Summary Last week we wrote about the new vRAM pricing model for vSphere 5 and the impact it would have on customers from a capacity management standpoint. Now, a week later, there has been some significant analysis by everyone thanks to all the blogging and tweeting about the subject. So what is the good, the bad and the ugly of the announcement with regards to capacity management?

Resources to Help VKernel has the following resources for VMware customers to assist with this transition: This blog :-) Free White Paper – "VM Memory (vRAM) Sizing Considerations" Free VMware Tool – Capacity View – to get a quick glance at the number of VMs with over-committed vRAM in your environment

The Good

Hyper-V Window is Open - Are Tiered Environments Coming?

The many threats you read to switch vendors by end users are hard to access.  There are switching costs to consider. But there was a recurring theme that this licensing move has accelerated Hyper-V consideration in many accounts.A typical posting, this one from LinkedIn, looked like this:

"My Director has caught wind of the changes and I've run through the numbers 3 times. I now have to explain away a $78,000 savings by moving to Hyper-V. That doesn't include additional savings by having unlimited OSE's on Datacenter, nor does it include savings by moving away from SRM for DR to alternate solutions. VMware really missed the mark on this scheme. With our hosts averaging 18:1 consolidation with oversubscribed physical RAM, our licensing costs are going to skyrocket."

So why is this good?

Monopoly power is never good. Competition and heterogeneity benefit everyone.  This move could accelerate adoption of non-VMware hypervisors and will definitely cause people to look at non-VMware hypervisors for different application tiers in their environments. 

Capacity Management takes on more urgency

With a consumption based model, capacity management takes on more urgency.  This is a good concept since it will push everyone to be more efficient. The path to do this is not always clear, however, especially with the challenges currently in vSphere for accurately measuring actual memory consumed.  VMware will need to make progress on instrumenting this so customers can better optimize for memory usage and reduce licensing costs.

Better Now than Later

The general consensus appears that socket based licensing could not last with high density cores coming to market.  VMware was providing significant value per socket, and that value was doubling every 18 months per Moore's law without any additional payment to VMware.

Per-VM pricing used on vCenter Operations is not particularly popular. The shock appears to be that the new scheme immediately penalizes some users with hefty increases that were unexpected in the budgeting cycle. Waiting any longer would have only caused more issues. One could argue that this announcement is a year late. But at least it is done.

The Issue with VDI for Non-VMware Environments is Reduced

There was some initial confusion over a huge impact on VDI licensing costs for non-VMware VIEW environments. This issue has been clarified and a good posting by Simon Bramfitt explains it.VMguru.NL also has an indepth analysis on why vRAM licensing does not change for VDI environments.

The Bad

Mission Critical Applications are Impacted

Bernd Harzog of the Virtualization Practice wrote an interesting blog titled "Could the new vSphere vRAM Pricing Slow Down Virtualizing Business Critical Applications?". In the posting, he writes:

"So VMware comes out with a new version of vSphere that is designed to allow the virtualization of the remaining 60% of the applications that are not virtualized yet. They specifically put features into the platform to allow it to address high memory applications – meaning that someone had to have known that the next set of applications were going to use a lot more memory that the ones that have gotten virtualized to date. And then they turn around and change their pricing to make it extra expensive (essentially a vRAM tax) to virtualize the very high memory (business critical) applications that the future success of VMware is riding upon."

10 - 20% of Customers are Impacted and They Are Mad

SearchCloudComputing.com reported that:

"VMware CTO Steve Herrod told us in an interview last week that VMware knew the changes would be deleterious to some customers but that VMware’s internal accounting showed that it wouldn't be more than 10-20% of customers, and it was worth it to simplify licensing for the other 80%."

...but boy, are those 20% mad.

It is tough to determine how widespread the dissatisfaction is. You must assume that VMware did the math on this. But it is tough to ignore a 50 pages of comments on VMware communities, or the proliferation of the #VTAX Twitter feed. If this is just a vocal minority, they are vocal.It seems as though a vast majority of additional users see the long term impact this will have on them. One user commented that VMware has now hitched their wagon to Moore's law and VMware customers should expect their licensing and maintenance costs to double every 18 months.

Tony Bourke, writing at The Data Center Overlords wrote:

"The biggest issue with vRAM allotments are that they’re too small today, and they’ll definitely be too small tomorrow. RAM is a depreciating asset. RAM price continuously goes down, and servers are getting more and more of it. The issue isn’t if the new licensing model will screw you, it’s when."

The Change Impacts the Bleeding Edge Customers the Most

Those customers who have been pushing consolidation ratios to the maximum appear most impacted by the move.These are most likely the same customers who purchased bleeding edge equipment with maximum cores, maximum memory in an attempt to continually shrink the data center footprint. These early adopters appear most impacted and most upset by the changes.

I was surprised to come across multiple postings on LinkedIn and VMware communities where people are claiming 2x, 3x, and 5x increase in the licensing costs. These are environments with heavy memory/CPU ratios.

The Ugly

Licensing Change Over Shadowing Good Stuff in vSphere 5

The new storage APIs in vSphere will allow vendors like ourselves more access to important information to better perform capacity management.  Much of this good information has been overshadowed by the licensing issue. Exactly the wrong type of messaging you want out in the marketplace.

VMware's Response Was Widely Criticized

The VMware response to questions on licensing was not well received both in the comments following the blog and elsewhere.  SearchCloudComputing commented that

"VMware has posted a fairly silly ‘clarification’ about the new licensing where it attempts to convince the public that users are confused over whether the licensing is about the amount of physical RAM or the amount of vRAM. Nobody is confused about that- that’s why there’s a “v” on there."

Long Term Impact on Scale Up and Scale Out

VMware's vRAM pricing models biggest impact will be on infrastructure build out.  To avoid vRAM costs, organizations may scale out more as opposed to scaling up.  But this may not be optimal as more servers shift costs elsewhere in IT.  What is clear, is that this pricing model makes TCO and capacity decisions significantly more complex and ugly. When deploying VMware, it is not just about the software licenses. The greater impact is the choice of hardware platform and the resulting impact on data center space, power, cooling, and connectivity.

Conclusion

Had this pricing change happened 2 years ago, relatively few customers would have been impacted, and people could have planned for the change. We would be talking about the good stuff in vSphere 5. Instead, there are discussions on the #VTAX.

For VKernel, the vRAM change increases the role capacity management will continue to play in these environments. In addition, as VMware prices at a premium to others in the market, we are expecting to see more heterogeneous and tiered environments which only benefits hypervisor agnostic players like VKernel.

That is the Good, the Bad, and the Ugly of vRAM pricing.

Bryan Semple
CMO
VKernel