VMware backpedals as new vRAM pricing change angers customers

After the furor that arose due to the recently announced vRAM pricing for vSphere 5, VMware has decided to modify the pricing in order to appease its customer base. I had discussed this before as many of my clients had negative feelings toward the shift toward vRAM entitlements and/or tiering. Many customers are still unhappy about the change in licensing, but this capitulation by VMware shows that they are willing to work with customers in order to remain relevant in the virtualization space. I'm still not 100% sure how the new vRAM entitlement will affect end customers, but I can promise you that I will cover it here on my blog as my clients begin the shift to vSphere 5 in the next few months.

Here is what VMware has sent channel partners in reference to the new vRAM entitlement pricing versus the previously announced pricing.

We’ve increased vRAM entitlements for all vSphere editions, including the doubling of the entitlements for vSphere Enterprise and Enterprise Plus. This change addresses concerns about future-looking business cases that were based on future hardware capabilities and the previous vSphere licensing model.  Below is a comparison of the previously announced and the new vSphere 5 vRAM entitlements per vSphere edition:

vSphere editionPrevious vRAM entitlementNew vRAM entitlement
vSphere Enterprise+48 GB96 GB
vSphere Enterprise32 GB64 GB
vSphere Standard24 GB32 GB
vSphere Essentials+24 GB32 GB
vSphere Essentials24 GB32 GB

We’ve capped the amount of vRAM we count in any given VM, so that no VM, not even the “monster” 1TB vRAM VM, would cost more than one vSphere Enterprise Plus license. This change also aligns with our goal to make vSphere 5 the best platform for running Tier 1 applications.
We’ve adjusted our model to be much more flexible around transient workloads, and short-term spikes that are typical in test & development environments for example. We will now calculate a 12-month average of consumed vRAM to rather than tracking the high water mark of vRAM.

VMware has gone out of their way to emphasize that they are not wishing to crush customers under licensing pricing, nor are they trying to harm channel partner relationships. Rather, they are a company that is "built on partner and customer goodwill, and [have] taken your feedback in earnest." They have also split off the virtual desktop space with licensing that does not include vRAM entitlements. This was crucial to the future success of the VMware View platform.

VMware is in a tricky situation right now because they have branched out into so many very different areas: Server Virtualization, Desktop Virtualization, Disaster Recovery and even Cloud Computing. What this results in is a very fractured environment upon which to lay pricing across. Unlike the early days where there was just server virtualization, development environment virtualization and a little bit of extra capability added in here and there, now there are very separate and distinct roles carved out within the VMware ecosystem. Naturally, VMware has tried to unify all of these and tie them into a neat little bundle, but that doesn't really work when your product line is this diverse. You need to carefully separate each product line and evaluate how it should be licensed in line with customer usage.

This first salvo between VMware and its customer base illustrates that VMware will need to be mindful of licensing separately and fairly for every product line going forward. They are now experiencing the nightmare that Microsoft has had to endure over the years with licensing various product lines within Server, Desktop and Application spaces. At the end of the day, however, they brought over Paul Maritz for a reason, and no one knows how to work like Microsoft more than he does. In some ways, VMware will have to go down the same roads Microsoft has already treaded, but at the same time, they have the capability to do it in such a way that keeps customers happy and fosters goodwill across the ecosystem. If they fail to do so, they will start to see the decline that Microsoft is well into.

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