New VMware Licensing – Really? Are they Mental or What?

You may just have noticed a slight pro-Hyper-V bias to this blog   Yeah, I prefer it because I think it does what I need and there is more focus from Microsoft on what the business cares about: business applications.  But from time to time I’ve said that VMware have an excellent server virtualisation product.  Recently I’ve been heard to say that I think VMware got a huge leap on Microsoft by virtually stealing the term Private Cloud in their marketing efforts.  A few of us geeks know what Microsoft are up to.  VMware have been doing huge road shows to reach a much wider audience to say “we are the private, public, and hybrid cloud”.  That might be about to change.

VMware announced their new pricing structure.  It is moving away from a predictable per host model to a model that charges for processors and assigned memory. 

By the way, ESXi 5 (the free one) entitles you to a not-so-massive 8GB of RAM.  An example is a typical DL380 or R710 host with 2 CPUs and 196 GB RAM.  To license it you will need 4 * vSphere 5 Enterprise Plus licenses.  They cost $3,495 retail each.  So virtualisation (only) on that host will cost $13,980

Rather confusingly, cloud deployments have a different licensing model for vCloud Director, etc.  They are sold on a VM-bundle basis.  vCloud Director costs $3,750 for 25 VMs.  Not cheap, not at all!  vOperations is more money and the much ballyhooed SRM is seriously mad money.

VMware customers are expressing their dissatisfaction all over the net.  Many are reporting that this vTax (as Microsoft cleverly calls it) is going to increase their virtualisation costs significantly.  And don’t forget, this gives you your virtualisation licensing and nothing else.

Let’s saunter over to the Microsoft alternative.  If you license your Windows VMs correctly (on any virtualisation platform) then you’re probably licensing per host, using DataCenter edition.  That licenses all the host (if required) and unlimited number of VMs on that host.  The retail (and no one pays retail!) price is $2,999.  That DL380 or R710 will be licensed for unlimited Windows Server VMs for $5,998. 

By the way, you can install that Windows Server Datacenter on the host (you’re entitled to) and enable Hyper-V instead of ESXi.  All of the features of Hyper-V are included at no hidden or extra cost.  Clustering, Live Migration, Dynamic Memory are all there.  Hyper-V Replica is on the way in Windows Server 8 (announced this week at WPC) to replicate VM workloads from host to host, site to site.  No need for VMware.

But aren’t VMware the private cloud?  Bollox!  If you want private cloud then look at the service (the business application) centric System Center Virtual Machine Manager 2012.  You can get that as part of a bundle from Microsoft called the System Center Management Suite.  You can license a 2 CPU host (and all VMs and applications on that host) for all of Microsoft’s systems management products for $5,240 (retail).  That’s private cloud, virtualisation management, enterprise monitoring, service/helpdesk management, backup, configuration management, and runbook automation.  In other words, you can manage the entire service stack – the stuff that the business cares about.

Let’s compare the two vendors on a single 2U server with 2 CPUs and 196 GB RAM (my hardware sweet spot by the way).  We’ll also assume that there are 50 VMs on this host:

What is a private cloud?  It’s a mechanism where end users will freely deploy VMs as and when they need them, with no restrictions placed on them by IT.  We can measure and optionally cross-charge.  But do we really want to get into the whole “we can’t use that much RAM because it’ll add another $4K tax on our virtualisation.  Sorry the business will need to do without!”.  Not good. 

If I’m a customer, I have to seriously revisit the Microsoft option.  It’s 59% cheaper, does way more across the entire application stack, and the focus is on the business application in the private cloud, not on the irrelevant (yeah I said it) hypervisor layer that can probably fit on a tiny disk.  And with all those cash savings, I can refocus my budget on taking advantage of all those management systems.

If’ I’m a consulting company, I look at what I make margin on.  You’re lucky to make 10% margin on software.  Services are where the money really is.  If you’re selling VMware to your customer then you’re getting them to spend 59% more on software that you’ll make 10% margin on.  If you sold the MSFT alternative then you know that customer has 59% extra budget that can be spent on services.  They’ll have all that System Center licensing goodness that you can revisit to deploy and engineer.  That’s 70%+ margin on human effort.  What sounds better and more profitable?  And you know what: more of your competition are taking advantage of this.  Why aren’t you?