vSphere 5 Licensing

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.


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


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?

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1,980 Replies

As an owner of VMW, I understand that it is the only job of the board to maximize profits for the share holders.  Apparently they are doing that job quite well and feel that the new licensing model will allow them to continue to maximize profits.

It's all about keeping Wall Street, not the customers, happy:

VMware Reports Second Quarter 2011 Results

Year-Over-Year Revenue Growth of 37% to $921 Million; Operating Margin of 20.3%; Non-GAAP Operating Margin of 31.6%; EPS Growth of 183% to $0.51; Non-GAAP EPS Growth of 62% to $0.55; Trailing Twelve Months Operating Cash Flows Growth of 46% to $1.5 Billion; Free Cash Flows Growth of 56% to $1.6 Billion

        --  Revenues for the second quarter were $921 million, an increase of 37%
            from the second quarter of 2010 as reported, and an increase of 35%
            measured in constant currency.
        --  Operating income for the second quarter was $187 million, an increase
            of 85% from the second quarter of 2010. Non-GAAP operating income for
            the second quarter was $291 million, an increase of 56% from the
            second quarter of 2010.
        --  Net income for the second quarter was $220 million, or $0.51 per
            diluted share, compared to $75 million, or $0.18 per diluted share,
            for the second quarter of 2010. Non-GAAP net income for the quarter
            was $235 million, or $0.55 per diluted share, compared to $142
            million, or $0.34 per diluted share, for the second quarter of 2010.
        --  Operating cash flows for the second quarter were $463 million, an
            increase of 114% from the second quarter of 2010. Free cash flows for
            the quarter were $443 million, an increase of 91% from the second
            quarter of 2010.
        --  Trailing twelve months operating cash flows were $1.5 billion, an
            increase of 46%. Trailing twelve months free cash flows were $1.6
            billion, an increase of 56%.
        --  Cash, cash equivalents and short-term investments were $3.7 billion
            and unearned revenue was $2.1 billion as of June 30, 2011.
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Please, tell me again why there was a economical "need" for the new license model.

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roglar wrote:

Please, tell me again why there was a economical "need" for the new license model.

The license model needed to change anways as the newer CPUs will all be higher than 6 cores. I think the new license model is a good idea, but needs some number tweaking for it to make sense. Currently the new numbers are too low.

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Those numbers may not be so cheerful next quarter...

Allen Beddingfield

Systems Engineer

The University of Alabama

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John Troyer wrote:

Hi all, I work for VMware but am not a licensing specialist. I've asked for some of them to come by. We anticipate that this new model won't cause a price increase for most people - but you need to calculate your real-world numbers before you can tell.

The key to understanding the model is that you have to look at your full data center and your full real-world environment, because it's a vRAM pool. The other key concept is that you license vRAM (the amount of RAM your VMs use), not the physical RAM in the box. So you have to take into account memory utilization (60-85%?), HA spare cluster capacity (you've got that, right? Those machines take a license but cost zero vRAM from the pool.), DR capacity if you can pool the vCenters, and all the rest of your lower-utilization clusters and machines around your organization.

They based the allocations on actual real-world data from customers, and we expect almost everybody to come out a little ahead (i.e., some excess vRAM capacity) just from their regular SnS upgrade from vSphere 4. This is not to say that there aren't some monster VM scenarios where you'll pay more, but until you do that calculation, you don't know where you stand. And in those cases, talk to your VMware rep or partner. This is also the right time to start looking at VM rightsizing -- do all those VMs really need all those GB?

This is a conceptual shift to a pool of resources, not physical devices. It takes everybody a few days to get their heads around, even VMware folks. I encourage you to read the following resources and do some calculations. Then let's start a new thread on some real-world scenarios -- that will be most useful for all of us to understand real-world implications. We're here and we're listening.

Who is VMware to tell Microsoft/Oracle/IBM/RedHat that the application being installed in a virtual enviornment doesn't actually need all that memory to run smoothly?  And why are you putting it on the sholders of your customers to fight for application X to be installed with less than the recommended memory?

I haven't had time to read all 49 pages, but can anyone tell me if its true that current customers have only 30 days from July 12th to take the pitance of vRAM licenses from v4 CPU licenses?

I thought that VMware wasn't going to change the licensing model for v5, and had gotten the message from the outcry that happened with v4...  Add another customer who is now forced to look at other virtualization technologies.  Sure they aren't as mature, but I cannot goto my CIO and ask for 10 to 15 more licenses to cover hardware that we already own but are not upgrading.

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I just finished a lengthy conversation with my VAR. Oddly enough they don't seem to be getting much negative feedback.

Talk to your sales people... these posts do nothing. VMware doesn't care about you directly.

If you are in the same situation as I am... explain how the changes impact not only your future VMware purchases but also hardware purchases that you would have been making. They need to understand that this goes beyond just VMware to take interest.

The new licensing is forcing me to take a look at alternative Virtualization Technologies... technologies that are free or that I already own through other license agreements.

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It is even worst - we have approximately 4x memory oversubscription on QA and developmebnt hosts (wghich is obvious - I have maybe 4 DB serevrs for QA dfor different projects, each with let's say 8 GB of RAM, but only 1 is erally active in a time and other sare idle - but not down). New model makes it impossible at all (if I have 64 GB server then I run approximately 256 GB of vRAM and so I will need 8 cpu licenses instead of 2, which makes it absolutely unreasonable).

So this new model will make vmWARE non usable for development and qa and eventually (if we switch both onto the free systems like XEN) all systems will go off the vmWARE.

Moreover, the memopry price drops so I wil see 128 GB of RAMN on 2 socket server normal in 2 - 3  years - and it wil make vmWARE too expensive.

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XenServer is licnesed per Host thats it.. You should take a look at it

Also, here is a XenServer vs Vmware Calc -

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shaofis wrote:

I just finished a lengthy conversation with my VAR. Oddly enough they don't seem to be getting much negative feedback.

Talk to your sales people... these posts do nothing. VMware doesn't care about you directly.

If you are in the same situation as I am... explain how the changes impact not only your future VMware purchases but also hardware purchases that you would have been making. They need to understand that this goes beyond just VMware to take interest.

The new licensing is forcing me to take a look at alternative Virtualization Technologies... technologies that are free or that I already own through other license agreements.

I talked to my VAR rep, and she indicated that she is getting a lot of negative feedback from her customers. The advice she's giving (probably the only advice she can give) is to sit tight and let VMware explain themselves, but I would be extremely alarmed if I were a VMware reseller right now.

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Hey VMware... if you are actually listening. Here is some constructive feedback for a change.

  • The last server I bought had 128GB of ram per processor.
    • Honor Existing Purchases... transition customers at 75% of 128GB or 96GB per proc
    • Look... we already bought the licenses don't force us to purchase new just to move to your new model
  • Honor existing SNS Agreements at 96GB Per proc. I just signed a 3 year agreement... I've already paid for SNS honor it.
    • After the agreement expires then move to your 48GB model.... or here is an idea... sell SNS based off of total memory allocations.. discounts applied based on how much you actually have.
  • Why keep the per proc requirement. If you want a per RAM model... move to it. Make it simplier...
    • New licenses should be memory incremental... move 100% away from the physical model... it no longer matters.
  • VMware View.... don't create a separate license for it... We've already purchased our licenses...
    • If you don't want to limit view implementations then key the license that way...
    • Allow us to move memory allocations into an unlimited View model or back. Keep it simple.
  • 48GB is low.. but acceptable  ***IF*** you honor our existing purchases at the current technology levels.
    • This would at least let me implement V5 without needing to purchase new licenses.
    • New implementations could take into consideration the changes and be budgeted for.


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--- This is also the right time to start looking at VM rightsizing -- do all those VMs really need all those GB?

No, this IS NOT the right time. remember, if I configured 10 GB vRAM does not mean that sytem wil use 10GB vRAM.

The primary benefit of virtualization is that we can configure systems as THEY (systems) want to be, and use resources as they (systems) REALLY use them. So it is absolutely normal to have 128 - 256 GB of vMemory on the 64 GB real memory hosts. I can understand real memory licensing - it is what we REALLY use. But vMemory licensing kills the whole virtualization idea and cause people to make one of 3 choices:

- stay avay from vSphere5, with 4.1 (free or commercial)

- go to Hipervisor or other commercial technologies

- go to XEN or other free technologies.

Take into the account that de facto vmWare already teach people how to use virtualization. Then it is relatively easy to switch if price / license model don't allow to stay with one of these technologies, and I don't see any way to stay with VMware if they will license vMemory (virtuial memory which de facto do note exist at all) and not really used resourecs (# of cpu or physical memory, which maybe make sense). For now, ESX5i is absolutely 100% NO-NO in our company, we explicitly prohibited it's usage because of this licensing schema.

Again, problem is that new licensing broke the WHOLE VM idea

- configure what application believe it needs

- use what you have.

While we license physicla servers, phisical memory, and other physical things I am ok with it. When they started to license virtual things it broke the whole VM idea .

PS> Vmware has 2 great advantages over other technologies now:

- vmfs is clusterd fast system without fencing; people underestimate all advangages of this

- they have a great migration and management tools and vmware itself has a small footprint.

But, this is not forever; wrong licensing model can kill it all. And once migrated over, people wil never return back.

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Justin Devereaux wrote:

Just playing with Xenserver at the moment - for a free product it is looking quite good, and even if you pay for all the Enterprise features it is ridiculously cheap compared to rip off VMware. Hell, you even get vMotion for free Smiley Happy


Thanks for the idea; I did not consider it all before new licensing announcement (the seme reason - even if Vmware is little more expensive it is much better) but I don't see how  I can deal with new (absolutely non-scalable) licensing schema and so we will add XEN into our test roadmap. I have a few small sits with essential; I can deal with for example 64 GB per 1 server maximum of phisical memory, but I can't deal with any virtual memory limitations (and changing small sites from essential to enterprise is too expensive) - if for example our developers ask me to assign 256 GB of memory to their 32 development systems, I must be able to do it (they wil not use more then 32 GB of real memory anyway).

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Eric Gray wrote:

One vCenter Server can handle multiple pools, there is no need to set up multiple to accommodate different editions.

Even so.

Today: _ set up small business system, 3 x 2 sockets, 32 GB RAM servers. They together can run about 24 x 8 GB each VM systems, with total vRAM of 192 GB.

I can add + 32 GB of memory into each of 3 servers when I need more memory, and so I can run approximately 380 GB of vRAM without big oversuvbscription.

Tomorrow - essential license has 24 x 6 = 144 GB of maximum vRAM. To run the same smal business system (380 GB of vRAM on 3 small servers), I must upgrade to the enterprise license and still purchase aprpoximately 12 cpu licenses - for the same 3 x 2 cpu x 64 GB servers.

Who said that approximately $16K is cheaper then $500? Are they crazy? New model wil cost 32x more. Guess what wil people do? IT is not 300% increase, it is not 1000% increase, it is almost 2000% increase Smiley Happy.

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aroudnev wrote:


@aroudnev: I couldn't agree more. This whole move from paying by the # of CPUs to overpaying for virtual utilization by vRAM is so insanely frustrating. If just VMware had done the entitlements correct from day1 (double amounts) this wouldn't have been any issue. I could accept to purchase a couple of extra licenses but not 30.

Even though I'm heading XenServer route now (and should be happy about that) I can't let go of complaining about how VMware managed to screw up my plans. They do have a good product but it isn't worth the money they now ask for it.

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two good writeups that cover their licensing from from a business perspective :

Can This Be Fixed?

For VMware the strategically important part of this issue lies with its enterprise accounts the vast majority of whom have Enterprise License Agreements where the customer does not pay what is on the price sheet anyway. The first step that VMware needs to take is to offer an addendum to all of its existing ELA’s that allow customers to continue to roll out vSphere 5 at the same per CPU price (irrespective of vRAM) as they were were paying with vSphere 4. Doing this will allow the largest and most strategic rollouts of virtualization and private clouds to continue uninterrupted. Failing to do this will derail VMware’s progress on its most import initiatives with its most important customers.

VMware could certainly change the pricing scheme to appease grumpy customers, but that's probably not going to happen. The company is more likely to drive a hard sell for the new product based on its technical advances and unmatched feature set. For some, there's simply no substitute for the best of the best, which VMware remains with or without boneheaded pricing plans.

I've previously called out Autodesk (Nasdaq: ADSK ) for a similarly customer-unfriendly pricing policy, only to see the maker of 3-D design tools laugh in my face and accelerate its growth with wider margins. I think VMware has done its homework and is willing to lose a few disgruntled customers in exchange for fatter margins.

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I agree with you all. The new licensing model is worse on the SMB side. Too bad!

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tomaddox wrote:

Please keep us posted on the results of this survey! Admittedly, this is going to be self-selecting based on people who are already cranky about the licensing and reading this thread, but I would very much like to know how things work out.

If you haven't taken the survey, go here:

Here are some preliminary results, based on 139 samples so far. I added KVM as a virtualization platform as well as the Essentials and Essentials Plus after polls opened so results are slightly skewed (perhaps 40 or so were answered without those options).

Which VMware version are you currently running?   

VMware   Infrastructure 3.x (VI3)2.16%
VMware vSphere 4.x97.84%

Under which VMware architecture?   


VMware Edition?   

Essentials Plus2.16%
Enterprise Plus39.57%

Was a VMware virtualization project planned before the new vSphere 5 licensing scheme announcement?   


Did the new license (vRAM entitlement) change your mind on upgrading to vSphere 5?   


Have you already bought new bigger and better hardware for your planned vSphere 5 deployment?   


Do you think that the new license (vRAM entitlement) will affect your current or future VMware plans?   


Has this new licensing scheme changed your mind to consider another virtualization platform?   


Which hypervisor are you considering or are currently evaluating based on this announcement?   

Citrix XenServer40.25%
Linux KVM10.59%
Microsoft Hyper-V41.10%
Oracle VirtualBox2.12%

Do you still have plans to move forward with vSphere 5 or have you put your project on hold? 

Yes (move forward)15.11%
No (on hold)84.89%

Some select comments:

"In Europe, I'm pretty sure we could organise a law case. SnS paying parties are supposed to have upgrade rights, and this is not true anymore for people that have to pay more for an upgrade on their current infrastructure. Furthermore, it is easy to show that vmware past incentives to obtain 3 years of SnS for lower prices, and their marketing push to consolidate as much as possible on fewer host can now be seen as a scam. It still possible for vmware to either stay with the current price model, go for a model based on the cores, adapt the vRam limits (and have a clear plan in the future to raise those limits gradually), or anything more acceptable than their v5 licensing."

"I contract for a branch of the military and we are no longer considering a guaranteed Vsphere 5.x upgrade.  Not that one wouldn't go forward eventually but in my line of work progress is slower than corporate America so we are fine sticking to 4.1 for now and evaluating our options for the next few years.  Before the new licensing model, there was no need for an evaluation."

"I always like to keep upgraded but with the new restrictions on vRAM I plan on holding out on any change while I wait for Hyper-V to get better and them move some, if not all, to Hyper-V.   Hyper-V was always an attracive solitoin for a larger part of servers but I liked using one system for all but with the new hand cuffs VMWare is going to use I will have to move because of the costs."

"we are vmware partners, have just about unlimited licenses that we can use internally, however some of our customers are affected pretty badly by this new licencing scheme. and quite honestly, i cannot/would not recommend vsphere to them any more. and this goes to _all_ our customers. worst thing that could happen to kvm (not rhev) is it's abandoned. worst thing that could happen to vsphere, i (dare to) have no idea. "

"10 Years I have been a VMware Consultant and one of the original VCP's ever certified. 100% of my clients are asking me for alternatives to consider in the next 30 days and at this time all 100% are going to leave their licenses at 4.1 until further change from VMware and their licensing occurs."

The results so far are representative of the mood of this thread. I think we're the early adopters that have grasped the implications of this licensing change, and perhaps not alot in the industry have clued in yet. I'll try to get this survey out a bit more, you guys are more than welcome to do the same and drop the link elsewhere.

Jump to round 2 results here:

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Dear All,

I suggest that this is  a one off PSOD (Purple screen of death) and then you reboot and ALL is back to normal, But people at VMware need to address this issue NOW, even with something like “we are looking into it”, I have not read the whole 50 pages regarding this issue, but it is quite hot and I have read the licensing document, and something is not right, giving 48GB/Processor is a bit greedy when people are talking about Terabytes for a while now. The second thing is that why would you put a licensing system that charges per VM. Because I can understand paying for an operating system per node but not by the number of nodes sharing the same operating system, I am not sure if I am saying this in the correct way. I still believe there is an issues with the previous licensing model because there are just many of them (The express, the kit, ....), why not just Standard/Enterprise. I hate to say that people at VMware became suddenly very very greedy. The licensing document (white paper) in the FAQ section:

“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. vRAM entitlements have been set to provide enough capacity to scale well beyond today’s average consolidation ratios of 5:1. In addition, thanks to pooling, customers will be able to share entitlements among multiple hosts, thereby making more efficient use of available capacity”

This is good but how much???

VMware always delivered the goods right time and with right attitude; do not let greed take it away. Hope this will be fixed soon and give away few licenses for free, just think if every node in the world is virtualized, VMware still make trillions using the old licensing model.

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I think that new model comes from cloud providers. VMware did not realize that there is a HUGE difference between these providers and small/medium businesses:

- providers don't have 4 - 10x memory over-subscription (they can't control VM usage). IN contrast, 10x memory oversubscription is absolutely normal on developers and test environments.

- providers has a high cpu usage (you dpnt want to pay for VM whcih is not used). Enterprises has a very low CPU usage and so they can allocate much more memory per CPU vs providers.

- providers has a huge memory and CPU counts. medium IT can't encourage CFO to pay $20K for VM licenses, so they move in small steps - free ESXi, Essential, Essential+, enterprise. Proposed schema remove Essential from consideration so it kills the only bridge from free VM technologies to the enterprise ones, so cutting out many potential users.

- 24 GB per CPU is funny number even in 2011; ESXi is for next 5 - 6 years, and this number makes every professional to smile. The reasonable vRAM per 1 socket is even now 64 - 128 GB and will became more and more every year. We need aprpxomately 128 GB of RAM to fully utilize CPU on DELL 710R servers (2 CPU sockets) when we run Vmware ESXi on them (else we have CPU underused and CPU overused), and this is just TODAY.

But I can say that I don't see how VMware can keep small/medium business markets with ESX5 licensing model. 5 years ago they did not have a good competitors; today they have many, and have on both _FREE and almost FREE boundary_ and _EXPENSIVE CLOUD BOUNDARY_. When I read all these _XEN vs VMware_ articles, I always laugh because in reality there are a ways top do the same things 2 - 10x cheaper then they calculate and it really helps to bring new customers to the technology (Essential is a very important for VMware not only as a way to attract small businesses but as a way to make a step-by-step cost increase for medium size IT). So, I can't predict what will happens, but I can predict that those who propose this model in VMware will not have a bonuses in 2011 year because they caused a huge harm to the comp[any PR and market position already (no matter what they change next). let's keep tuned to them and see what will happen.

(I was really surprised when saw their new model and made a few calculations and then compared with the real installation - it showed 2x - 20x cost increase in ALL cases).

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You are on the money here mate - so to speak.

Most of the OPs are caught up in a world of bitterness, emotion, betrayal, rejection and disappointment and cannot see the writing on the wall.

Get over it!

Vmware does not care.

I am not sure that they are laughing in our face but certainly will be laughing all the way to the bank!

Why muck around with thousands of customers when you can make more money from just a few?

This is the long running and successful Rolls Royce marketing model.

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