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VMware licensing change limits CPUs to 32 cores

VMware moved its per-CPU licensing plan closer to competitors' per-core licensing plans by requiring one license for CPUs with 32 cores.

VMware has changed its licensing model to limit the number of cores per CPU in a move that aligns with the per-core pricing model used by many major software companies, but is expected to increase costs for customers in years to come.

Under the revised VMware licensing model, effective for purchases after April 30, any software licensed on a per-CPU basis requires one license for up to 32 physical cores. For CPUs with more than 32 cores, an additional CPU license must be purchased.

 "The software industry appears to be moving away from CPU/socket-based models and we want to make sure our model is aligned with the value we provide," said Ryan Knauss, vice president of pricing and licensing for VMware.

The pricing change should not affect the majority of VMware's sizeable user base, according to Knauss, because very few users are deploying more than 32 cores per CPU in their shops, with the exception of those users running high performance computing (HPC) applications. The new pricing scheme effects the majority of VMware's core products including vSphere, VSAN and its vRealize suites.

"We have some telemetry data on VMware users deploying our software on servers using more than 32 cores and you can count them on a few hands," Knauss said. "But for those users who have already deployed on CPUs with over 32 cores, we aren't going to ask them to buy another license and will give them one free of charge."

One analyst said the VMware licensing change won't affect many customers now, but it likely will in the future.

If CPUs have a massive number of cores in the future and VMware sticks with a per-CPU license, they will start losing money at that point.
Gary ChenResearch director of software-defined compute, IDC

"If CPUs have a massive number of cores in the future and VMware sticks with a per-CPU license, they will start losing money at that point," said Gary Chen, research director of software-defined compute at IDC. "People will be getting more capacity but VMware won't be getting any revenue for that. They realize this would be a good time to make the change because it won't impact a lot of people immediately and it better sets them up for the future."

VMware said the updated licensing model will make it easier for customers to accurately compare pricing structures among multiple vendors.

"It's not just the metrics but the varying terms and conditions and all the checkboxes users have to consider in all the versions of software across the spectrum," Knauss said. "But this change also sets the stage for us to have a more granular pricing model as we head in the direction of cores."

One analyst argued that the change won't make it any easier for users to compare pricing of various pricing models. In fact, it may make it slightly more complicated.

"I think most people understand either a straight socket-based licensing model or one that is core-based," said Matt Kimball, senior analyst focused on data center issues with Moor Insights and Strategy. "But they are introducing a third kind of licensing model to the equation. It may not be overly difficult to figure out once you do the math, but I don't see where it simplifies pricing in comparing one model vs. another."

VMware's licensing change may be just a first step toward evolving into a full per-core licensing model further down the line. The half step could be related to the company's previous attempt several years ago to switch to a per-core pricing model involving its vRAM offerings. But corporate users screamed so loudly that the switch was going to cost them significantly more money that VMware dropped that pricing model after less than a year.

"VMware was also ahead of the curve back then," Kimball noted. "But the cloud market has matured, and core-based licensing is considered normal now. If I was to be pragmatic in softening up the customer base to accept core-based licensing, this is the approach I would take."

The licensing change may prove to be a bigger issue for chip makers such as AMD as it continues to produce multi-core large scale chips, according to Brian Kirsch, an IT instructional liaison with Milwaukee Area Technical College.

"I think this will become an issue as the CPU count goes up and containers continue to grow," Kirsch said. "For containers as distributed applications, you want more cores and less GHz over the old school monolithic application design which favored higher CPU speeds with less cores. This is VMware being proactive about the future which in the IT world is right around the corner."

Users buying VMware software licenses to be deployed with more than 32 cores per CPU prior to April 30, 2020 are eligible for additional free per-CPU licenses that cover the CPUs on that server. Requests for additional licenses must be submitted before 11:59 pm PST on January 29, 2021, the company said.

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