VMware CEO Maritz: 'Licensing Is Going To Have To Change'

In a press conference Tuesday at VMware Partner Exchange, CEO Paul Maritz said future adjustments to its product licensing terms are coming as VMware moves toward a consumption-based licensing model.

Maritz, who made similar comments last October at VMworld Europe, said VMware will try to keep licensing stable for as long as possible, and will try to minimize the impact of the changes it makes.

"Pricing and packaging is something you have to do very carefully … so you want to try and measure three times and only cut once if you possibly can," Maritz said.

"On the other hand, the world is changing, we're moving towards a world of managed services, and we can't put out our heads in the sand and pretend it’s not happening ," Maritz said. "We're trying to be careful, and thoughtful, as we go forward, and be honest about the fact that over the next years… the licensing is going to have to change."

VMware heard grumbling from customers over its licensing terms for vSphere 4, and louder complaints when it introduced the vRAM model with vSphere 5. With VMware engineers hard at work on the next version of vSphere, slated to arrive next year, Maritz is positioning consumption based licensing as an issue that all technology companies must consider.

"This is not unique to VMware -- it's something the industry faces, so let's try and be collective and thoughtful about this," Maritz said.

VMware is a thought leader and a first mover in virtualization, so it makes sense that it would look to put its stamp on the issue of how costs will be calculated in cloud and virtual environments in the future. However, being the first mover in this discussion is creating some challenges, one longtime VMware partner told CRN.

While customers are maintaining their VMware investments in data center and production environments, some are choosing not to expand into using other VMware products, like vCenter, vCloud Director, and View, said the source, who requested anonymity in order to protect his relationship with the company.

"I am seeing customers going in a different direction, even when it makes more financial sense to go with VMware," the source said. "We recently had two clients that purposely chose another cloud broker instead of vCloud Director, against our recommendation. They are aware that VMware has changed its pricing model in the past, and it's something they're concerned about."

Public cloud providers are selling products in consumption-based models, but it's harder for a software company to pull off this transition, said the source. "We may be heading there as an industry, but when customers feel like they're being told that they’ll have to accept consumption-based pricing, they don't like it," said the source.

As VMware continues to manage the change that consumption-based pricing will bring, some of its partners have already heartily endorsed the model. Jamie Shepard, executive vice president of technology solutions at ICI, a Marlborough, Mass.-based solution provider, believes that customers will embrace consumption-based pricing because of the financial flexibility it brings.

"With VMware, it is a true consumption model where you can plan for the future on a pay-as-you-go basis," said Shepard. "Why pay $4,000 for unlimited electricity use in your home if you can pay as you go and budget month-to-month and project-to-project?"