At VMworld VMware announced the release of the vCloud Suite of products. This new suite of packages, depending on the level purchased, bundles together several individual products into a single purchase point. See the table later for details of which package includes which product.

However, to me the most interesting point was the fact that this suite is purchased per processor, not per VM. This, coupled with VMware’s announcement of the death of vRAM, means that you can in theory now get a lot more bang per buck spent with no artificial limits set on usage.

Let me give an example of a fairly average enterprise environment. (Remember, these prices are VMware’s list prices and as such do not take into account any corporate discount that you as a customer have negotiated.)

20 nodes of vSphere Enterprise Plus coupled with SRM to protect 500 VM guests costs:

Qty Description Unit Cost Qty Cost
1 vSphere Accelaration Kit (6CPU + vCenter)

$42,132

$42,132

12 vSphere Ent+

$6,322

$88,508

1 vCenter

$9,035

$9,035

20 SRM Enterprise (25VM pack)

$19,032

$308,640

$520,315

Now, that is not an insignificant number, so now let’s compare this with the cost for the same environment but priced for vCloud Enterprise Suite, remembering that this package contains not only SRM, but several other useful product and is licensed per CPU rather than in per 25-VM packs:

Qty Description Unit Cost Qty Cost
20 vCloud Suite Enterprise

$13,897

$277,940

2 vCenter

$9,035

$18,070

$296,010

As you can see that is a significant savings in capital expenditure costs for what is not a very large vSphere environment. The CapEx saving is a little under 50%, and this is not taking into account the other bundled software.  I would do a costing for the environment based on all the products, but I really would not want to scare you with the number :)

As already stated, couple to this the fact that the suite comes with a significant amount of other bundled software, again the majority of which bought alone is still priced in per-VM bundles, and you can see there is a serious amount of money to be saved.

The table below shows what is bundled in each suite package:

VMware vCloud Suite Editions
Product Title Included Software
Standard vSphere Enterprise Plus
vCloud Director
vCloud Connector
vCloud Networking and Security* Standard
Advanced All of Standard Plus:
vCloud Networking and Security* Advanced
vCenter Operations Management Suite Advanced
Enterprise All of Advanced plus:
vCenter Operations Management Suite Enterprise
vFabric Application Director
vCenter Site Recovery Manager Enterprise.

* New product name for vShield App and vShield Endpoint.

The opportunity for CapEx saving is significant; however, the real question is why has VMware done this? The purchase of a vCloud bundle will result in severe loss of revenue going forward. One can only posit the following:

  • That the company is not getting the results they expected with vCloud Director
  • That they have realised that the hypervisor is no longer the cash cow it was
  • The company is running scared as the competition is catching up.

I will deal with each bullet individually. It is true that VMware is not getting the traction with vCloud Director that it had hoped for; that said, this is still very much an emerging market and in no way saturated–there is still much opportunity for revenue growth for this product. The hypervisor has been a commodity item for a number of years now. VMware has been very aware of this, as is evidenced by their attempt to move up the stack into management and by other ventures like their Nicira purchase. True, the competition is creeping up; Microsoft has released Windows 2012, which included Hyper-V version 3, a major improvement on the previous offerings.  Other clouds (CloudStack, OpenStack) are gaining more traction in the marketplace. I believe that it is for the third reason that VMware has decided to take a page out of Microsoft’s book and bundle the most useful VMware software with vCloud Director in an attempt to make this the defacto marketstand. This could actually be Maritz’s crowning glory, as with his parting shot he “does a Microsoft” and bundles all the production software into a single suite, thereby doing for the cloud what Microsoft did with the desktop with the Office suite.

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Tom Howarth (65 Posts)

Tom Howarth is an IT Veteran of over 20 years experience and is the owner of PlanetVM.Net Ltd, Tom is a moderator of the VMware Communities forum. He is a contributing author on VMware vSphere(TM) and Virtual Infrastructure Security: Securing ESX and the Virtual Environment, and the forthcoming vSphere a Quick Guide. He regularly does huge virtualization projects for enterprises in the U.K. and elsewhere in EMEA. Tom was Elected vExpert for 2009 and each subsequent year thereafter.

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1 comment for “vCloud Suite: Why is VMware Turning its Back on VM-based Licensing?

  1. Alok Prakash
    October 22, 2012 at 1:58 PM

    Why are there 2 vCenter licenses in per CPU model?

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