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VMware recently announced a change to its software licensing model that limits the number of cores supported in a CPU, effective April 2, 2020. Why did VMware do this? What is the actual impact on IT? And what does this mean for the VMware ecosystem and competitive landscape? The next few paragraphs will attempt to answer these questions.
Vmware Licensing Costs
Almost all VMware software is licensed on a “per-CPU” basis (Enterprise PKS and NSX Datacenter are the most important products licensed on a per-core basis). Although the company flirted with the idea of ”spending” licensing a few years ago, market pressure quickly reversed course.
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Fast forward to a market where core-based licensing is normal, if not the norm, and the company will move to a more “hybrid” model. In this new licensing model, VMware will still license per CPU, but the number of cores supported per CPU will be limited to 32. Anything above 32 cores will require a different CPU license. If another CPU is used, a separate CPU license with the same conditions is required (more than 32 cores requires a different license).
The above example from a VMware post shows a simplified licensing scheme. What if the server running VMware software has two 48-core processors? This would still require four CPU licenses as each license is tied to a physical socket.
Frankly, this licensing change will not affect the vast majority of IT organizations today. The average server in a data center has less than 20 cores per CPU. However, as IT organizations look to deploy servers with more densely populated processors, such as AMD’s 2nd generation EPYC processor (which can scale to 64 cores per socket), there is bound to be a re-evaluation.
A suggestion for IT organizations starting to implement EPYC in the data center: Don’t panic and don’t abandon this strategy immediately. Rather, re-examine the reasons why you decided to install these servers in the first place. Does this licensing model make those reasons irrelevant? Is there a deployment model that allows the organization to stay on this strategic path and minimize cost impact? Given the relatively low price of the hardware (compared to the software solution stack), the answer to this last question should be “yes”.
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Another thing to keep in mind is that VMware is giving customers until April 30th to purchase licenses for >32 core processors, which will be old and therefore not subject to the new licensing model.
First and foremost, drop the conspiracy that Intel is somehow behind this VMware decision (the company is about to be affected by this licensing). There is no “deep state” in the tech world trying to stop AMD from succeeding with EPYC. Instead, VMware is responding to what it sees as a potential loss of licensing revenue due to the density of computing platforms.
As mentioned earlier in this article, if kernel-based licensing is not the norm, it certainly is. Both in terms of software licensing, software subscriptions and cloud services. Microsoft moved to kernel-based licensing years ago for Windows Server, SQL Server, and other products. Similarly, database giant Oracle has been kernel-based for many years. Why wouldn’t a company with over 75% virtualization market share adopt this licensing model? In the age of subscription-based software and this “as a service” market, this signals VMware’s move to better compete.
It’s easy to look at AMD’s 64-core EPYC processor and quickly conclude that this licensing shift will have a big impact on AMD as it expands in the data center. However, in reality, the vast majority of EPYC-based servers are sold with far less than 64 cores (or even 48 cores). These extremely high core counts are typically used to support high performance computing workloads and applications with similar performance requirements. As a result, the real-world impact of this change to the licensing model should not significantly impact AMD’s server business.
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Also, the impact on Intel is negligible. Although it is moving to a new generation of CPUs with higher core density, the main virtualization parts will continue to be in the sub-32 core range.
The impact of the “cloud” on IT is significant, making “as a service” the norm in the consumption of hardware, software and solutions. While this licensing shift away from VMware is not as drastic, it certainly allows customers to begin the transition to using its products that more closely resemble these consumption models that are becoming so prevalent in IT.
I suspect that VMware will continue to evolve its licensing model over time to better align with market dynamics and requirements. Ultimately, this will ultimately benefit customers who see as-a-Service as an “easy” button to deliver IT services to their organization.
My company, Moor Insights & Strategy, like all research and analytics companies, provides or has provided research, analysis, consulting and/or consulting to a number of high-tech companies in the industry. I have no ownership positions in any of the companies listed in this column. UPDATED (October 18, 2018): The vCenter Server Features by Licensing table has been updated to reflect that the vCenter Server Migration Tool is included in the ISO and is available for use with all licensed versions of vCenter Server.
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VCenter Server enables virtualization administrators to centrally manage and monitor their vSphere environments. Recently, I have received several questions from customers about the different vCenter Server licensing options and what features are included in them. There are three different categories of vCenter Server licenses; Standard, Foundation and Essentials. vCenter Server licenses for Standard or Foundation are sold separately from vSphere licensing, where vCenter Server Essentials licensing is included in the vSphere Essentials Kit. It is important to understand the differences between the three licensing options for all supported versions of vCenter Server and the one that best suits your environment.
VCenter Server Standard is the version that contains all available features of vCenter Server. vCenter Server Standard first differs from Foundation in that it can manage up to two thousand vSphere ESXi hosts, compared to just four hosts. This version of vCenter Server also brings the ability to leverage vRealize Orchestrator to automate key tasks, enables Enhanced Linked Mode (ELM), vCenter Server High Availability (VCHA), vCenter Server File-Based Backup and Restore, and the vCenter Server Migration Tool ( included in the ISO for all versions of vCenter Server). vCenter Server Standard is best suited for vSphere environments that have many vSphere hosts to manage, or those looking to expand their virtual infrastructure or take full advantage of a rich feature set that simplifies virtual machine control, orchestration, and provisioning. vCenter Server Standard is also sold separately from vSphere licensing.
Next, let’s talk about vCenter Server Foundation. This version of vCenter Server is limited in some features compared to other versions, although it still provides the basic management needed for smaller vSphere environments. It is sold as a separate license and supports self-management of up to four vSphere ESXi hosts. This applies to vSphere starting with vSphere 6.5 Update 1 and later, older versions of vSphere will support up to three hosts. vCenter Server Foundation does not include vRealize Orchestrator, vCenter Server High Availability (VCHA), vCenter Server File-Based Backup and Restore, and does not support Enhanced Linked Mode (ELM). This version of vCenter Server is best suited for environments where no more than four vSphere ESXi hosts will be available to manage and there are no requirements for certain business continuity features.
VSphere Essentials and Essentials Plus are kits designed with the SMB space in mind as they begin virtualization. These kits also include vCenter Server, unlike purchasing vSphere Standard, Enterprise, etc., where the vCenter Server license is purchased separately. The version of vCenter Server included with vSphere Essentials and Essentials Plus is called “vCenter Server for Essentials”. vCenter Server for Essentials is similar to Foundation in terms of feature limitations. Bundled with vSphere Essentials, vCenter Server for Essentials enables the management of up to three vSphere ESXi hosts, with up to two physical processors each. There is no support for vMotion or vSphere High Availability with vSphere Essentials. Creating data centers, clusters, etc. is available, but migrations to other hosts would require a “cold migration” or shutdown of the VM prior to the migration.
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What about vSphere Essentials Plus? With the purchase of vSphere Essentials Plus, vCenter Server for Essentials is also included, which enables business continuity features such as vSphere High Availability (HA) and vMotion. vSphere Essentials Plus also unlocks cross-switch vMotion, vSphere Replication, and optional VSAN access.
The following table is a visual representation of the different vCenter Server licensing options and their available features.
Each version of vCenter Server has a different set of features that may or may not be suitable for every environment. Before purchasing a vCenter Server license, it is important to understand the current requirements of your environment, as well as its potential scope. If a small environment with three or four vSphere ESXi hosts is all you’ll ever manage, then vCenter Server Foundation may be your best bet.
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