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VMware Cloud on AWS pricing versus on-premises vSphere

It's important to run the numbers before jumping to VMware Cloud on AWS, as on-premises vSphere on similar hardware might be the more cost-effective option.

Now that the VMware Cloud on AWS pricing is available, the next logical step for admins is to do a cost comparison...

with an on-premises vSphere installation on similar hardware to figure out which option is better -- and the answer might surprise you.

VMware Cloud on AWS pricing models

To start, let's look at the base VMware Cloud on AWS pricing. The service includes two models: an on-demand structure and a reserved model with one- or three-year options. Per host, the on-demand cost is $8.37 an hour, while reserved for one year is $51,987 and the three-year option is $109,366 per host.

Before you go into sticker shock, let's break it down. An on-demand price of $8.37 per host seems a lot easier to work with than $51,987. In both cases, each host includes two CPUs for a total of 36 cores -- or 72 logical cores with hyper-threading -- 512 GB of RAM and 10 TB of flash storage. So, for less than $10 an hour, you're getting an impressive set of hardware. However, there are a few additional details to consider. First, the minimum configuration requires four hosts, so that increases the hourly cost from $8.37 to $33.48. Although that still doesn't seem like a lot, remember that it's a per-hour charge.

To expand on that a little, say you need an environment for a day; you're looking at $267.84 for about eight hours. Of course, you need to include the setup and configuration time, but that's still not a bad price for a very powerful environment. If you continue to do the math, maintaining this setup for a 40-hour work week would cost $1,339.20. However, the catch is that you would have to deploy and configure the servers each day, unless you wanted to pay to keep the environment online 24/7, which would cost around $5,624.64 for the week. You can see how quickly you're able to go from a few hundred dollars to a few thousand in a very short time. Remember, these numbers are just the base costs. If we expand on this for a year, that price tag becomes $293,284 for a year of 24/7 on demand; compare that to the reserved cost of $207,948. Now, the initial sticker shock of $51,987 for a reserved host isn't as bad, but is it worth it when compared to on-site offerings?

VMware Cloud on AWS versus on-premises vSpherecost comparison
VMware Cloud on AWS versus on-premises vSphere cost comparison over three years

On-premises vSphere pricing

Using list prices from server manufacturers, such as Dell and Hewlett Packard Enterprise, to compare costs based on hardware specs, I came up with some interesting results. I wasn't able to configure a processor with 36 cores -- I had to settle for 22 cores. And I avoided the top-of-the-line Intel Xeon Platinum chip and instead selected a higher-end but reasonably priced CPU. I was able to come up with similar spec server hardware for about $54,000.

That puts the VMware offering in the ballpark of the base hardware costs for the first year for the reserved host. The challenge is: What happens once you go beyond that first year? If you purchase the hardware, you don't have additional capital costs for the next two or three years. Also, keep in mind that, while the capital costs for the server would normally extend over three years, the lifespan would normally be closer to four years in production with a fifth year in a test/dev role. With VMware Cloud on AWS, however, you would have to renew every year, equaling $155,961 per host -- or $623,844 for a four-host environment -- or go for a three-year plan, which saves you about 33%.

Since you have to license any guest OSes and applications similarly in both environments, the deciding factors come down to the facilities, networking and maintenance costs.

Since you have to license any guest OSes and applications similarly in both environments, the deciding factors come down to the facilities, networking and maintenance costs. These elements are important metrics to estimate your actual total cost of ownership (TCO). According to VMware's site, the TCO for VMware Cloud on AWS is $0.06 to $0.09 cents per VM, per hour on the three-year reserved plan, compared to $0.10 to $0.17 cents for on-premises VMs. The trouble with these numbers is that they depend on very specific circumstances. Your data center needs are unique,  and these figures could reflect something that doesn't apply to your environment.

Your base formula with the best VMware Cloud on AWS pricing is $437,464 over the course of three years, compared to four new hosts at $216,000, plus VMware licensing adding $75,000. As you run the numbers and consider staff time, cooling and power, connectivity and maintenance, if you find those costs equal or exceed about $146,000 over three years, this will help to establish your case for VMware Cloud on AWS. The environmental and networking costs favor an on-premises environment, but everything gets hazy when you factor in labor costs. In the end, is VMware Cloud on AWS pricing a better deal than on premises? It really depends on how you work the numbers. With an equation this complex, it's very easy to swing it one way or another. As VMware and AWS continue to add more services and tiers aimed at the SMB and commercial space, it's likely the cost models will be very similar, and whether it's right for your environment will depend on your unique case.

Next Steps

Learn about pay-as-you-go pricing for your data center

Compare on-premises private cloud to public cloud

Determine whether applications should be on-prem or in the cloud

This was last published in September 2017

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