VMware CEO Maritz Tries To Clear Air On vSphere Licensing

In vSphere 5, VMware is moving from a per-CPU licensing model that's based on the number of server cores to a per-CPU model that's based on the amount of vRAM, or memory that customers allocate to virtual machines on the host. Customers can pool VRAM across their entire data center, but the amount of memory that goes into the pool is determined by their licensing level.

In VMware's second quarter earnings call Tuesday, Maritz acknowledged customers' confusion and anger over the vSphere 5 licensing changes but said most customers aren't going to see their licensing costs rise.

"We believe that 95 percent of customers will see no change in their licensing costs. From our calculations, most customers will see no change and won't be required to pay us more money," Maritz said in a Q&A during VMware's Q2 earnings call.

Virtual machines in vSphere 5 support up to 32 virtual CPUs, compared to 8 virtual CPUs in vSphere 4, and they can also hold up to one terabyte of virtual RAM, compared to 256 gigabytes for their predecessor. Customers that take advantage of these expanded capabilities will pay more for vSphere 5, but they'll also be getting more corresponding benefits from their investment, according to Maritz.

"At the higher end of the market, with customers that are squeezing every last drop and getting a high level of utilization out of their infrastructure, that's where [vSphere 5 licensing] will scale up," Maritz said. "That's a fair bargain to make, because that’s when they will start to get the full benefits of the cloud model."

Keith Norbie, vice president of sales at Nexus Information Systems, a Minnetonka, Minn.-based solution provider, has done the math and agrees with Maritz's claim that the changes won't affect most of his customers. However, Norbie believes that VMware's disclosure of the vSphere 5 licensing changes was ill-timed.

"There was so much cool factor around the cloud infrastructure, and the licensing stuff took some of the momentum away and overshadowed the business benefits," Norbie said.

VMware CFO Mark Peek said VMware does 75 percent of its business through partners, which means training the company's partner ecosystem will be a sizable undertaking. "As there has been some debate and discussion about shifting from the per-processor with core limit [model] to virtual memory, we anticipate that it will take us some time to work through that transition," Peek said during the call.

Maritz reminded earnings call attendees that VMware added virtual machine-oriented licensing to its vCenter management products at last year's VMworld, suggesting that it shouldn't come as a huge shock that the company would apply the same model to vSphere itself.

"It’s a metric that reflects the value [customers are] getting out of the software as opposed to the hardware packaged underneath it. That is the whole direction that cloud in general is heading -- pay as you drink, provisioning everything up front," said Maritz. "It's not so much that we're trying to give customers a better or worse deal, we're trying to change the metric we use to measure value."