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VMware makes major licensing changes to vSphere and vSOM

VMware unveiled a licensing cost increase for vSOM Enterprise Plus, leaving midmarket customers in the dust.

With the new financial year just round the corner, many businesses may not have budgeted for the vSphere licensing...

changes announced by VMware in February. In fact, when I mentioned these changes to my customers, 90% were not aware of what was changing.

In February 2016, VMware announced the End of Availability (EoA) of vSphere Enterprise, vSphere with Operations Management (vSOM) Standard and vSOM Enterprise. The effective date of this EoA is June 30, 2016. However, although you will be unable to purchase these licenses after June, it's worth noting that support for these products will continue until March 2020, which is the support end date for vSphere 6.

Additionally, VMware announced price changes, effective April 1, 2016, for vSOM Enterprise Plus from $4,245 per CPU to $4,395 per CPU, and vCenter Server Standard from $4,995 per instance to $5,995 per instance.

What license changes mean for users

VMware has aligned the new pricing and packaging with what it sees as the most common customer use cases:

  • vSphere Standard: Delivers server consolidation and business continuity;
  • vSphere Enterprise Plus: Offers resource management, enhanced application performance and availability; and
  • vSOM Enterprise Plus: Optimizes the data center through intelligent operations, consistent management and automation with predictive analytics.

VMware is justifying the price increase by highlighting the fact that vSOM Enterprise Plus will now include enhancements to Workload Placement, and that vCenter Server Standard will now include 25 Operating System Instance licenses for vRealize Log Insight.

In addition to the vSphere licensing announcements, VMware is running a promotion that allows customers with valid support to upgrade their EoA licenses at a 50% discount off list price.

One of the most obvious changes is that vSphere Standard now comes with vStorage APIs for Array Integration (VAAI) and Multipathing, previously available with Enterprise.

It was my understanding that vSphere Enterprise was quite a popular edition for midmarket customers. These customers bought vSphere Enterprise licenses mainly for the Distributed Resource Scheduler (DRS) and VAAI features because they deemed Enterprise Plus too expensive for them, plus they would never use all the advanced features like Distributed vSwitch or Auto Deploy.

So it comes as a surprise that VMware is dropping the Enterprise edition and forcing customers to either stick with Standard edition -- with the lack of DRS -- or purchase the more expensive Enterprise Plus edition. Customers are a bit irate at being forced to pay for the hugely expensive Enterprise Plus licenses just to get DRS.

VMware's decision to drop vSOM Standard and Enterprise also seems strange, as it indicates the company considers Operations Management an "Enterprise Play" and only for customers looking at vSphere Enterprise Plus licenses when, in fact, the price increase will restrict customers purchasing the product. In my opinion, it sends out the wrong message, suggesting customers with small environments shouldn't care about proactive monitoring and management.

VMware drives up costs

VMware has mentioned that customers can still purchase vRealize Operations Standard as a standalone product with vSphere Standard, however, the economies of scale with being able to package it into a per CPU license is no longer applicable. At face value, it appears to be more expensive to license for vSphere and vRealize Operations than to use the old vSOM licenses. For example, looking at the price list released this month, the cost of one host -- two CPUs -- and 25 VMs with one year production support will now cost 40% more to license separately compared to purchasing it as a vSOM license. It's even more expensive if you have between 25 and 50 VMs on a single host, as you would then have to purchase two packs of 25 VM licenses -- the uplift works out to be over 200% more expensive.

In my opinion, VMware has made a huge mistake by depriving customers with entry level vSphere of a dedicated monitoring system and forcing them to fork over money for a separate vRealize Operations license, or a separate product altogether. What VMware should do is bring back the foundation license it introduced with vCenter Operation Manager 5.6, but removed in vRealize Ops 6.0. This free license of Operations Manager provided basic insights and visibility into performance and health of the vSphere infrastructure.

Customers with SKUs that have reached end of life are already complaining. Due to the cost, they don't want to upgrade, but come July, they'll need to purchase different licenses for their new ESXi hosts if they wish to expand their existing VMware environment. Although you can run a mixed edition environment, it wreaks havoc when enabling features such as DRS in the cluster. In fact, these features might not even be available due to mismatched licenses.

VMware's renewed focus

While I can understand why VMware dropped the Enterprise edition, it doesn't help that the company is now forcing customers to choose between a basic and full feature set. Enterprise was a good compromise for customers who wished to have DRS, but not the distributed vSwitch or other advanced services.

VMware seems to be moving its focus away from vSphere, which has perhaps led to the simplification of SKUs; this could be because VMware sees that vSphere revenue streams are on the decline.

There is a lot more focus on complimentary products, with VMware's priorities shifting to taking customers on the journey to the software-defined data center and cloud. As hardware becomes less and less important due to the switch to a software control layer, hypervisors are increasingly becoming a commodity. Hyper-converged software, network virtualization and cloud management platforms are the future, and VMware is trying to set itself apart from its competitors. However, I can't help but suspect that the company is neglecting its small and medium-sized businesses and midmarket customers in the process, opting in favor of enterprises that can afford to purchase top license editions.

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This was last published in April 2016

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How will EoA announcements and licensing changes to vSOM and vSphere affect your data center?
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For small and medium businesses who would like to focus on  VMware/vSphere  instead of Microsoft System Center/Hyper-V, this  increase in cost and paring down on "bundled features" licenses is the worst decision VMware could make! Their rationale apparently is to limit their client base to large enterprises. Very depressing...Also, to "assume" that hosts only have 2 CPUs, so the sample prices are only multiplied by 2, does not include the HPE hosts which generally include 4 CPUs. Multiplying VMware license  prices by 4 CPUs and then by the number of hosts eliminates all of our small businesses who are looking for a powerful SDDC! What are VMware leaders thinking!?
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More changes primarily driven to increase VMware revenue. I'm sure Dell had a say in this as well - they need to claw back some of their investment in EMC.

This will primarily force SMB's who might have gone with Enterprise to now shell out for Enterprise Plus. VMware should have included HA/DRS in Standard, and left all the extra features in Plus that the big corporations buy as default.
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