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You might be paying too much for Windows Server licensing

If you're still taking a traditional approach to Windows Server licensing in your virtual data center, you're leaving money on the table.

Software licensing is about as avoidable as death and taxes, and not much more enjoyable. Often we purchase new server and desktop licenses as we purchase the new hardware, making licensing management easier. A one-to-one ratio was simple and clean, but virtualization changes all of that.

Now we have multiple guests running on top of a single hardware platform. These changes have created a lot of confusion for the system administrator trying to properly license software in this virtual world. We have to license our hosts to run VMware, and then we have to license the guests that run on top of VMware, and finally we have to license the applications on top of the operating system.

One of the best ways to see the impact of our choices is to work with a simple example of calculating Windows Server licensing. Let's consider 10 ESXi hosts with dual CPU sockets (four physical cores; eight hyper-threaded) running vSphere Enterprise, with each hosting 30 dual vCPU Windows Standard 2012 servers. That gives us 300 VMs on 10 hosts that we need to license.

Let's use the following list prices (not volume agreements) for both VMware ESXi and Microsoft Standard Server 2012 to find the theoretical total licensing cost.

  • VMware vSphere 5.5 Enterprise list cost: $2,875.00 per processor socket
  • Microsoft Windows Server 2012 Standard edition list cost: $882 per processor socket

Total cost under a traditional licensing model:

  • VMware ESXi licensing: $57,500
  • Windows Server 2012 Standard licensing: $529,200
  • Total: $586,700

In a non-virtualized world that would be over half a million dollars. When we add in VMware licensing costs, the total approaches $600,000. Under the traditional licensing method, virtualization doesn't save much money, and that initial cost can cause huge sticker shock for most people. So, let's take a look at a few ways to trim it down. When we create a virtual machine (VM), VMware allows us to select multiple vCPUs or multiple vCores per vCPU. What is the difference? Without getting into extensive technical details, there isn't a big difference when it comes to the operating system, but it can make a world of difference in the Windows Server licensing.

Windows Server licensing under a vCPU/vCore Model:

  • VMware ESXi Licensing: $57,500
  • Windows Server 2012 Standard licensing: $264,600
  • Total: $322,100

So, how did we do that? Instead of selecting two vCPUs per VM, we chose one vCPU with two vCores -- reducing the number of Windows Server 2012 licenses needed from 600 to 300. That is a savings of $264,600 dollars by simply knowing how to configure your VMs with the correct vCPU/vCore combinations to work with the operating system licensing agreements. Now we are starting to see some of the additional cost benefits to a virtual environment besides just the hardware and power savings.

Now, a 45% cost savings is great, but we can do even better. Microsoft has an edition of Windows Server 2012 called Datacenter edition, which allows an unlimited number of VMs per processor socket. There is nothing preventing you from licensing this version for your VMware ESXi hosts. Datacenter edition is expensive, at $6,155 per processer socket (we have two per host), and would have to be licensed at the ESXi host level. Let's run the numbers and see if it would be worth it:

Microsoft Datacenter Licensing:

  • VMware ESXi Licensing: $57,500
  • Windows Server 2012 Datacenter edition licensing: $123,100
  • Total: $180,600

By purchasing 20 processor sockets of Microsoft Datacenter edition, we have reduced our server licensing costs by just over $400,000. So we have gone from over half a million dollars to under $200,000 simply by selecting the proper licensing option. A 70% licensing saving on your server operating systems might be worth a call to your software licensing representative. Microsoft Datacenter edition even allows you to run the Standard version of Server 2012. However it does not allow you to run Windows Desktops -- sorry VDI folks -- and of course you still need to purchase your Client Access Licenses separately.

The Datacenter edition also allows "unlimited virtual instances," so the drudgery of counting Windows Server instances no longer exists. Your Microsoft Server licensing count can now match your VMware ESXi license count. If you have volume licensing or true-up agreements, where you update your license count with Microsoft at the end of the year, the base costs can change but not the licensing models for the different versions. So even if you get Windows Server 2012 below list price, it still may be possible to get it at a much lower cost. Licensing requires attention to detail and maybe even a little insight into how other people are doing it.

There is no guarantee that your environment could see this level of cost savings. Each environment is unique and the Windows Server licensing agreements change with each new release, but it is worth a second look to see how you're doing it today and if you can save money during your next renewal.

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