VMware makes major licensing change that hikes some prices

VMware has made a significant change to its software licences: the virtualisation giant will soon consider CPUs with more than 32 cores as two processors for licensing purposes.

As the company’s announcement explains, “VMware is still using the per-CPU licensing model, but we will require one license for any software offering that we license on a per-CPU basis, for up to 32 physical cores. That is, the license will cover CPUs with up to 32 physical cores. This change is effective starting on April 2, 2020.”

VMware says the reason for the change is “… to align our product offerings to industry standard licensing models and projected changes in the hardware market. We cannot continue pricing on a per-CPU basis, where CPUs could have unlimited core counts.”

The announcement also says other vendors price on a per-core basis, so VMware is falling in line with a de facto standard.

But the company is also making it harder to cash in on many-core CPUs. In August 2019 Lenovo promoted a single-socket server on the basis that it matched the performance of dual-socket servers, but reduced VMware licensing costs.

The Lenovo server in question, model SR655, runs AMD EPYC 7002 CPUs, which come in 48-and-64-core variants. Intel’s Xeon range also includes 48-and-56-core CPUs.

This licensing policy change therefore makes VMware licences more expensive when running on those CPUs.

User reaction hasn’t been positive. The Tweet below is typical of social media reaction found by CRN Australia.

"This new pricing model will give our customers greater choice and allow us to better serve them."

Please, @VMware explain what greater choice this gives your customers...
Just explain you need income to continue innovation. Not marketing BS like this. It's insulting.

— Adrien (@saruspete) February 3, 2020

Microsoft licensing analyst Wes Miller said the change reflects vendors' desire to increase revenue.

“Moving to per core is generally done to drive revenue," he said. "It was for Microsoft too; you can see the switch from Per-Processor to Per-Core reflected in earnings after SQL Server (2012) and Windows Server/System Center (2016) switched.

"Microsoft has stated that this shift was done to align on-premises licensing with Azure, no company makes this shift for procedural reasons. It’s done to monetise the core-dense processors of today.”

The change is not instant and won't hurt current users, for a couple of reasons.

One is that VMware says "the vast majority" of its clients use CPUs with 32 or fewer cores.

The other is that "Any customer who purchases VMware software licenses, for deployment on a physical server with more than 32-cores per CPU, prior to April 30, 2020 will be eligible for additional free per-CPU licenses to cover the CPUs on that server." 

But after April 30, many-core CPUs will lead to higher software costs in VMware's world. 

The change impacts all VMware software sold with per-CPU licences. The company is increasingly offering SaaS products, so not all of its range is affected.