing our customer base this weekend 75% have not reached these limits yet so that is good.  The ones that may upgrade are going to see red when they get quotes to migrate to Standard + plus additional licenses for mecessary vRam entitlements.

[bilalhashmi]

You do realize all 3 polls completely miss the point of the problem, right? :smileysilly:

It's like buying a car, and then suddenly they add a govenor that limits it to 20mph unless you pay more, sure, you can just drop 20mph everywhere and not increase costs, but you're missing like 66% of your available car.

Polls will say customers will pay exactly the same, victory will be claimed, ignorant hilarity will ensue.

This is why there is an option that this change will effect your future plans.

Follow me @ Cloud-Buddy.com

[wdroush1]

Bilal wrote:

You do realize all 3 polls completely miss the point of the problem, right? :smileysilly:

It's like buying a car, and then suddenly they add a govenor that limits it to 20mph unless you pay more, sure, you can just drop 20mph everywhere and not increase costs, but you're missing like 66% of your available car.

Polls will say customers will pay exactly the same, victory will be claimed, ignorant hilarity will ensue.

This is why there is an option that this change will effect your future plans.

Follow me @ Cloud-Buddy.com

Which is funny, makes it sound ok for people like me, but we're in the process of buying.

[itoperationsgrh]

Let’s look at this from a Machiavellian point of view.

• Double the base pricing of our most popular product
  
  • 100%+ increase for most customers
    
    • If we keep ½ of our customer base we break even
      
      • We loose the most unprofitable customers
        
    • Reduces our support staffing costs
      
      • Those who cannot afford this also cannot afford expert staff to administrate the VMware instances.
        

• We can always double the vRAM allocations, for 5.0 licensing, after the initial announcement: (96Gb instead og 48GB for Enterprice Plus. etc.....)
  
  • Causing a 20% to 25% price increase over current licensing costs
    
  • Claim we are listening to our customers
    
  • Claim a public relations Coup d'État
    

I am not shocked; I think this appears to be a sound business strategy, although a bit short sighted.

• Short term
  
  • Large payoff
    
  • Sell stock and clear out as soon as the long term results start to kick in
    
• Long Term
  
  • Competitors will eat your lunch and take a large portion of your business
    
  • The people who created this policy will have been hired away by their competitors
    

[wdroush1]

itoperationsgrhc wrote:

• • • Those who cannot afford this also cannot afford expert staff to administrate the VMware instances.

To be honest, I'd find it the other way around, anyone with expert virtualization staff is already somewhat knowledable about other systems (or you should stop putting all your eggs in one basket and learn a field, not a product), and can migrate relatively quickly, and is currently in the process of investigating alternatives.

It's those that rely on the cloud deployments and staff that have no clue are the ones that have to stick with what they have simply because of ignorance to the technology.

[itoperationsgrh]

To be honest, I'd find it the other way around, anyone with expert virtualization staff is already somewhat knowledable about other systems (or you should stop putting all your eggs in one basket and learn a field, not a product), and can migrate relatively quickly, and is currently in the process of investigating alternatives.

It's those that rely on the cloud deployments and staff that have no clue are the ones that have to stick with what they have simply because of ignorance to the technology.

You may be right; I was attempting to think like a marketing/sales person, which I am not.

I was attempting to determine what system of reasoning could produce such a short sighted, costly decision.

Knowledgeable IT staff will switch to alternative technologies in droves, when keeping current systems becomes cost prohibitive.

It will be interesting to see what VMware actually does.

[wdroush1]

itoperationsgrhc wrote:

To be honest, I'd find it the other way around, anyone with expert virtualization staff is already somewhat knowledable about other systems (or you should stop putting all your eggs in one basket and learn a field, not a product), and can migrate relatively quickly, and is currently in the process of investigating alternatives.

It's those that rely on the cloud deployments and staff that have no clue are the ones that have to stick with what they have simply because of ignorance to the technology.

You may be right; I was attempting to think like a marketing/sales person, which I am not. 

I was attempting to determine what system of reasoning could produce such a short sighted, costly decision.

Knowledgeable IT staff will switch to alternative technologies in droves, when keeping current systems becomes cost prohibitive.

I kind of go over it towards the end of my blog:

http://www.roushtech.net/tech-blog/10-virtualization/17-vmware-vsphere-5-licensing

Basically, to align current vRAM allocations to the pCPU licences allows people to purchase less, they're attempting to not allow you to do that. I understand the idea of the vRAM model (DR and N+1 boxes can have lower costs, if the drop the pCPU model...), I think it's mainly that they want to move to a more properly allocated model, but don't want to lose current revenues.

But to do that basically requires screwing the customers hard, that they overlooked.

[pjo65]

I was completely baffled about this. I thought "ok it's per core. Makes sense" and then "no they must be missing a zero here". Microsoft could not have done a better job in getting me think about moving to a new virtualization platform. This is Novell and Palm all over again. Two companies that were leading thier fields but had catastrophic marketing/leaders that thought "well we are so big that we can do whatever we like". And i'm most irritated by the fact that they think that we=the users, are morons :

---------------------8<---------------------

Although it is impossible to predict the effects of the new
model in every type of environment, the licensing model has
been designed to minimize the risk of potential impacts in
existing environments while also providing room for growth.

---------------------8<---------------------

The limits in this model have worked fine 4-5 years ago when servers had 32-64 GB of memory. But now.... Just to be comliant we need to double our licenses. Vsphere 4.1 had a limit of 256 GB/Host. And the fact that you must buy 2 CPU licenses/host gives that 128 GB/CPU should have been a mere minimum. "....while also providing room for growth."

I realy like VMWare and hope that the people responsible for setting theese limit are to come to some sense. If not? I'm having a hard time justify VMWare as is. And i must consider moving to Hyper-V despite it is inferior, and sadly see a worldclass product (portfolio) dissapear once again.

[itoperationsgrh]

I realy like VMWare and hope that the people responsible for setting theese limit are to come to some sense. If not? I'm having a hard time justify VMWare as is. And i must consider moving to Hyper-V despite it is inferior, and sadly see a worldclass product (portfolio) dissapear once again.

Look at Citrix XenServer, they wrote the Hyper-V code for MS, it costs but much less than VMware, with currently less features.  However assuming that VMware does not "come to its senses" and goes the way of the DoDo bird, (read Novell Netware/Sony Beta-Max/IBM PC, XT, AT, PS2/etc...), we will be spending the time until our current subscriptions run out, (fall of 2012), testing and deciding upon an alternative, as will a large number of other IT departments.

VMware will have to at a minimum double the vRAM allotment in their 5.x licensing model, before their flagship product is again, expensive but within reach economically.

[DSeaman]

I have no problems with a vendor deciding they need to change their licensing model because of technology advances. Corporations need to make money so they can continue to innovate. However, VMware made such radical changes with no grandfather provisions that people using vSphere 4.x today cannot be guaranteed they can utilize all of their existing hardware resources with vSphere 5.0 into the future. As many have stated, this blows out of the water future budget planning, and projects that will be coming online over the next 2-3 years. This is even though they pay yearly S&S to cover such software upgrades. Today's vRAM utilization bears no reflection of what may come in the future, which will very likely be higher.

To stem the tide of people of voting with their wallets and moving to alternatives, yet still balance future VMware revenue streams, VMware could do something like this:

1. Leave the existing vRAM entitlements for all new v5.0 licenses, BUT with 2-years paid up front S&S double the entitlement, tripple for 3 years of up-front S&S. This encourages business to spend more up front, and commit to VMware over the long haul helping prevent defection to other vendors. Remember XS and Hyper-V will be increasingly feature rich and be more competitive over the next 3 years.

2. Create a new vRAM-only SKU that is dramatically cheaper than the per-socket license cost. vRAM SKUs could be edition specific, so that more functional editions cost more per GB and a fixed size of say 64GB. Looking at today's prices for DDR3 server memory, you are looking at roughly $4K per 64GB. Pricing standard edition at 5%, enterprise at 10% and enterprise plus at 15% of that price, you get $200, $400 and $600 per 64GB, respectively. 1TB of enterprise plus vRAM now just costs you $9.6K, not $77K. Also addresses the illogicality of buying socket licenses to get more memory. No S&S on vRAM entitlements.

3. Cap vRAM entitlements to be no greater than pRAM in the pool. This enables the freedom to over-subscribe (a great VMware feature), but gives organizations predictibility to future licensing if they know there's a hard cap. Want to ensure you are fully licensed for all of your hardware into the future? No problem, buy vRAM entitlements that equal pRAM, and no surprises. Peace of mind and budgeting!

4. For existing vSphere 4.x customers with ACTIVE S&S (only) double standard edition entitlements, tripple enterprise entitlements, and quadruple enterprise plus entitlements when they upgrade to v5.0 licenses. No active S&S, see point #1 for new licenses.

Personally, if changes similar to these were made, I could accept the 5.0 changes and move on. They give me a clear upgrade path, only the largest of the large customers would probably need to pay more to upgrade, and I have future budget predictability, which is very important. I think VMware has already done a lot of PR damage, so some dramatic revisions need to happen or customers will be actively fleeing to the competition.

[bilalhashmi]

wdroush1 wrote:

Which is funny, makes it sound ok for people like me, but we're in the process of buying.

Well that puts you in a better situation. You can now purchase the proper hardware that alligns with the new licensing model and meets your business needs. I would still wait to see if a revision is made to the licensing though.

Follow me @ Cloud-Buddy.com

[s1xth]

All --

For what is worth, I have been sitting on the side lines reading this post for the last few days, deciding how to respond to some of the comments. I actually had a huge long, drawn out post (yes longer than this!) about the licensing and my feelings about the new model typed up. However, I didn't feel it was worth posting because I am going to try sum it up in as few words as possible.

I feel everyone's frustration here about the new licensing model. In some environments and I use "some" lightly, this new model will not benefit them. I honestly agree that more licenses will be needed for some customers. However, we must not forget how far the technology itself has come from just a few years ago. We all know that more than 6-core processors are right around the corner (Sandy Bridge - Bulldozer, so on, etc) and from a socket to socket licensing model is just not business sensible. I look at this change more from the perspective of a business model, more then a "lets find a way to screw the customer" model. In all honesty, I really do NOT think VMware is trying to screw the customer, I think they are trying to be fair while trying to keep their stock, investors and quarter earnings strong.

With that being said, do I think there can be some adjustments made? Yes. I think the entitlements can be raised ACROSS the board, NOT just Enterprise and Enterprise Plus licenses either. Standard Edition is the MOST popular licensing model that VMware sells and I think it can't be left out of the licensing adjustment. I also feel that the the "free" edition of vSphere needs the memory entitlement moved from 8GB to 16GB. I do agree that VMware needs to have a way to differentiate the free based product from their higher licensing models. With that said, I think a 16 or 24GB memory entitlement would suffice since the product already does NOT have any key features (HA, DRS, vMotion, etc) and is only locked down by CPU and socket.

To sum this up, I am still 50/50 with the new licensing model. In my enviornment I am unaffected at this time. Going forward in the future the licensing will definitely be something I will need to analyze more once I am running 5.0 or plan on more expansion and new hardware which will be purchased once Sandy Bridge/etc becomes main stream.

I do believe that VMware is taking all of these feelings from customers seriously and I believe with enough hard numbers there is a chance we may see some adjustments, especially at the top end of the licensing spectrum. Let's all stick together until VMworld and see what happens, as I am sure there will be a lot of feelings expressed at the conference that may further help with this major change.

Even though this new licensing is causing a lot of customers pain, we must not forget how AWESOME vSphere 5 really is. There are tremendous new features and amazing advancements in many areas that make me EXTREMELY excited to incorporate it in my environment. Hands down, this is STILL the BEST virtualization product VMware has ever released and I honestly feel the licensing issues will work themselves out. It still is the best hypervisor on the market, we all can agree to that.

I welcome your comments, and with a topic like "licensing" in general, we could write a book about how WE all THINK the licensing SHOULD be.  In the end though,there will always be someone that is unhappy.

Jonathan

www.virtualizationbuster.com

www.handsonvirtualization.com

@s1xth

[VidarK]

Bilal wrote:

Well that puts you in a better situation. You can now purchase the proper hardware that alligns with the new licensing model and meets your business needs. I would still wait to see if a revision is made to the licensing though.

Follow me @ Cloud-Buddy.com

You got that backwards. Assuming his VMs are 64bit (or getting there soon) and need a certain amount of memory each there is no particular hardware config that will will align well with the new licensing model. He should rather be looking at aligning the virtualization vendor with his wallet like everyone else should.

[rbtwindude]

@S1xth

I too have been on the sidelines… I am not sure how this change will affect our environment but in the coming weeks, I’m sure I will.

First – Some will have to give up VMworld to spend the money on learning/training on something new! Won’t be able to afford VMworld with the extra training needed now…

Secondly – To discuss some “AWESOME” vSphere 5 features – are you joking? They are only “AWESOME” when you can afford to use them and save the business money so they will continue to TRUST your team on the direction you are carrying the company!

WE all are thinking, what in the world are they thinking, from their customers to partnerships and so on! Think about the partnerships with VCE (fastest booming technology – today) and others that have guided companies into the Cisco UCS models and now you will have cost jacked up or just not use what you bought, that is craziness! VMware has said very little but the reality is if you take your environment today and see what it would take to run in vSphere 5.. (Apples to apples) it may be a smaller cost but if you are planning to learn (home lab) or build or budget for the future on vSphere 5, it’s not pretty! Some have already put hardware orders in, these were based on the release of vSphere 5 and its ugly now!

So let’s think about this, if your budget for a project has to go up one dollar based on a license change that is not planned, it doesn’t look good, PERIOD! When you budget infrastructure projects; you budget for growth, hardware, software, license and resources. If you have to take money out of one part to fix another one then you are SHORT! This is going to affect all companies that use VMware today, maybe not now but it will sooner or later. Whether you are planning for it now or later it will cost you MORE! Yes we understand the cost of doing business goes up but that’s why we pay for S&S so we can still have budgets and growth, right?

The vRAM entitlement was a very bad plan from what I can see, all together, especially at a new version launch!  NO one is even thinking about "what vSphere 5 features can do"; we are trying to figure out if another product will support our basic needs! Other products will do the basics and pretty well, but some of us have taken for granted that VMware will always be our product of “choice”. The new features can’t be used if you can’t afford them. So honestly most of us are trying to figure out what to do next and how to keep our business’s going!  We helped VMware get where they are today and now some will have to help another product get up to speed and hope we can trust them! I am not a fan of putting all my eggs in one basket but it looks like I to put a lot of trust in VMware and I have learned a lot.

Even if VMware makes major license cost changes they have lost a lot of trust from big/little/large customers, no matter what happens. We all will start to look at our environments and see how we can prevent this from affecting our business again! Some may leave now, but we all will learn from this and keep an eye on other products that may help us build a more agile environment!

I not only hope that VMware sees what its customers are saying but others look at this as a learning experience too. We all will learn and grow from this!

If someone wants to setup a true poll, maybe they can use this as a model:

1. What are you running VMware (options) 3.x or 4.x
   
2. What are you running (options) ESX or ESXi
   
3. Did you have a project to go to vSphere 5 before the new license model release (options) yes or no?
   
4. Did the new license (vRAM entitlement) change your mind on upgrading to vSphere 5 (options) yes or no?
   
5. Have you already bought new bigger and better hardware for your planned vSphere 5 deployment (options) yes or no?
   
6. Do you think that the new license (vRAM entitlement) will affect your current or future VMware plans (options) yes or no?
   
7. Has VMware changed your mind on virtualizing on another virtualization product (options) yes or no ?
   
8. Do you still have plans to move forward with vSphere 5 or have you put your project on hold (options) yes or no?
   

Then publish the results here on the VMTN forum....

Disclaimer - I do not work for any hardware vendor or software vendor!

[wdroush1]

Bilal wrote:

wdroush1 wrote:

Which is funny, makes it sound ok for people like me, but we're in the process of buying.

Well that puts you in a better situation. You can now purchase the proper hardware that alligns with the new licensing model and meets your business needs. I would still wait to see if a revision is made to the licensing though.

Follow me @ Cloud-Buddy.com

Really? You do understand the whole point of vRAM is that there is no more "hardware aligning". :smileyplain: If they dropped the pCPU licensing and bumped the vRAM allocation it would be genius being as hardware aligning sucks for anything that isn't cutting edge.

[devilz666]

Wonder if any company is thinking of taking vmware to court for this (Americans love to sue dont they?)

Seeing as if they've paid for support and upgrades, and the new product cannot and will not support the existing setup/configuration without having to pay more money?

Think if a paying MS customer paying the usual fee for free upgrades of windows/office etc all of a sudden found out this

'Sorry, but anyone currently paying for select windows7 free upgrades will now have to pay 100% to 150% more to be able to run Windows 8 properly'

'You can upgrade to Windows8 for free, but you can only run a maximum of 2 applications at a time unless you pay more! Take it or leave it...'

Thats basically what Vmware have done for most customers, taken away base functionality and forcing you to pay more to get it back.

[scowse]

Vmware has adopted the price gouging philosohy of M$ and as a prerequisite has a well resourced legal team.

Good luck with any litigation.

[wuffers]

After slogging through the rest of the posts this weekend, I've put most of my thoughts down here:

http://wuffers.net/2011/07/16/vmware-vsphere-5-licensing-changes-overshadows-new-feature-set

Basically, now I'm between a rock and a hard place.. after championing VMWare internally for the last 4 years, our next refresh might not have VMWare in the mix at all, due to Hyper-V being free (literally, we're a Microsoft Gold Certified Partner and the free software entitlements are enough to run our "datacenter").

rbtwindude wrote:

[snip]

If someone wants to setup a true poll, maybe they can use this as a model:

1. What are you running VMware (options) 3.x or 4.x
2. What are you running (options) ESX or ESXi
3. Did you have a project to go to vSphere 5 before the new license model release (options) yes or no?
4. Did the new license (vRAM entitlement) change your mind on upgrading to vSphere 5 (options) yes or no?
5. Have you already bought new bigger and better hardware for your planned vSphere 5 deployment (options) yes or no?
6. Do you think that the new license (vRAM entitlement) will affect your current or future VMware plans (options) yes or no?
7. Has VMware changed your mind on virtualizing on another virtualization product (options) yes or no ?
8. Do you still have plans to move forward with vSphere 5 or have you put your project on hold (options) yes or no?

Then publish the results here on the VMTN forum....

Disclaimer - I do not work for any hardware vendor or software vendor!

Great questions. If I have some time, I might set that up tomorrow.

[rvantipalli]

It is good to refer to the below link to understand vSphere 5 licensing in detail and why VMware has moved to vRAM licensing.

http://blogs.vmware.com/rethinkit/2011/07/understanding-the-vsphere-5-vram-licensing-model.html