vSphere 5 – Did VMware Misjudge its Licensing Changes?

Here’s a quick challenge, name one vendor that didn’t make a change to product licensing without upsetting someone.

In the desktop virtualization world Citrix incurred the wrath of it’s XenDesktop customers when it introduced named user licensing with the introduction of Xendesktop 4 back in October 2009. Microsoft does it every time it goes near anything to do with desktop virtualization. And yesterday given all the noise in the Twitterverse you could be forgiven for thinking that with the launch of vSphere 5 it was VMware’s turn to drink for the cup of licensing ineptitude.

#VMware vSphere Simplifies IT for Small and Midsized Businesses > As simple as “You can’t afford it any more”

Well, as much fun as it is to express outrage at any vendor with the temerity to change its licensing mechanism, VMware’s new system isn’t as bad as many have made out.  Now that the true impact of changes are beginning to be understood saner heads are starting to prevail. 

Bob Plankers and Carter Shanklin have written excellent posts on  the impact and nature of the licensing changes and Josh Atwell has offered a solid explanation of why the changes were made. I’d urge you to read them all before going any further. Yes it’s going to hurt some customers, but if you are one of those that it does hurt, you don’t HAVE to stick with VMware, although you might still choose to and don’t forget that license costs are negotiable.

vSphere 4-5 LicensingThe “trouble” stems from VMware’s decision to change licensing from a processor-centric to a committed memory-centric (vRAM) model.  VMware really had little choice but to make this change to memory-based licensing.  As virtualization extends across a broader range of processor platforms it would otherwise have become increasingly difficult for VMware to maintain licensing parity between processor architectures, especially when it comes to dealing with emergent enterprise processor architectures such as those coming from ARM Holdings. charging by the core not a viable strategy when the capabilities of each core can very so much, and when the number of processor cores are likely to increase far more rapidly than memory utilization for any given workload.  While this change makes a lot of sense for customers who are ready to fully embrace the idea of treating its virtual infrastructure as a private cloud service, and should be acceptable to the large majority of remaining customers once they have come to terms with the costs and benefits of vSphere 5, some will loose out badly.

The only real flaw in VMware’s licensing strategy is that it lacked the courage to fully embrace a memory centric licensing model.  By imposing limits on both cores and memory it has created problems for itself and its customers: firstly it creates artificial inequalities between its customers, those who fall within the boundaries of the combined processor/memory envelopes for any given addition will be happy, those with workloads that do not fit the model will suffer, and splitting customers into separate camps this way is never a good strategy. Secondly it cannot sustain this model indefinitely, and will once again risk its customers anger as it revisits licensing a year or two from now to complete the transition to an all memory-based licensing model.

VMware knew that it was going to take some heat for the changes. It had briefed analysts as well as some select customers before announcing the changes, but even so it could have done better. Some questions remain unanswered. Small details like how Disaster Recovery environments will be factored into the new licensing rules are not yet clear. Will customers be required to license DR environments separately so that they can be tested, or will VMware allow a grace period of regular testing as well as for any post-disaster recovery period.  VMware has not yet offered a definitive answer to that question, or rather if it has it has not been well communicated yet, and it should be clear to VMware that there is only one really acceptable answer to this uncertainty; it must not charge customers test their DR plans, nor should it attempt to charge them for over-committing on licensing during a post-disaster recovery.

A bigger question mark hanging over vSphere 5’s licensing  policies is seen in VDI environments. A quirk in the way ythat vSphere is licensed for View means that VMware View customers shops are not going to be impacted by the new licensing rules. vSphere 5 will be free of charge for View deployments. However, vSphere shops who have built VDI solutions using Citrix XenDesktop or any other VDI platform are going to have to make some hard choices.  With vSphere’s vRAM-centric licensing model and VDI’s high RAM requirements, the cost implications of running any other VDI platform on top of vSphere will be significant.

Suggestions have been made that VMware offer a VDI only version of vSphere to better support the needs of customers impacted by this change, but there is little real possibility of VMware responding favorably to this call. VMware main gain a few more vSphere licenses by supporting customers this way, but anything that reduces the cost of its competitors VDI solutions would not be viewed favorably within VMware. Leaving customers with the hard choice of either changing platforms (VDI or virtual infrastructure) or facing a significant price hike with the move to vSphere 5.

I’m running a live poll to assess the impact of this change, you can vote or just see the results below. So far the response favors a shift away from vSphere towards XenServer, but I would expect inertia to result in few migrations that the poll’s initial results suggest.

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Simon Bramfitt

Simon Bramfitt

Simon is an independent industry analyst covering enterprise desktop, mobile and application virtualization, delivery and management technologies. He is an experienced solutions architect with unmatched insight into the challenges of designing large (200,000 seat plus) high availability presentation and desktop virtualization systems. Simon was invited to join the Citrix Technology Professionals (CTP) group in May 2010 and joined the Virtualization Practice in September 2010

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  • Simon Bramfitt

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  • Simon Bramfitt


    July 14, 2011 at 1:30 PM

    a lot of the technology created by VMware become meaningless, since they cap at low memory centric for this case especially on VRAM, I really think this is backward mindset to force users to consider their competitor. Imagine just about the memory over-commit, it meant nothing anymore since this changes, as they controlled the VRAM you provision and power on, why do I still want to go for over commit? Typical EMC business method and I do see the same as in VMWare now. I dun mind if they increase the per sockets license by 30 percent and maintain the previous package. The new licensing is really forcing SMB and enterprise to consider of switching.

  • Simon Bramfitt


    July 14, 2011 at 10:22 PM

    Simon, I’m very disappointed with this post and this website for siding with VMware here. It appears you’re giving VMware a cursory handslap. From the amount of VMware advertisiing on this webpage I guess looking for objective journalism is just too much to ask for.

    Perhaps if you read Twitter, VMware’s Community Forums or about a dozen other websites you’d see that you’re just way off base here. Way off. VMware is giving their customers the bird and you’re defending this behavior? No other vendor charges for memory usage. If I’m not mistaken, Xen supports 64/128 GB of memory per VM 512 GB per host and is free while MS Hyper-V Server 2008 R2 is free, supports 64 GB of memory per VM and supports a TB of memory. Even more gallling is to read that VMware announced they “did this for their customers.”

    So now they’re insulting my intelligence too. VMware is a four letter word in my office.

    This is the THIRD RELEASE IN A ROW that VMware has changed the licensing terms. All three have been money grabs for VMware. This is really a disappointing. I expected better from you.

  • Simon Bramfitt


    July 15, 2011 at 10:25 AM

    I am aware of datacenters that will find the new licensing model… less than advantageous. That is as polite as I can manage. Consider for instance the federal government “campus” sites and new “green” datacenters that are beginning to spring up (over the past 5-10 years) in the DC metro area. I believe that in most cases these “campus” sites are an attempt by the government to consolidate the smaller and more numerous satellite offices into more centralized primary sites (don’t get me started with the national threat vulnerability this might pose). I am aware of 5 such customers that share similar statistics: Currently using vSphere 4, currently using XenDesktop or non-VIEW VDI solutions, currently using high memory hosts (256GB, 512GB & 1024GB RAM), have over 5000 user base at the campus with upwards of 25,000 total personnel in the organization. The IT programs have gone “high” rather than “wide” with their designs. They have to support not only a large number of users, but also all applications and system previously spread out through many smaller offices/datacenters. They have “gone green” and attempted to reduce their server footprint by utilizing virtualization, following the trend as it were, to get the most out of each physical server, rack, row, etc.

    I think that I question how (from a cost standpoint) VMware’s new licensing model helps the overall “go green” ideal. Many of the sensible counter-arguments attempting to answer the angry customers regarding this issue include changing a given design model to fit the licensing rather than the customer requirements. I did read some of your recent comments on the VMware community site regarding this issue and how “right sizing” VMs and better practices by the engineers will be called for. I agree, we should be wasteful and there is always room for improvement. But from a cost standpoint, again, it would seem that with this new licensing, design according to the requirements will soon take a backseat to design according to the cost via licensing allowances (i.e. Enterprise plus – 48GB memory 32way vcpu). I am not so naïve as to believe that it is an either/or with cost or requirements, it is both and even more. But cost just jumped up to the top, IMO. Environments like the ones I describe (not uncommon or rare customers in my experience) will have to completely move away from their currently approved design and ideology regarding hosts and assume something more in line with, what I am seeing as, vendor imposed structures. Not hard imposition but rather through cost, it is always up to the customer what budget they are working with. As I am sure you are aware, the FedGovt doesn’t exactly “turn on a dime” or make decisions in anything resembling a timely fashion. It may take customers as described above literally years to adopt the new vSphere solution (if they still chose too) where prior they were some of the best examples to the market of VMware success. Two of these customers were early adopters of vSphere, creating pilots and deploying the solution prior to any other branch in their department of the govt. Quite the feather in the cap for VMware and something to their advantage from a marketing stand point. I am already hearing from decision makers on these projects that this will not be the case with vSphere 5, they will not be early adopters and will ride out the vsphere4 deployments for as many years as they can negotiate. In my opinion, this would be a strategic loss for VMware in many ways: loss of sales, loss of customer confidence, loss of market share (potentially over that multi-year time frame where these customers are not adopting vSphere5, other vendors would develop even better and more mature solutions with which to unseat VMware).This is my first comment on the blogosphere regarding this issue, I am interested to see how things develop. I remain in position to be responsible for my customers and will work hard to give them the best options moving forward.

  • Simon Bramfitt

    rick parker

    July 15, 2011 at 3:55 PM

    I think they did, I am going to evaluate alternatives because of the changes

  • Simon Bramfitt


    July 26, 2011 at 7:46 AM

    Hello Rob,

    This site is not currently sponsored by VMware. This could change of course. We now have 3 different views of licensing up by our analysts. Each analyst is welcome to their own opinion. You are correct no vendor currently charges by memory use, but this could also change depending on whether or not this licensing change is successful. I am sure there are others just waiting to find out. Research continues and expect more details once we have that research. Compare this licensing change to the fees airlines charge which changes quite often as well. One airline implements a new charge and others follow suit. Could this happen in the virtualization/cloud market as well?

    Best regards,
    Edward L. Haletky

  • Simon Bramfitt

    Djamel Karare

    July 27, 2011 at 7:29 PM

    Dear All,

    Sometimes in business admitting the obvious proves a kind of sincerity. VMware like any other company is driven by market shares and the more money they make the more head room. One thing VMware needs to do and everything will be on track, is to increase the amount of RAM/Proc Example: 48G/Proc for Enterprise+ it should be at least 128GB/Proc. At Approx. $5000 per license add the cost of Hardware and …so the cost of 15 virtual machines per processor is not that bad. I believe this is the only issue, also there is nothing for free and I do not expect nothing for free, I am happy to pay for what I use but “reasonable price”, with the new vSphere 5.0 Model I believe it cost about $600 per VM which is quite rich.
    Customers are free to go elsewhere but that decision always bring a bad feelings with it, a lot of work gets done but at the end the performance is the same or lower, my advice to customer do not change vendors based on price, because price is always negotiable. On the other side of the coin VMware Marketing should really know that not all customers will negotiate the price because it is not their culture to do so, and risk losing them to a competitor. VMware has ALWAYS delivered the goods and it TIME and for that “Chapeau”.


  • Simon Bramfitt

    Simon Bramfitt

    July 27, 2011 at 8:08 PM

    I hardly think that suggesting that VMware lacks courage, calling attention to the negative sentiment on Twitter and encouraging customers who are dissatisfied with this new licensing agreement to look elsewhere are really the actions of somebody who is looking to kowtow to VMware.

    I judge all vendors on the merits on their individual actions. I have been critical of VMware in the past, and I have praised it when it has done the right thing. On this occasion, I believe that the transition to a memory-based licensing model is absolutely the right thing for any virtualization vendor to move towards. VMware’s failure was not that it took this path, but that it did not have the courage to migrate to this model in a single step, leaving its customers open to this same pain, and itself to the same criticism in another 18 months or so.

    A memory-based licensing model cannot be faulted, although I certainly understand that the cost per license may cause some dissatisfaction. However, and I said before “license costs are negotiable.”



  • Simon Bramfitt

    […] the July 12 news came a lot of criticism for the plan as summed up by the Virtualization Practice: The “trouble” stems from VMware’s decision to change licensing from a processor-centric to a […]

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