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AMD: EPYC Is Still The Virtualization King Despite VMware Change

'While the new VMware licensing guidelines change the economics slightly for higher core count processors, AMD remains committed to VMware as a winning virtualization solution for AMD EPYC customers,' the chipmaker says in response to VMware's move to double licensing costs for processors with more than 32 cores.

AMD is downplaying the impact of VMware's move to double licensing costs for processors with more than 32 cores, saying that its processors can still drive major cost savings for virtualization, even if the economics of its higher core count processors have "slightly" changed.

"AMD continues to lead the industry on performance, features and TCO in virtualized environments for both 1 socket and 2 socket systems," the company said in a statement to CRN. "While the new VMware licensing guidelines change the economics slightly for higher core count processors, AMD remains committed to VMware as a winning virtualization solution for AMD EPYC customers."

[Related: Scale Computing CEO Jeff Ready Slams VMware Licensing Increase]

The Santa Clara, Calif.-based company made the comment after VMware announced changes Monday that will require an additional license for all of VMware's software if the CPU exceeds 32 cores. With the change in VMware's per-CPU pricing model set to begin April 2, this will effectively double the licensing costs for CPUs like AMD's 48-core EPYC 7552 and 64-core EPYC 7742.

VMware partners told CRN that VMware's new core limit for software licenses will make processors with more than 32 cores "severely unattractive for any VMware workload." But one VMware partner added that it was only a matter of time until the virtualization giant changed its pricing model in reaction to the increasing amount of cores being put into processors.

"[AMD was] just trying to exploit a loophole in VMware's licensing technique," said Glenn Dekhayser, field chief technology officer at Red8, a Costa Mesa, Calif.-based solution provider, pointing to the major license cost savings AMD has promoted with its latest EPYC processors. "VMware didn't have a reason to close that loophole until AMD exploited it."

In the short term, VMware's licensing changes are set to have a greater impact on AMD than rival Intel because AMD currently has six processors with more than 32 cores while Intel only has two. However, Intel plans to release more processors with higher core counts in the future, including a 56-core Xeon Scalable processor that goes by the code name Cooper Lake.

VMware said the licensing changes will have "no impact on the vast majority" of customers. But a senior director at one VMware partner, who declined to be identified, said the greater impact will likely be felt in a few years when processors with higher core counts become the norm.

"It will be a non-story until people start using more and more of these in their data center," he said, calling the licensing changes an "additional tax" on customers.

When AMD announced the launch of its second-generation EPYC Rome processors last year, the company promised the CPUs would transform the economics of virtualized environments. For one, the company has touted nine world records for cloud and virtualization performance benchmarks that were recorded by Hewlett Packard Enterprise, Dell EMC and Lenovo.

But the chipmaker has also touted other benefits that lower total cost of ownership over servers running Intel Xeon processors. That includes improved power efficiency, higher density, greater capital expenditure savings and lower software licensing costs — the latter of which has now changed for the six 48-core and 64-core processors in AMD's product line of 20 EPYC Rome SKUs.

In one example provided last year, AMD compared 80 dual-socket systems running 16-core Intel Xeon Gold 6242 processors running the same number of virtual machines as 40 single-socket systems running 64-core AMD EPYC 7702P processors. Thanks to their higher core density per socket, the EPYC processors provided roughly 75 percent lower VMware licensing costs then Xeon, according to AMD.

But because 64-core processors will soon cost two VMware licenses instead of one, the cost savings has changed. In a calculation provided by AMD before the VMware licensing change, the chipmaker said VMware vSphere Enterprise Plus licensing costs for the 80 Xeon systems would come out to $577,920 across three years while the three-year cost for 40 EPYC systems would be $144,480. Now with the change to VMware's licensing, the licensing cost for the 40 EPYC systems would come out to $288,960.

That means while VMware's licensing costs have doubled for servers running single-socket, 64-core EPYC processors, AMD can still claim a 50 percent reduction in licensing costs. But the other touted TCO benefits of EPYC processors remain, meaning that the three-year total cost of ownership for AMD's 40 EPYC system example has increased slightly, from $1,590,699 to $1,735,179, reducing the cost savings impact by roughly four percentage points to 49.5 percent over the 80 Intel Xeon systems.

An executive at a top solution provider that partners with AMD said while he agrees the VMware licensing change will discourage customers from using high-core EPYC processors for virtualization workloads, there are cases where single-socket EPYC processors can provide cost-savings benefits, mainly in space and power.

"Any time you go with a single-socket solution there are other cost savings because the reality is one high-wattage CPU is going to lower your power consumption over two high-wattage CPUs," said the executive, who asked to not be identified to speak frankly about the matter. "There's no question you're going to have some other cost savings."

But, the executive added, there will be fewer incentives on the dual-socket side for virtualization.

Dekhayser, the executive at VMware partner Red8, said while he thinks it was time for VMware to make a change, he thinks the company should have gone to a pure per-core licensing model instead of imposing an artificial limit on the number of cores for a per-CPU model.

"If they went to per-core, we could architect in the best way technically instead of deal with arbitrary license limits," he said. "This goes to distort good architecture practices."

Dekhayser said he expects more software companies to follow the per-core licensing model over time, which will ultimately change how IT departments scrutinize the economics of their systems.

"There will be a greater need to track the economics," Dekhayser said. "As companies and enterprises want to start economizing their IT in a cloud way, we're going to look at micro-economizing our IT."

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