VMware Users Stay Loyal Despite Price Hike

VMworld attendees don't like the recent vSphere 5 licensing price changes--but they have little appetite for moving elsewhere, either, according to our man-on-the-show-floor conversations.
Some wondered whether VMware might be feeling the heat from more than the desert air as it convened its annual VMworld conference in Las Vegas this week. The company had rolled out a new pricing mechanism for its enterprise vSphere 5 licensing plan in July, and some outspoken customers had objected vigorously.

Three weeks after roll out, VMware modified the pricing mechanism. It had planned to limit its top of the line, Enterprise Plus license holders to 48 GB of virtual memory use per CPU. Instead, it doubled that amount to 96 GB. That appears to have been a well timed move, because several VMworld attendees said a plan that had been cause for concern initially no longer represented a problem to them.

"They were expensive to begin with. They rolled it back when too many customers complained," said a virtualization administrator for a large West Coast software maker, who asked not to be identified because he did not have permission to speak for his company. But in his view, VMware was watching processor cores proliferate in its customer base, as Intel and AMD brought out more powerful CPUs. The value of implementations of its software went up as customers added virtual machines per CPU. Yet VMware was maintaining the same CPU pricing. That meant more cores "were good for VMware's customers, but not for VMware," he said in a VMworld interview Tuesday.

Microsoft, sensing a crack in VMware's virtual armor, sent Edwin Yuen, director of cloud and virtualization strategy, to Las Vegas to hold court on the fringe of the VMworld show floor. Microsoft will maintain CPU pricing for Windows Server 2008 R2 SPI, the version that contains its Hyper-V hypervisor for free. Likewise, the pricing on its management software, Systems Center with Virtual Machine Manager, will remain CPU- based, he said.

"As the size of the virtual machine scales up, that's where cloud computing gives benefit back to the customer. VMware changed the basis for its model. Microsoft did not," he said in an interview.

But Microsoft and other vendors active in the virtualization space were watching the VMware experiment. If more and more of the data center becomes virtualized, it will get harder to associate value with a single physical asset, such as a disk drive, a network switch, or a CPU.

Asked if Microsoft itself would consider pricing by virtual asset in the future, Yuen answered it would stick to CPUs: "Right now, that is the method were using."

Microsoft issued a white paper, Microsoft Private Cloud: A comparative look at Functionality, Benefits and Economics, showing its form of virtualization would cost $4,600 per CPU, including three years of software assurance --- Microsoft's brand of technical support. That's compared to $6,100 per CPU for VMware, plus its pricing on individual VMs, the paper claims. (See's Art Wittmann's take on that Microsoft white paper.)

But despite an acknowledged price differential, there was little talk of bolting to Microsoft by customers on the VMworld show floor.

VMware Customers Staying Course

"We allocate about 28 GB of virtual memory per (virtual) server," said Herman Valter, a quality automation engineer at Skype. Skype maintains an Enterprise Plus license for vSphere. With spikes in usage, a 48 GB limit might have meant a price increase for it to swallow, said Valter. With a 96 GB limit, "that should not be a problem in the foreseeable future," he said.

When asked if a price hike had been imposed, would Skype have looked at a different vendor, Valter's companion, another Skype IT manager, shrugged and said,"Probably not." Both then laughed self-consciously.

"We would look at how much were saving on administration with VMware, how much time we have cut," Valter said. They wouldn't like a price increase, but an in-depth evaluation of current operations would probably keep them from moving away from it, he said.

[See InformationWeek's recent, exclusive research on the VMware pricing change and how it affected customer virtualization plans.]

Another Enterprise Plus user, Ryan Hambacher, network engineer for H&E Equipment in Baton Rouge, La., said his firm is running 24 VMware ESX Server hosts. By the time he zeroed in on the vSphere 5 pricing change, VMware had raised the virtual memory limit to 96 GB. "That leaves plenty of room for us right now," he said.

Asked if his firm had been hit with an increase, would it have shifted to another vendor, he said: "Probably not. We're heavily invested in VMware. We think the quality of the others is not there yet," he said. His associate, Jason Guilbeare, iT operations manager at H&E, nodded his assent.

Just how deeply VMware has its hooks in some of its customers was illustrated by another team, Carl Huber and Nick Williams, network administrators, and Lee Winterschniedt, IT specialist, for the wholesale food distributor, Martin Brothers, in Waterloo, Iowa.

They are users of vSphere 4.6 and plan to stick with it for at least another year, although one of their missions in attending VMworld was to learn more about vSphere 5. They run 43 virtual machines on three ESX Server hosts and think they've virtualized 80% of their operations, located in a new, Tier 1 wholesale data center space leased by Team Data Center about a mile from the firm's warehouse. Martin Brother's disaster recovery systems are essentially its old hardware running identical systems in a computer room in the warehouse, linked by a one Gb fibre line.

Everyone in the firm thought it was a good setup, until a tornado tore through the neighboring town last year. Afterward, "My boss wanted to know all about redundancy and how we would recover our systems," recalled Huber.

The mile distance between its two data centers no longer looked like enough. The company would now like to modernize its approach to disaster recovery, by basing it on virtual machines stored in a more geographically separate, cloud-based data center. With VMware's Site Recovery Manager software, that would become feasible.

"We realized we had never really tested the old DR system," Huber said. "It was a scary thing to flip that switch and see if your production system recovers," added Williams.

By relying on VMware to map out disaster recovery based on virtualization, Martin Brothers will feel better prepared in its next close encounter with a tornado, he said. "The ESX stuff is solid. We rarely have an issue," he added.

It may be that VMworld attracts the firm's most faithful followers, 19,000 of them this year even with a loss of attendance to Hurricane Irene. It may be that everyone was having so much fun being in Las Vegas that they forgot how upset they once felt over VMware's planned, now ameliorated, price increase. But the story was similar among many attendees.

Ryan Reynard, a system administrator for the University of Western Ontario, in London, Ontario, said his boss alerted him to VMware's proposed pricing model change, then with the shift, "the concern went down."

His school has consolidated 250 servers onto 14 ESX Server hosts, although so far the virtual machines represent the smaller, less risky applications. Virtualizing Oracle database servers is still to come, and will require more CPU and memory per host. But that will come as his shop "is definitely moving towards fully virtualized operations."

If the change in the pricing model had stuck and the University's bill had gone up, his boss would not have liked it. But "we probably would have taken the hit," he says. "We've talked to the others (vendors). But we're a small group of technicians, all familiar with VMware. I imagine we would have stuck with it."

Roy Rivas, owner of Ubiquitous Computing in Houston, Texas, had a different perspective. He was new to both virtualization and VMware and he knew nothing about the vSphere 5 brouhaha. But he knew his competition kept showing up on bids with proposals to virtualize servers and walking away with the business. He had come to VMworld to learn more.

"I've launched one free version of ESX Server," he said. Asked why he was grappling with VMware, with its potential pricing structure, when his small firm could gravitate to Microsoft's free version of Hyper-V, or open source Xen and KVM, he said he wasn't interested in those alternatives.

"I just downloaded 53 patches to do a Windows 7 upgrade. I don't trust Microsoft (to do virtualization). VMware just seems so solid," he said.

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