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VMware adopts per-VM licensing, pricing

VMware released vSphere 4.1 today, but that wasn’t the only news out of Palo Alto.

VMware is also introducing a per-VM licensing and pricing model for most of its management portfolio. Customers can now buy licenses for vCenter Capacity IQ, vCenter AppSpeed, vCenter Site Recovery Manager and the Ionix management line on a per-VM basis.

Under the old model, you had to buy these products on a per-processor basis. That’s the way licensing on physical servers has traditionally worked, but it’s not always the best way to do things in the virtual world. (For example, with Microsoft’s per-processor licensing for SQL Server 2008 R2, admins face two undesirable options: dealing with a limit on the number of guests per license, or paying twice as much for unlimited rights.)

This change by VMware recognizes the problems that per-processor licensing can cause for customers. Bogomil Balkansky, vice president of product marketing, said he hopes more vendors will follow suit.

“We have the chance, the opportunity, but also the responsibility to show leadership in how licensing should be done in a cloud world,” he said during a recent interview. “We need to get better alignment between value received and what customers are paying for.”

In theory, per-VM licensing gives customers more flexibility. But in practice, it can be complicated. You know how many processors you have on a system, and that’s a fixed number. But the number of VMs on one host — let alone throughout your entire infrastructure — is regularly in flux. How do you plan your purchasing around that? And how do you make sure you don’t violate your licensing terms?

I asked Balkansky those same questions, and his answer was surprisingly simple. Here’s how he said the procurement process will work:

You estimate your needs for the next year and buy licenses to meet those needs. Over the course of those 12 months, vCenter Server calculates the average number of concurrently powered-on VMs running the software. And if you end up needing more licenses to cover what you used, you just reconcile with VMware at the end of the year. (If you end up needing fewer licenses, VMware won’t reimburse you, but as Balkansky pointed out, there’s really no need to overestimate in the first place.)

It’s important to note that the per-VM pricing and licensing model does not apply to vCenter Server itself. And the Ionix management line, which VMware acquired from EMC in February, is now officially part of the vCenter family. VMware has combined Ionix Application Stack Manager and Ionix Server Configuration Manager into one new product, called vCenter Configuration Manager, and the company has also rebranded Ionix Application Discovery Manager as vCenter Application Discovery Manager.

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A TRAVESTY!!! This is a complete money grab! By licensing per-processor, you can budget annually. When control over how many machines are running is in the hands of technicians, managers lose any real control over how many virtual machines are running, meaning YOU'RE SCREWED! This is a complete bullshit move by VMWare to grab more money. How 'in theory' does it give more flexibility?!?!? In the beginning of the year, you have an idea of how many processors/machines are running VMWare. Licensed by processor, you can run as many or few VMs as you wish/need to on that hardware platform. By VM Machine, the projected budget for next year flexes and shrinks as the number of VMs does. Under an actual business/licensing model that includes annual budgets, this is a HORRENDOUS practice. This makes it easy for IT/Technicians to unintentionally screw those responsible for licensing compliance/budgeting. Good luck in any organization that isn't completely disciplined...
You are off your rocker. I doubt you have ever been a "technician". I am not a Server Administrator either but I have worked side by side in a related capacity for almost 20 years. I have NEVER seen or heard of one trying to "screw" anyone especially by creating excess VMs. They are the ones that get "screwed", as you put it, as a regular part of their every day routine by managers and budgeters trying to reverse engineer the new math they used to create the bogus budget that they passed up the chain. This new licensing practice means that when an email or phone call comes down stating they need two more VMs for the new project you can reply that they need to have 2x$??? budgeted in the project and here is the quote. Straight forward, no hassle, easy to comprehend. VMs have never been free.
As the manager of a VMware environment with a few thousand servers this will definitely increase the priority of re-evaluating hyper-V and Xen to determine their place in our enterprise. It's upsetting in the sense that much of the ROI for investment over the past few years in new hardware and software has been based on increased consolidation and efficiency to provide the most cost effective VMs possible (in large part by maximizing the return on expensive ESX licensing). If VMware moves to per VM pricing that becomes far less important, almost inconsequential in some of our environments. It will even change our standard hardware platform since we've been CPU bound and have always tried to maximize cores/host for co-scheduling and increased ROI. I will say this however, if it comes to pass it would break down the last barrier to virtualizing high IO or CPU applications for us, since the primary reason for not virtualizing them has been the lack of ROI on the hypervisor expense. So VMware could potentially pick up licensing revenue on the last 20% of our operating systems, but more likely will end up loosing revenue when we migrate tier 2 and/or 3 environments to cheaper solutions where we don't need the full feature set VMware provides.
While it is true that most of us struggle with change, I think it is premature to call this a travesty or a money grab. I learned a long time ago not to guess where the future was going. Today we pay X$ per processor we license. We buy the biggest and fastest processors so that we can put Y number of guests on that processor. If we do our own math, we can figure out how much we spend on average per VM. While I do not know the number, I do know that in the environment I work in, the dollar amount is not far off. In some environments we still use bare metal because the price of the hypervisor does not warrant the few number of gusts in that segregated environment. We also have not put some of the advanced management features into play because we only need them for a few guests. This new structure may very well be a cost savings and allow us to justify some of the advanced management features for the environments that could benefit from them. Lets just hope that Virtual Center will have some features to allow us to manage our licenses easily.
Thanks for your comments, everyone. There are good points to be made on both sides of this issue, and as your reactions show, it's a very important topic for virtualization customers. We have a reaction story on what some other users think about the news, which you can check out here: [A href=",289142,sid94_gci1517160,00.html"]VMware users debate per-VM licensing[/A]
I have only starting looking into virtualization but how does the VM size matter or will it be "one price fits all". We have a small VMware server (1 CPU core) for our COBOL compiler environment. How will that pricing be compared to a large application taking up one or more CPUs, multiple cores, tons of RAM and storage, etc. Having lots of small VMs running of a large SMP-type of server would kill the budget. Also, some PaaS development such as rPath utilize JeOS (Just Enough O/S) to package and build a VM application appliance and only include required operating system components to create small and nimble VMs. If per VM licensing is the same across the board then you will see if area die out.