VMware CEO alludes to looming virtualization licensing changes

At VMworld Europe, Paul Maritz discusses consumption-based licensing model, bringing up vRAM nightmares

Who says nothing new gets discussed at VMworld Europe that wasn't already said at the U.S. VMworld? That's been a common complaint ever since VMware decided to shorten the six-month separation between the two shows to a mere six weeks.

But this year at VMworld Europe in Copenhagen, there was a new discussion topic that has lately proven to be not so popular within the VMware virtualization community: licensing changes.

[ Also on InfoWorld.com: In an exclusive interview, Paul Maritz outlines VMware's plans for the post-PC era. | Dell outlines a transition to the cloud at Dell World 2011. | Keep up on virtualization by signing up for InfoWorld's Virtualization newsletter. ]

Last week during the event, VMware CEO Paul Maritz offered his own assessment of how he sees the pricing model for virtualization and cloud computing evolving over the next decade.

"We are going to have to move toward more of a consumption-based model. This is where we are going," Maritz said at a Q&A session during VMworld Europe. "We are trying to keep the licensing stable for as long as we can, but in 10 years from now, things will have changed quite radically."

With virtualization host servers getting beefier and beefier, customers are able to put more and more virtual machines on a single server. Today, it isn't uncommon for someone to get a VM to physical server density of 50:1 or even 100:1. Moore's Law is definitely on the customer's side as they are able to continuously increase the population size of VMs per host.

Because of that fact, Maritz believes the entire industry will have to take on the challenge of addressing the licensing of virtual machines with increasingly powerful hardware on the horizon. One way to address it is by moving further away from the more commonly practiced per-CPU-based pricing to a consumption-based model.

If VMware moves to a consumption-based licensing model, rest assured it won't happen overnight. The company has slowly started weaning its consumers away from a strictly CPU-based pricing schema when it launched vSphere 5 back in July. At that time, the company also announced a new licensing program to go along with the new virtualization platform: the vRAM pricing model. With it, VMware introduced a licensing methodology change by calculating costs based on both a CPU count as well as the amount of memory allocated to the virtual machines on the host server.

The initial licensing change announcement didn't go over very well, to put it lightly. Like protesters on Wall Street, customers who'd been accustomed to the per-CPU licensing model and who built their virtual data center plans around it came out of the data center to loudly protest their displeasure with vRAM licensing changes they feared would bring higher costs and shine a negative light on their future data center growth plans.

VMware eventually calmed those fears and quieted the outspoken voices of consumers by increasing the vRAM allotments that counted against a customer's license entitlement.

But maybe the lesson of the vRAM debacle was well learned by VMware executives. Rather than announcing a significant pricing change alongside a new product release -- in essence, ripping off the Band-Aid -- it may make more sense to slowly introduce the idea of moving away from the old per CPU-based pricing to a futuristic consumption-based pricing model. This Q&A announcement at VMworld Europe may be one of the first steps so as not to surprise consumers again with the next licensing change. This may have been VMware's first public attempt at sowing those very seeds.

From a business perspective, the licensing change makes perfect sense to me. This licensing model also seems inevitable -- it's only a question of time.

But when things "radically change" over the next decade, will VMware be able to maintain its monstrous server virtualization market share lead? And if so, will it be able to pull off a consumption-based licensing change without any consumer backlash? If they keep up a slow and steady drumbeat educating consumers, perhaps so. If nothing else, it certainly shouldn't come as a shock or major surprise as it did in July. Consumers still might not like the way it tastes, but that's something altogether different.

This article, "VMware CEO alludes to looming virtualization licensing changes," was originally published at InfoWorld.com. Follow the latest developments in virtualization at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

Copyright © 2011 IDG Communications, Inc.