Virtualisation vendors reconsider per-CPU pricing

VMware and other virtualisation software vendors are considering a move away from per-CPU pricing to a model more profitable for vendors, according to Chris Akerberg, president and chief operating officer of Vizioncore.

However, VMware Australia denied that the vendor was changing its pricing when contacted for comment by CRN.

The change in direction - which will make virtualisation software more expensive for customers - was in response to the increases in power in the latest CPUs, said Akerberg, whose company sells software under a similar model.

Companies were needing far fewer processors because they could fit more virtual machines per core, which meant virtualisation software companies were forced to charge less per virtual machine.

"Density is an issue. VMware is looking at [changing from per-CPU pricing] because Intel is coming out with these huge multi-core CPUs," said Akerberg, who was in Sydney to meet with resellers and customers.

Akerberg gave as an example a financial institution in New York which was trying to finalise an order with Vizioncore last year for 1000 CPU sockets.

The customer delayed the purchase to virtualise its servers and came back with an order for 400 sockets.

"We are leaving a lot of money on the table, quite frankly," said Akerberg.

Akerberg said pricing per virtual machine was "too tedious" and would restrict users from seeing the benefits of virtualisation. He cited one customer who was producing 80 virtual machines a month.

Vizioncore would stick with per-CPU pricing until VMware decided to change its own model, said Akerberg.

"We are just going to have to follow VMware's lead. I know they are trying to come up with something different," said Akerberg.

Virtualisation software vendors were in a better position with licensing than traditional backup and disaster recovery vendors such as Symantec which still charged their software per server, said Akerberg. (Symantec charges per server for it Backup Exec Systems Recovery and Backup Exec products, and per server or per CPU for its Net Backup product.)

Server consolidation through virtualisation could severely undercut their revenue targets, he predicted.

"They're expecting revenue from 50 boxes [from one company], but that could go to two CPUs," said Akerberg.