VMware's new model: Is consumption-based pricing the way of the future?

With a major product announcement last week from VMware, many IT environments are required to fundamentally change their approach to licensing and provisioning. IT pro Rick Vanover shares the details.

Last week was a great week for virtualization products with VMware vSphere 5 being announced. This is clearly a push to cloud-modeled technologies delivered to each and every data center. While there were scores of updates to VMware products along with one new product, all of the news was entirely overshadowed by the new pricing mechanism.

With vSphere 5, VMware has introduced a new pricing model for virtualized servers explained in a new PDF. The new pricing model introduces vRAM. vRAM is a memory allocation that is provided with a socket (processor) license. This is different than the previous exclusive per-socket (CPU) only licensing that exists with VMware vSphere 4.

vRAM is entitled to a pooled environment by combining a number of CPU licenses. Specifically, vSphere is commonly deployed in clusters of many hosts. Those hosts each would be licensed with CPUs that each has a vRAM entitlement that is pooled together for a licensing pool of allocated vRAM. The individual CPU licenses are still purchased, and each CPU adds a vRAM quantity to the pool. The vRAM pool is then consumed from active virtual machines within the environment.

vRAM is provided at either 24, 32 or 48 GB per socket; depending on socket licensing level. So, if 10 sockets are purchased at the Enterprise level, there would be 10 x 32 GB of vRAM made available to the environment; which would permit a total of 320 GB of RAM allocated to active virtual machines. If more vRAM is needed (though it is not enforced within vCenter); additional vRAM allocations can be added by either adding more CPU licenses at the same Enterprise level; or upgrading one or more sockets to Enterprise Plus.

The reactions have been frequent and generally negative. I was expecting per-VM pricing for vSphere with this release; which is what we have seen with other products like VMware’s Site Recovery Manager. Many environments will be okay; meaning their current level of licensing will translate fine to the vRAM allocation. Highly consolidated environments will have to license a single socket at two socket licenses per physical socket to adhere to the vRAM allocation.

In the end, this is a big change. Does consumption-based pricing make sense? Is it inevitable? What do you think of this bold move on pricing? Please share your comments below.