Understanding the new VMware pricing model
VMware pricing has become a hot topic in the IT industry, causing concern for businesses relying on virtualisation solutions. The recent VMware pricing increase has led many organisations to reassess their infrastructure strategies. This shift in cost structure has a significant impact on budgets and long-term planning for companies of all sizes.
To address these challenges, this article will explore the new VMware pricing model and its implications. It will guide you through evaluating your current VMware usage and present alternative solutions. We will also cover strategies to manage VMware license cost effectively and maintain operational efficiency. This will give you a clear understanding of navigating these VMware licensing changes and making informed decisions for your IT infrastructure.
Overview of Broadcom’s changes
Broadcom’s acquisition of VMware has significantly changed the company’s pricing and licensing model. The new approach focuses on simplifying product offerings and transitioning to subscription-based licensing. VMware has reduced its product SKUs from nearly 9,000 to two main bundles: VMware vSphere Foundation (VVF) and VMware Cloud Foundation (VCF). This consolidation aims to streamline the purchasing process for customers.
One of the most notable changes is the shift from perpetual licenses to subscription-based models. This transition allows customers to benefit from recurring payments instead of one-time purchases. However, it also means that perpetual licenses are no longer available, which has been a point of contention for many existing customers.
Another significant change is the move from socket-based to core-based licensing. This shift could substantially impact costs, especially for organisations with high-performance computing requirements. The new model requires a minimum purchase of 16 cores across two sockets, effectively mandating a base of 32 cores. This change has the potential to increase costs significantly for some users.
Impact on existing customers on VMware pricing
The new VMware price model has considerably impacted existing VMware customers, with many facing substantial cost increases. Some organisations have reported price hikes ranging from 100% to as high as 800% at renewal. In extreme cases, such as a UK university, support costs surged from £40,000 to £500,000 per year, representing a staggering 1250% increase.
These changes have particularly affected small and medium-sized enterprises (SMEs). The discontinuation of the VMware Essentials Kit, an entry-level product widely used by SMEs, has left smaller businesses with fewer affordable options, compelling many to migrate to more expensive, comprehensive packages.
Educational institutions and other sectors previously classified as eligible for significant discounts now face increased support costs. Broadcom has reclassified certain sectors, such as education, as “strategic customers,” limiting their ability to negotiate lower VMware prices.
Key differences from the previous model
The new VMware licensing model differs from its predecessor in several key aspects:
- Bundled offerings: The new model emphasises bundled solutions like VMware Cloud Foundation and vSphere Foundation. This approach can reduce costs for customers deeply integrated into VMware’s ecosystem but may significantly raise expenses for users who previously purchased single products.
- Subscription tiers: The new subscription model includes pricing tiers with discounts ranging from 8% to 35%, depending on the bundle and subscription term.
- Core-based licensing: The shift from socket-based to core-based licensing has changed how customers charge VMware products.
- Minimum purchase requirements: The new requirement of buying at least 16 cores across a minimum of two sockets has increased the base cost for many users.
- Channel partner restructuring: Broadcom has restructured VMware’s channel sales and resellers, choosing to take larger accounts directly. This change means some customers may no longer have the support of their reseller in ascertaining requirements and facilitating negotiations.
- Longer-term agreements: Broadcom is incentivising longer-term deals, offering the most optimal pricing for customers considering 3-5 year terms. Short-term renewals often come with much higher per-unit pricing, discouraging these options.
These changes have led to widespread concern among VMware customers. A CloudBolt Software report found that 99% of VMware customers expressed concern about the acquisition’s impact on their IT strategy, with 76% being extremely or very concerned. Despite VMware’s efforts to reassure customers, there remains a disconnect between the company’s statements and customer experiences.
As customers grapple with these changes, it’s crucial for them to carefully evaluate their VMware usage, explore alternatives, and consider renegotiating their contracts. Staying informed and agile will be key to forming effective virtualisation product strategies in this new landscape.
Evaluating your current VMware usage
Assessing workload requirements
Organisations must thoroughly assess their workload requirements to evaluate current VMware usage effectively. A workload represents the ongoing effort of an application and the demands placed upon it. This assessment involves understanding the duty cycle, which represents the time interval or cycle of repeatability for data requests and processing.
When assessing workloads, organisations have two primary options:
- Server configuration data/metadata assessment
- Dynamic performance data assessment
The choice between these options depends on the desired level of detail and accuracy. Performance-based assessments use collected dynamic performance data, considering CPU and memory utilisation to recommend appropriate Azure VM sizes.
To conduct a comprehensive assessment, organisations should consider the following factors:
- Performance history duration
- Percentile utilisation
- VM series compatibility
- Comfort factor for future scalability
Identifying essential features
Identifying essential features is crucial for optimising VMware usage and planning for potential migration. VMware vSphere, a key component in many organisations’ infrastructure, uses virtualisation to transform data centres into simplified cloud computing infrastructures.
Key components to consider include:
- VMware ESXi: The hypervisor for creating and running virtual machines
- VMware vCenter Server: A central administrator for connected ESXi hosts
When evaluating current usage, organisations should focus on:
- Resource pooling and management capabilities
- Monitoring and management of physical and virtual infrastructure
It’s also important to consider the working set size, which refers to the amount of data a process or workflow creates or uses in a given period. Understanding this helps in optimising storage systems and caching strategies.
Cost-benefit analysis
Conducting a thorough cost-benefit analysis is essential for making informed decisions about VMware usage and potential alternatives. This analysis should consider both current costs and potential savings from modernisation or migration.
Key factors to consider in the cost-benefit analysis include:
- Infrastructure costs: Evaluate the current expenses of maintaining VMware infrastructure, including server maintenance, administration, and facilities costs.
- Licensing costs: Assess the current VMware licensing model and compare it with potential alternatives, such as container-based solutions.
- Performance improvements: Consider the potential performance gains from modernising applications or migrating to alternative platforms.
- Operational efficiency: Evaluate the impact on operational efficiency, including factors like agility, compliance, and flexibility.
When considering alternatives, it’s worth noting that container-based solutions have shown significant benefits in recent studies. For example, an IBM experiment comparing virtual machines to containers found that:
- Containers enabled greater throughput in the same x86 environment
- Container environments saw a reduction in response time by half due to lower network latency
- Containers demonstrated over 4x more throughput than virtual machines
Financial impact analysis revealed that transaction workloads running on x86 can provide a 75% reduction in annual server maintenance, administration, and facilities costs using a Red Hat OpenShift container environment versus a virtual machine environment.
To facilitate this analysis, organisations can utilise tools that allow for cost, price, and VMware Cloud Bills analysis for custom objects and groups. These tools enable:
- Comparison of cost and price metrics across various custom groups
- Analysis of top and bottom performing objects based on selected metrics
- Comparison of cost, price, and VMware Cloud bills across objects.
By thoroughly evaluating current VMware usage, identifying essential features, and conducting a comprehensive cost-benefit analysis, organisations can make informed decisions about their virtualisation strategy and explore potential alternatives that may offer improved efficiency and cost savings.