Opinion: What you need to know about vSphere 5's new pricing model

VMware is charging based on a 'pool' of memory in virtualized servers that can be shared as well as on the usual number of CPU cores.

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vSphere 4 vs vSphere 5 licensing

vSphere 5 will now be sold based on a per-CPU-socket price (as vSphere was before) but with each level of vSphere offering a certain amount of vRAM entitlement (see chart). These vRAM entitlements will be automatically pooled by vCenter to license a specific amount of configured vRAM across all similarly licensed servers.

Breaking down the numbers of entitlements

vSphere 5 edition vRAM entitlement per license Average # of VMs entitled Average # of VMs entitled on 2-way server Average # of VMs entitled on 4-way server
Standard 24GB 6 - 12 12 - 24 24 - 48
Enterprise 32GB 8 - 16 16 - 32 32 - 64
Enterprise Plus 48GB 12 - 24 24 - 48 48 - 96
Source: VMware

There are some very important points that I want to stress:

Every vSphere socket license you buy has an entitlement for vRAM, and the amount of that entitlement varies by vSphere edition.

The entitled vRAM from all the licenses you own will be pooled (added up) on the vCenter server. So if you have multiple vCenter servers, you can use linked mode to pool all entitled vRAM across all your sites.

From that shared vRAM pool, every powered-on virtual machine's configured memory will be subtracted. In other words, vRAM pools are not based on active memory but on configured memory of VMs that are powered on.

Other important information:

  • There is a pool for each edition of vSphere 5 that you have licensed. Thus, if you own vSphere Standard and Enterprise Plus, there is a vRAM pool for each, and servers using different licenses can't share the vRAM from a pool that they are not part of.
  • vSphere Standard, Enterprise and Enterprise Plus won't keep you from powering on a virtual machine if you exceed your pool amount, and will just give you a warning. (Your end-user license agreement does, however, specify that you purchase licenses before you exceed your vRAM pool, not after.) vSphere Essentials and Essentials Plus will, however, prevent you from exceeding the pool by not allowing you to power on the virtual machine that would put you over the pool amount.

Once you have upgraded to vSphere 5, at any time, you can report on the utilization of your vRAM pool in the vSphere 5 client by going to the new licensing report tab.

The controversies of pooled pricing

Some customers are complaining that the vRAM entitlements are too low. But VMware responds that the entitlements were calculated based on average customer data. On average, according to VMware, customers have a 5:1 consolidation ratio on their hosts (five virtual machines for every physical CPU socket) and, on average, customers configure 3GB of memory per virtual machine.

VMware also says that for most customers, upgrading to vSphere 5 will have no negative financial impact because customers won't have to increase the number of licenses they already own. According to the VMware white paper, "Although it is impossible to predict the effects of the new model in every type of environment, the licensing model has been designed to minimize the risk of potential impacts in existing environments while also providing room for growth."

However, the reality is that every customer is different. Some customers may have extra vRAM capacity after upgrading, some may break even and some will need additional licenses.

VMware will offer a free tool that can be used to determine if your vSphere 4 infrastructure will be able to upgrade to vSphere 5 without purchasing any additional licenses. The tool will be ready with the general release of vSphere 5, although the vendor won't commit for when vSphere will become widely available. (That's likely to be before the VMworld show in late August.)

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