VSPP 3.0 forcing service providers to jump ship

[MartinWi]

VMware have changed the cost of licensing from number of virtual machine to the amount of virtual RAM used, in the new VSPP 3.0 program. I wonder if VMware realize that many, if not all, service providers that are hosting Windows virtual machines will at least tripple or quadrouple the cost of just the license for each virtual machine. Very few Windows servers running 2008 are configured with less than 4GB RAM, making a machine with the vCloud Premier (if you have hundreds of hosts the standard program just wont do) modell in VSPP cost 60 points, whereas the old VSPP made it cost 36 points. Now keeping in mind that 4GB is just the bare minimum, and that many are in fact configured with 8-16GB RAM or even 32GB RAM, for example medium sized SQL-servers, that means you would end up with 480 points for that 32GB RAM SQL-server. It used to cost 36 points, meaning its now 13 times more expensive. And thats just one virtual machine, when you're a service provider you dont have one of these, you have hundreds or even thousands.

It's easy to see that this will make many, probably the majority, of all virtualized Windows servers be moved to Hyper-V. VMware can try with their consolidation ratio propaganda all they want, nobody is going to accept this gigantic increase in licensing costs when they're already getting used to Hyper-V and its much cheaper licensing costs.

Does anyone else currently a service provider have any other conclutions?

[BISGInc]

I'm surprised no one else has commented.  The new VSPP 3.x program is VERY troubling for all the reasons you listed.   Have you had any discussions with your partner manager?

[SWou]

We have exact same conclusion as you ... we can not understand what VMWare is doing with VSPP 3.0. Feels like they want to push away smaller IaaS players (<1000 vm's) on the market and probably have "special deals" with vcloud express parties ...

Buying licenses becomes again more intressting then this new VSPP model.

Greets

[BISGInc]

The problem is that you cannot buy licenses and then rent them out to end users.  This is an explicit violation of the EULA, and with VSPP firmly entrenched, they are cracking down on those providers that attempt to go this route.

There is some hope though... some of the recent rumors say that VSPP 4 will be much more friendly than VSPP 3.   Until then, we are staying on VSPP 2.

We are also looking at Hyper-V hosting options.  Sorry, VMware....

Rick

[Josh26]

We did the maths and the only way the plan was feasible was under the "Standard" plan.

But then why would you want your hosting suppliers not using all the enterprise features? At more than 3 x the cost for Premier, the "our buy", just for licensing, approaches the cost of a VM from the competition.

I'm still trying to get a straight answer on Nexus licensing too. As far as I can see, you just purchase it normally. Will there then be a rental program in future where suddenly outright purchases aren't legal?

[BISGInc]

Josh-

I've had this exact same conversationw with my VSPP Partner Manager.   What customer would leverage a Cloud Provider that didn't offer the advanced/enterprise features??  Furthermore, it would be immensely difficult to architect a multitenant cloud without the use of distributed virtual switches, and those require the Enterprise+ licensing.

As far as Nexus, my understanding is that the only way to get it is to buy it.  This will probably change, and like everything else, shift to a rental-only program.  My understanding is that when the original Cloud providers (who had purchased their licenses) began to be migrated (aka "forced") into the VSPP program, there was a grandfather period for the purchased licenses, but anything new they had to rent.   Perhaps someone that was in this situation could comment?

For VSPP4, my hope is that they fix the broken RAM based license by chopping the price significantly - at least 50%.   Second, if they insist on licensing by virtual RAM (which, IMO, is a horrible way to do this!) then they need to have some sort of cap, perhaps 8GB of RAM.   Server sizes are going to continue to increase and no one wants to be stuck paying $200+ in VMware licenses alone to host a 16GB SQL Server.

Rick

[Josh26]

The frustrating bit is that the end user doesn't care if you have Distributed Switches - they are happy for it to be your problem to code up a solution that creates port groups all over the shop individually.

They care about HA - which fortunately we can supply under the standard license.

It's the provider that suffers without those features.

There were exemptions for customers that purchased the product out right when it was the only option, but they were time limited. Eventually that investment just went down the toilet - and I'd be concerned about investing in Nexus vSwitches right now for the same reason.

[mike_tcis]

Does anyone know if the billing is done by the amount of RAM the VM is actually using, or the amount that is allocated to it?  e.g. if a VM is allocated 16GB but only uses 4GB, which value is used for billing?

I can see the vRAM approach being a cost savings for those with a lot of small VMs, but a cost increase for those with fewer VMs that have lots of RAM.

[mike_tcis]

How are you able to provide HA under the Standard license?

[BISGInc]

Under VSPP3, you are charged for virtual ram ALLOCATED.    With very few machines capable of running with less than 1GB, and more and more machines requiring more (ie Exchange 2010 needs 4GB), this is not a favorable change.

[Josh26]

mike_tcis wrote:

How are you able to provide HA under the Standard license?

http://www.vmware.com/products/vsphere/buy/editions_comparison.html

It is included in standard edition. See above.

[MartinWi]

We did the maths and the only way the plan was feasible was under the "Standard" plan.

But then why would you want your hosting suppliers not using all the enterprise features? At more than 3 x the cost for Premier, the "our buy", just for licensing, approaches the cost of a VM from the competition.

I've had this exact same conversationw with my VSPP Partner Manager.   What customer would leverage a Cloud Provider that didn't offer the advanced/enterprise features??  Furthermore, it would be immensely difficult to architect a multitenant cloud without the use of distributed virtual switches, and those require the Enterprise+ licensing.

The frustrating bit is that the end user doesn't care if you have Distributed Switches - they are happy for it to be your problem to code up a solution that creates port groups all over the shop individually.
They care about HA - which fortunately we can supply under the standard license.
It's the provider that suffers without those features.

Unfortunately there is a legal limitation in the vCloud Standard program that limits you to one Layer 2 network, i.e. one(1) VLAN. Here's a quote from the VSPP Product Usage Guide Q4 2010:

"vCloud Director - # of L2 Networks          Single*

Note that the limitations for the vCloud Standard Service Provider Bundle marked with an
asterisk (*) are legal limitations at this time and are not limited technically within the vCloud
Director product

1) Service must only be provisioned to one user per account and cannot utilize Lightweight
Directory Access Protocol (LDAP) to authenticate user.
2) Service must only access one virtual datacenter (VDC).

3) Service must only utilize a single Layer 2 network"

So, the standard program isn't really viable for any serious setup, and the legal limiation is there to prevent just that. The standard program is meant to be for testing and development etc. This means you're more or less forced to pay for the premium program if you want to remain a VMware service provider customer.

EDIT: Attached the VSPP Program Product Usage Guide Q4 2010. See page 12.

[Josh26]

Our workaround for that problem was simply to not use vCloud director.

Yes, it's a another hurdle.

[mike_tcis]

FYI my VSPP rep just said in an E-mail to me that there is a cap of 8GB on vRAM billing.  Trying to confirm this with him now.. but if so, it might be a little bit of good news..

[mike_tcis]

Good blog post covering our woes here:

https://profiles.google.com/112044160322828538316/posts/eyRwGXD6w5J#112044160322828538316/posts/eyRw...

[mike_tcis]

Confirmed by my VSPP rep:

-----

Yes, there is a cap, so any VM you have allocated 8GB of RAM or more to will be charged at the 8GB rate. There is a new VSPP Program Guide coming out that will have this.

[BISGInc]

mike_tcis wrote:

FYI my VSPP rep just said in an E-mail to me that there is a cap of 8GB on vRAM billing.  Trying to confirm this with him now.. but if so, it might be a little bit of good news..

This is not the case with VSPP 3.0, but is strongly rumored to be included in VSPP 4.0.   If your rep is confirming it now, that is a good thing, but I suspect he cannot yet present you with a document you can sign that states such.   VSPP 4.0 is also rumored to have a lower per-GB fee attached as they realized that the $15 was a bit outrageous.

[BISGInc]

mike_tcis wrote:

Good blog post covering our woes here:

https://profiles.google.com/112044160322828538316/posts/eyRwGXD6w5J#112044160322828538316/posts/eyRw...

I found this blog post a long time ago... it was originally posted here:

http://vmforsp.typepad.com/vm-for-service-providers/

I pointed the blog post out to my VSPP partner manager and, suspiciously, the blog post was taken down within days.   The author had previously declared that particular post to be his most heavily read post ever....then it disappears.   HMMMM.

[mike_tcis]

According to my rep @ Insight, the 8GB cap is in effect now and it is an ammendment to v3.

[Josh26]

mike_tcis wrote:

Good blog post covering our woes here:

https://profiles.google.com/112044160322828538316/posts/eyRwGXD6w5J#112044160322828538316/posts/eyRw...

I think this is a fantastic blog discussing everything that's been experienced by service providers.