VMware CEO Maritz: Get Ready For Consumption-Based Pricing


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Earlier this week at VMworld Europe in Copenhagen, VMware CEO Paul Maritz offered an unvarnished assessment of how he sees the pricing model for virtualization and cloud resources evolving over the next decade.

"We are going to have to move towards more of a consumption-based model. This is where we are going," Maritz said at the event Thursday, as reported by Computerworld UK. "We are trying to keep the licensing stable for as long as we can, but in 10 years from now, things will have changed quite radically."

Maritz isn't known as a spinmeister, but the frankness of his comments caught the attention of several VMware partners. Consumption-based pricing is a percolating issue in the IT industry, and one that will likely fuel future friction between vendors and their customers and partners.

Consensus opinion among the partners CRN spoke with is that the vSphere 5 vRAM controversy has caused Maritz to re-evaluate the way he sets expectations for customers.

"He's never been that forthright and direct about this issue," said Keith Norbie, vice president and CTO at Nexus Information Systems, a Minnetonka, Minn.-based partner. "However, anyone who thinks the industry isn't going to this kind of model is kidding themselves."

Mike Strohl, president of Entisys, a Concord, Calif.-based solution provider and VMware partner, says he's encouraged by the way Maritz is tackling consumption-based pricing because it makes things more clear to customers.

"Everyone wants to know where things are going with pricing. [Consumption based pricing] could be received well, or not, but at least now they're talking about what's real as opposed to what might be real," Strohl said.

vRAM, the new licensing model VMware debuted with the launch of vSphere 5 in July, calculates costs based on the amount of memory that customers allocate to virtual machines on the host. Customers accustomed to the old model of per-CPU licensing based on the number of server cores loudly voiced their displeasure with the higher costs they believed vRAM would bring.

At VMware's vSphere 5 launch event in July, it was Chief Marketing Officer Rick Jackson, not Maritz, who announced the company's decision to shift to the vRAM model. However, Maritz later pointed out that 95 percent of VMware customers wouldn't see any change licensing costs.

VMware eventually decided to increase vRAM allotments and cap the amount of vRAM per virtual machine that counts against a customer's license entitlement.

Maritz may be changing his tone to ensure that customers aren't taken by surprise when consumption-based pricing does come to pass, but Ken Phelan, CTO of Gotham Technology Partners, a solution provider based in Montvale, N.J., says VMware could have a battle on its hands along the road to instituting consumption based pricing.

"I can see why VMware would want this but I'm not sure they'll be able to pull it off," said Phelan. I don't think VMware's control of the market is so severe that they can dictate pricing at whatever point they see fit."

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