VMware vSphere 5 Licensing—it's not all about vRAM

With the announcement of features and new licensing model for VMware vSphere 5 during a live+webcast presentation, much of the ensuing kerfuffle was aimed at the new licensing model, rather than excitement over the new features. I have to admit, I'm one of those folks who aren't happy with the licensing changes; to be fair, I haven't been happy with the licensing moves VMware has been making since the introduction of "Enterprise Plus."

I understand and can accept the rationale from VMware, including the way the vRAM pooling is supposed to work. I'm also the first to admit that I've got a bias in favor of VMware: I am one of the leaders of the Kansas City VMware User Group in addition to being a long-time customer.

No, my concern is the way VMware keeps tying specific "entitlements" (their term) to the various Editions of vSphere. In this case, I'm not just thinking of the vRAM entitlement—the piece that's generating all the outrage—but the features that are available accross editions.

VMware's licensing whitepaper gives a nice overview of the new model, as well as some examples of how the new model could work in practice, paying particular attention to the vRAM portion. My opinion is that VMware pays short shrift to the other, non-vRAM details that distinguish the different Editions of vSphere.
On the vRAM side: If you have a small cluster of 2-socket hosts with modest amounts of physical RAM (e.g., 96GB/host), you will be unimpacted by the new license model if you're already on Enterprise Plus (2 sockets x 48GB vRAM= 96GB); in this scenario—assuming you have current service-and-support contracts—you'll upgrade straight to the vSphere 5 Enterprise Plus licenses and be "off to the races." Your physical RAM won't ever exceed your entitlement, and if you're over-subscribing your guest memory, you're begging more problems than vRAM entitlements, because it also means you've not left yourself any wiggle-room for N+1 availability. In fact, if you're in that situation, you may have over bought from a vRAM perspective: A 5-host cluster with 10 sockets of Enterprise Plus has a pool of 480GB vRAM. If all those hosts have 96GB physical RAM, your N+1 memory allocation shouldn't exceed 384GB, so you wouldn't need a vRAM pool bigger than 384GB. You can't quite achieve that with 10 sockets of Enterprise (which has a 32-GB entitlement), but you can do it with 12 sockets, which is a tiny bit less expensive (list price) than 10 sockets of Enterprise Plus ($34,500 vs $34,950). Of course, that assumes you're pushing the limits of your physical hardware and not obeying the 80% rule. In that case, you could get away with 10 seats of Enterprise and save a pretty big chunk of cash.

My suggestion to VMware: consider two changes to the licensing model with respect to vRAM entitlements. 1) allow vRAM pooling across editions, rather than keeping it edition-specific. 2) create vRAM "adder licenses" so that organizations can add blocks of vRAM to their pools (without paying for all the additional features of a full processor license at any given edition). Doing both eliminates the need for different SKUs for editions as well as vRAM increments.

Back to the 5-host cluster example...

The problem with going the route of choosing Enterprise over Enterprise Plus just to manage the vRAM pool—and I'm certain that VMware has all this in mind—is that you must give up some pretty cool vSphere features (e.g., host profiles, dvSwitch) if you aren't on Enterprise Plus, including some new features in vSphere 5 (e.g., storage DRS). These features of vSphere make a lot of sense for smaller enterprises that have to watch every single dollar spent on IT, especially when shared storage (which, in my opinion, is the one thing that really makes virtualization sing) is probably the single most expensive item in a virtualization project.
In this case, I'd like to see VMware push some of these more interesting new features down the Edition stack. In general, anything that helps the business better utilize their (typically) very expensive storage investment makes sense. If VMware keeps the storage features at the most expensive end of the spectrum, organizations may be more inclined to consider alternatives for their perceived value rather than paying the premium for Enterprise Plus, especially now that there's the added burden of vRAM entitlements to consider.