VMware Customers Fuming Over vSphere 5 Licensing Changes

VMware customers are venting their spleen over the licensing changes coming in vSphere 5, which in some cases will amount to a significant price hike.

Evidence of customers' frustration can be found on Twitter, where the #Vtax hashtag has sprung up and attracted a steady stream of vitriolic -- and sometimes colorful -- commentary. "Meet us at Boston Harbor -- we are dumping copies of VMware Workstation. Can someone Photoshop [VMware CEO] Paul Maritz's head on King George the III?" tweeted 'rbergin.'

In vSphere 4 and vSphere 4.1, VMware uses a per-CPU licensing model that's based on the number of server cores. But in vSphere 5, VMware is pegging licensing cost to the amount of physical memory that customers allocate to virtual machines on the host. Customers can pool the allotment, called vRAM, across their entire data center, and VMware isn't imposing any size limits on the pooling.

Customers with vSphere 5 Essentials, Essentials Plus and Standard will receive 24 GB of vRAM per CPU license, each of which costs $995, while vSphere 5 Enterprise will receive 32 GB ($2,875 per license) and Enterprise Plus will receive 48 GB ($3,495 per license).

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In vSphere 4.1, a customer that configured all the RAM on a 128-GB, two-socket server only needed two licenses. With vSphere 5, that customer will need three licenses, even if they're only using 96 GB of memory but have allocated the entire 128 GB of memory, according to Jamie Shepard, executive vice president of technology solutions at ICI, a Marlborough, Mass.-based solution provider.

Shepard sees the vSphere 5 licensing terms as VMware's reaction to the industry trend of servers with higher numbers of CPU cores. "I think VMware is seeing their licensing revenue go down because RAM is so affordable and is really the primary driver for consolidation," he said. "The more virtual machines you fit on a server, the fewer CPU licenses you need."

On VMware's community forums, customers that have configured their hosts with large amounts of RAM are voicing their displeasure with the price hikes they're facing in vSphere 5. "We are going to have to pay over $50,000 to maintain the use of the memory in our current hardware with this licensing scheme," forum poster 'allenb1121" wrote Wednesday.

The vSPhere 5 licensing changes also raise the question of how much the performance and scalability improvements in vSphere 5 will actually benefit customers. vSphere 5's virtual machines support up to 32 virtual CPUs, compared to 8 virtual CPUs in vSphere 4. vSphere 5's virtual machines can also hold up to one terabyte of virtual RAM, compared to 256 gigabytes for their predecessor.

Next: Can Customers Afford vSphere 5's High-End Performance?

"Forget the hoopla about a VM with 1 TB of memory. Who in their right mind would deploy that using the new license model? It would take 22 licenses to accommodate! You could go out and buy the physical box for way less than that today, from any hardware vendor," wrote forum poster 'SuperSpike.

In an FAQ, VMware addresses the question of whether the vSphere 5 licensing changes will translate into higher costs for customer by explaining that "the licensing model has been designed to minimize the risk of potential impacts in existing environments while also providing room for growth.

"vRAM entitlements have been set to provide enough capacity to scale well beyond today’s average consolidation ratios of 5:1. In addition, thanks to pooling, customers will be able to share entitlements among multiple hosts, thereby making more efficient use of available capacity," VMware said in the FAQ.

Of course, customers with higher consolidation ratios aren't going to see things the same way. " We've so far managed to justify VMware's expense over the competition due to the higher consolidation ratios we could achieve compared to other products, but unfortunately these changes will make our future using VMware products unlikely," VMware community forum poster 'stevieg' wrote Wednesday.

There's already industry chatter about how VMware's vSphere licensing changes could drive more customers into the waiting arms of Microsoft and Citrix. Whether or not this long-ago forecasted scenario plays out remains to be seen, but it's worth noting that the licensing changes VMware introduced in vSphere 4 generated their fair share of customer teeth-gnashing, as some posters have noted on VMware's community forums.

From a sales perspective, the vSphere 5 licensing changes will likely cause more, smaller, incremental upgrade transactions, Shepard said. "I just hope VMware doesn't price themselves out of the virtualization game, as it's becoming less and less attractive from an ROI perspective for smaller customers."