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Was it smart for VMware to undo vSphere pricing changes and kill vRAM?

VMware changed vSphere pricing again, but was that the right move? Our Advisory Board dissects the controversial vRAM pricing model.

This time last year, we wondered if IT shops were ready for cloud computing pricing models like VMware's vRAM limits.

As it turns out, many weren’t and they let VMware know by voicing their displeasure in the vSphere pricing model. Fast forward one year -- VMware said it would kill the controversial pricing model, though with one notable exception for participants in the VMware Service Provider Program.

So, what does our Advisory Board think about this? Three members discuss the vRAM limits and share their thoughts on VMware’s vSphere pricing double step.

Maish Saidel-Keesing, NDS Group
There are several angles to look in VMware’s decision. From most customers' perspective, VMware pricing changes are welcome. This was one of the biggest complaints associated with the vSphere 5.0 release; many IT admins did not understand why VMware added vRAM limitations and many customers felt they were being penalized. Once people started to look deeper into the change, and VMware raised entitlement limits, many understood the change wouldn't affect them. However, the perception that imposing vRAM limits was unfair persisted.

From a VMware perspective, getting rid of vRAM licensing was necessary. VMware customers didn't like it, and VMware’s competition was pointing to customer complaints to further criticize the introduction of the so-called "vTax." 

The question of why VMware instituted vRAM limits in the first place still remains. Was it to raise revenue, or was there a valid visionary reason behind the change? This, of course, introduces more questions. If it was a money grab, it didn’t work. VMware likely made financial projections based on the assumption that this would raise revenue. Now, that revenue will have to come from somewhere else. If the reason behind the change was to move toward a vision, then why did this vision change? Was it just because of some angry customers? 

Removing vRAM entitlements from VMware's vCloud Suite, but leaving it in place on vSphere licenses, may have presented a solution that would spur adoption of the company's new product. But then again, this move also could have introduced complexity in other areas.

More on vSphere pricing

VMware vSphere vs. Microsoft Hyper-V: Which is cheaper?

VMware vs. Hyper-V licensing and pricing exposé

VMware pros hail death knell for vRAM

Rob McShinsky, Dartmouth Hitchcock Medical Center
Whether you like Hyper-V or not, it is providing a checks and balance for VMware on features, price and now simplification of licensing. There were still instances where VMware beat or was competitive with Hyper-V on price, but perception of the vRAM tax did not sit well with consumers.

This licensing simplification does not change the pricing comparisons made with other hypervisor vendors, but it takes the complexity and a mental barrier away from the consumer. However, VMware has a real problem. This is the second VRAM licensing change in a little over a year. The first change that relaxed vRAM limits was only after user outrage. Whatever the real reason for the change this time (maybe product adoption was slower than expected), you either have a company feeling the heat of competition or users governing prices. Neither of these positions is good for VMware, since its primary revenue generator is the hypervisor and associated products. Hopefully this is enough of a licensing patch for VMware to spur new adoption and quell irritated users.

Dave Sobel, Level Platforms
I actually think the changes to vRAM licensing are unimportant. Removing vRAM entitlements essentially just removes the need to continually increase them, as the cost of memory always drops. Thus, the amount that would be "normal" will always increase. This is simply a natural progression of the licensing. This simplifies the model, but doesn't revolutionize it. They’re all reasonable changes, but not notable, I'm afraid.

This was first published in September 2012

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