VMware Kills Off vRAM Pricing Policy Hated by Customers

At VMworld 2012, VMware formally abandoned a widely disliked pricing policy called vRAM, where it charged for vSphere licenses based on the amount of random access memory installed in the server.

SAN FRANCISCO - The greatest applause VMware's incoming CEO Pat Gelsinger received during his VMworld 2012 keynote address was when he said the company's controversial "vRAM" pricing policy was no more.

The vRAM pricing policy was introduced at VMworld 2011 with the launch of vSphere 5.0, which is the VMware suite for managing virtual environments. Before version 5.0, users paid for vSphere on a per-central processing unit (CPU) basis. For entry-level versions of vSphere, each CPU could address 256MB of RAM, but for Enterprise Plus versions, there was no RAM limit. But the number of cores per CPU was capped at six for the entry-level version and 12 for the enterprise version.

With vSphere 5.0, the CPU limitations were lifted and replaced with what VMware called the "vRAM entitlement." In order to provision for 256MB of RAM under vRAM entitlement, a user would need six licenses instead of the previous two. In one scenario, the license costs would have jumped from $3,500 to close to $14,000 for one server.

This went over like the introduction of New Coke in 1985, when the soft drink maker changed the formula for its popular brand and faced a huge customer backlash.

VMware users howled and VMware backed down. At VMworld 2012 going on this week here, the company did a major mea culpa.

As for vRAM, Gelsinger said, "Today I am happy to say that today we are striking this word from our vocabulary."

With vSphere 5.1, he said, VMware is going back to its previous practice of charging per CPU and per socket, not per virtual machine.

Rick Jackson, VMware's chief marketing officer, went further during a news conference following the keynotes on Aug. 27. He told reporters the company tried a new pricing approach; customers balked, so VMware backed down. "We tried something new to pioneer it in the industry, to think about a new way of pricing and our customers did not like it. So let's step back and change that decision," Jackson said.

He said that even customers who understood the vRAM entitlement philosophy and could figure it out just didn't want to have to deal with it.

The vRAM debacle aside, VMware is continuing to drive adoption of virtualization throughout the IT industry. When outgoing CEO Paul Maritz hosted his first VMworld in 2008, about 25 percent of server workloads globally were virtualized. Now in 2012 that number is up to 60 percent, and Gelsinger predicted it could rise to 70 percent or 80 percent in a few years.

At VMworld 2012, VMware also introduced vSphere 5.1, an upgraded suite of virtualization management tools. Company executives touted advances in its virtualization platform and its advantages over the rival virtualization offerings from Microsoft, whose Windows Server 2012 operating system, coupled with its Hyper-V hypervisor, is due out this fall.