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Why VMware licensing changed in vSphere 5 and what it means for you

VMware licensing had to change eventually. Advancements in technology made the old per-socket model a problem for VMware, which added vRAM limits to the vSphere 5 licensing model.

The controversial new vSphere 5 licensing model, in reality, was probably the fairest model that VMware could have chosen. And with meticulous planning and management, most IT shops can ensure that their VMware licensing costs won’t go up.

With vSphere 5, VMware moved to per-socket licensing with a set amount of virtual RAM (vRAM) tied to each license. The vRAM entitlements are pooled in vCenter Server and distributed among powered-on virtual machines (VMs).

The old VMware licensing model was based strictly on the number of sockets, but advancements in technology necessitated a change, because they were costing the company money.

Why VMware licensing moved to vRAM
The old VMware licensing model was born at a time when servers typically had one or two cores per socket. To VMware’s credit, the company stuck with this model for quite a while, even as the number of cores per socket steadily increased. But now, with cores-per-socket ratios now outrageously high, VMware had to do something. Otherwise, the massive scale-up potential for servers would result in fewer hosts with fewer sockets -- and fewer licensing dollars for VMware.

The release of vSphere 5 presented an opportunity for VMware to finally bring the licensing model in line with current technology advances. I was pretty certain of a licensing change, because VMware refused to talk about any licensing details during the early briefings that it gave to bloggers over the last, few months. (Also, the writing has been on the wall for quite some time; VMware has slowly and quietly introduced per-VM licensing and pricing into most of its management and automation products.)

Before the release, many experts expected per-VM pricing for vSphere 5. But if you think about it, per-VM pricing wouldn’t be fair to vSphere 5 users. A VM with 1 virtual CPU (vCPU) and 1 GB of RAM would cost as much as a VM with 8 vCPUs and  64 GB of RAM. VMware settled on the vRAM model because it accounted for the size of VMs.

How VMware licensing affects users
Customers have had some time to study the changes in VMware’s vSphere pricing document (PDF) and weigh the effects on their infrastructure. For some customers, it won’t change much. But for others, the new VMware licensing will have a huge effect.

The problem arises when scaling up vSphere 5 hosts, which means building bigger servers with more resources. For years, VMware encouraged such use of servers with its high resource limits. The reasoning was that IT shops could put more eggs (VMs) in a single basket (host), cutting down on power, cooling and floor-space costs. With the new VMware licensing, however, users will have to spend a lot of money to support all of the RAM in an infrastructure with such dense hosts.

If you look at a typical two-socket server, for example, it can scale up to 24 CPU cores now. Typically you can get four VMs per CPU core, so that server might support up to 100 VMs. But most VMs are memory hungry, and host memory is generally the resource that’s consumed the fastest.

To support those 100 VMs, you need around 256 GB of RAM. With the old VMware licensing, it wasn’t a problem: You simply bought two Enterprise Plus licenses. Now two vSphere 5 Enterprise Plus licenses allow only 96 GB of vRAM, so you need at least three more Enterprise Plus licenses for the extra 144 GB of vRAM.

As a result of the new VMware licensing, existing customers that have scaled up will pay a big financial penalty if they move to vSphere 5. For many companies, the price is too high. Budgets are set already, and they will stick with vSphere 4.

For smaller infrastructures and VMware shops that have scaled out, the licensing changes will have minimal or no effect. These users may have hosts with lesser amounts of RAM that are under the vRAM entitlements.

If anything, the changes will force customers to right-size VMs by not over-allocating resources. Right-sizing VMs is good practice (it ensures an efficient use of resources), but it also requires tighter virtualization management to stay on top of VMs and their resource needs.

New VMware licensing also forces customers to make architecture changes to adapt to the VMware licensing model. Let me use a naval metaphor to explain: Instead of deploying a few, big battleships (scaling up hosts), you’re encouraged to deploy more destroyers (scaling out hosts). These VMware licensing changes will affect how customers design and deploy hosts in vSphere 5.

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