VMware Doubles Costs in New Pricing Model, Effective this Spring

Updated: Feb 23

Last Friday, VMware unveiled a new approach to its per-CPU pricing. After April 2, 2020, the vendor will require users to have one CPU processor license for servers that use up to 32 physical cores, and an additional processor license if their server has more than 32 cores.

The vendor claims:

  • the change will not impact most current customers because they use Intel and AMD-based servers that are at or below the 32-core threshold, and,

  • the new pricing is in line with industry standards of licensing software based on CPU cores as a primary metric.

However, the change means customers will be forced to pay twice as much for new VMware licenses if they deploy to a server with more than 32 cores.

For currently owned licensing, any purchases prior to April 30th, 2020, that were deployed on servers with more than 32 cores, will be eligible for complimentary processor licenses to maintain compliance. However, it’s not clear if the free licensing offered will be maintained for future renewals. A common tactic for IT suppliers is to offer free/promotional licenses on a “one-time” basis, requiring payment for such licenses at renewal. If the complimentary licenses offered end up holding a cost value in future renewals, this will also cause your support fees to increase.

According to industry reports, reaction to the news has not been positive. Analysts believe the move is intended to drive new revenue from customers with processor-dense CPUs, rather than being a means to “keep pricing simple and relevant to where the hardware market is going,” as quoted in VMware’s press release.

See the tables below as an example of how future purchases and support fees can be affected by VMware’s licensing change:

VMware license cost comparison with old and updated rules

As illustrated in the tables, a purchase of 500 Vsphere Enterprise Plus processors with support, for servers with more than 32-cores, would previously cost you $2.17M at list price. With the new rules that will be in effect starting April 2nd, you will have to buy twice as much licensing for the same product, which doubles your costs to $4.35M.

For further information, please contact your ClearEdge representative.

Meghan Smith is a ClearEdge Senior Analyst who specializes in VMware and virtualization deals.