VMware Shifts Pricing Strategy

During the VMworld 2010 conference this week in San Francisco, virtualization software vendor VMware will implement a new pricing structure for its vCenter Server management suite that will be based on the number of virtual machines running on a virtualized server, not on the number of processors on the server. This shift in pricing policy, taking effect Sept. 1, is intended to better align the price of the software license to the value of virtualization technology to a customer. However, the change may cause disruption for some VMware customers who may have to pay more for VMware than they're used to.

The switch in pricing applies only to VMware vCenter, the company explained in a July 13 news release, which includes eight different management software products: vCenter Application Discovery Manager, AppSpeed,  Lab Manager, Capacity IQ, Configuration Manager, Site Recovery Manager, vCenter Chargeback and Lifecycle Manager.

The change in pricing is needed because, while virtualization has become the answer to "server sprawl" in data centers, the popularity of virtualization has created a totally new problem of "virtual machine sprawl," said David Floyer, chief technology officer and co-founder of Wikibon.org, a Web site where industry analysts, vendors and customers share information about tech industry issues.

"Doesn't the world change quickly?" Floyer observed. "Virtualization is a victim of its own success."

With virtualization software charged per processor, he said, customers started buying servers with the highest-performing processors available and began loading those host machines with as many virtual machines (VMs) as they could. Individual departments within a company could create VMs without having to budget for the cost of new hardware and without receiving a chargeback from their IT department. Without having to justify the expense of a new server instance, VM sprawl resulted.There is a risk to running too many VMs on one physical server, Floyer explains, because if the physical server fails, all of its VMs fail, even though there is technology, such as VMware's vMotion, that moves VMs from one physical server to another while the application is still running. But overloading servers with too many VMs can also tax other parts of the infrastructure such as storage or networking.

By switching to a per VM licensing model, IT can more precisely chargeback for IT services to departments or at least, as Foyer put it, "showback," which is reporting to a department how much IT resources are consumed even if their department isn't directly charged for it.

Although customers may end up paying more under the per VM model than per processor, "I think it's the way to go," said Dave Bartoletti, senior analyst with The Taneja Group, a research firm. "I think that people want to pay value pricing ... and people are increasingly seeing that CPU pricing isn't quite tied to value because everyone gets a different value out of a CPU based on the applications that are running on it."