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VMware tweaks ESX pricing for hosting providers

The new VMware Service Provider Program (VSSP) is the company's first foray away from perpetual licenses for its ESX virtualization software.

VMware Inc. announced a new program for hosting providers today that changes the way the company charges for ESX...

and associated virtualization software. Instead of being granted a perpetual license per dual CPUs, participants in the VMware Service Provider Program (VSSP) can choose to rent ESX per virtual machine (VM) per month.

The service provider business is very competitive, said Bogomil Balkansky, VMware senior director of product marketing. "Being able to control costs is very important to them, and it can be difficult to swallow an upfront perpetual license. By switching from an upfront fixed cost to an ongoing variable cost," this model gives hosting providers the ability "only to pay us if they sign on a customer," he said.

Specifically, the VSSP gives hosting providers the right to license either VMware Infrastructure 3 Starter, which includes ESX but little else, and VMware Infrastructure 3 Enterprise, with the full complement of premium features including VMotion, High Availablity (HA) and Distributed Resource Scheduling (DRS). Hosting providers self-report the number of VMs they used in the month based on data collected by the VirtualCenter management application. Pricing was not disclosed.

VMware is by no means the first software provider to offer its products on a monthly basis. Microsoft, for example, has the Service Provider License Agreement (SPLA), which bears quite a bit of resemblance to the VSSP program, observers said.

More flexible ESX deployments

But VMware's new service provider pricing isn't only about helping them avoid upfront capital costs. Jason Lochhead, principal architect at Data Return, LLC, a hosting provider in Irving, Tex., said the new model "gives us a bit more freedom about how we want to scale our VMware environment." Whereas a perpetual license encourages users to run as many virtual machines per host as possible to amortize the ESX license cost, "now, we could deploy a single VM per box strictly for portability's sake."

Data Return uses VMware ESX as the foundation of its "MHOne" managed hosting offering and recently converted its existing ESX licenses to the per VM, per month model.

Compared with enterprise IT shops, hosting providers value virtualization not so much for its ability to consolidate servers, but for the simplicity with which the provider can deploy a new service, said Nicolas Keller, director of platform products at Rackspace in San Antonio, Tex., another VSSP participant.

"People want to be able to quickly deploy and turn on VMs," Keller said. "If you have to stop and license a new ESX host every time you need to do that, it doesn't make sense."

But is renting VMs by the month cheaper than buying a perpetual license? It probably depends on how far along the virtualization path the hosting provider is, said Blake Ellman, president and co-founder of Net Access Corp. (also known by initials NAC.NET) of Cedar Knolls, NJ, which is in the process of migrating its internal systems in to VMs and exploring virtualization for its customers. "If you have 50 VMs on a server, it probably makes sense to buy the ESX license outright," he said. However, if you're just getting started, or anticipate running your ESX hosts lightly loaded, the monthly VM rental is pretty compelling. "I think it comes down to how you like to spend your money," said Data Return's Lochhead. "There's probably some crossover point where it makes more sense to buy a perpetual license."

Enterprise trickle-down?

For now, the VSSP packaging is available to hosting providers from "Web-hosters all the way up to big time outsourcers like EDS and anyone in between" Balkansky said. However, Balkansky was cagey about whether the company would ever consider extending this model to non-hosting provider customers. "We're constantly looking at pricing models," he said. "At the end of the day, our goal is to make it as easy as possible for our customers to deploy our software," he said.

VMware has dabbled with per-virtual-machine pricing before, but never with by-the-month pricing. For customers considering Virtual Desktop Infrastructure (VDI), Hewlett-Packard, IBM and ClearCube will sell ESX for approximately $200 to $300 per seat.

Network Access' Ellman said it was easy to see how the VSSP model would also appeal to generic enterprise users. "I've talked to large customers with enterprise-wide licenses, and what they say is how nice it is not to have to perform a full consolidation study every time they want to deploy ESX."

Let us know what you think about the story; email: Alex Barrett, News Director.

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