How Impactful Is VMware’s New Core-Limited Licensing?

This week, VMware announced new licensing restrictions for vSphere, which I wrote about here.  I wanted to get more understanding for how impactful this change would be for existing customers.  On today’s ActualTech Media EcoCast, I asked our audience for two pieces of information.  The first asked viewers if they have any servers with individual processors of more than 32 cores.  The second asked viewers their current standard processor core count.
We had over 100 responses to each question.  Admittedly, this is not necessarily a scientific survey, but does provide general guidance as to potential impact of the licensing change.

Immediate Impact

I consider the immediate impact to be what happens in the near term in terms of licensing and maintenance and support costs.  Under the new licensing rules, VMware is providing customers to acquire sufficient licenses to cover their current environment, but starting April 2, 2020, new licenses will be needed for every 32 cores in a system, potentially doubling the cost of licensing for 64-core systems and costing even more for higher core counts.
In our informal survey, the first question asks how many viewers have any servers in their environment with more than 32 cores.  Of 104 respondents, 20% say that they have at least one server that falls into this mix.  If those systems happen to be vSphere hosts, those respondents will get an increased maintenance bill from VMware to add new “free” licenses to top-up.

Our next question seeks to understand the overall real impact as it stands today. Today, the vast majority of organizations, at least those covered in this small study, won’t feel the pain from the licensing change for routine server purchases.  Just one respondent of 122 (0.82%) indicated that their organization has standardized on servers with individual CPUs with more than 32 cores.

There could be workload impact as well.  For example, it’s not uncommon to see high core count servers used in VDI scenarios.  As it stands today, VMware Horizon licenses include vSphere Desktop via a different licensing mechanism, so I don’t expect that these workloads would be impacted.  However, VMware has not yet returned an answer to my query on this question.  As soon as they do, I’ll update this post with their answer.
For those running other software, such as Citrix, on top of regular vSphere licenses, if there are high core count processors being used, those customers will be paying more over time.

Long-term Impact

Although the short-term impact appears to be somewhat minimal, the licensing change really has a longer-term impact.  As CPU core counts continue to increase, organizations will be forced to rethink the economies of scale that they used to enjoy with vSphere’s unlimited core licensing.  Further, by introducing a surprise financial hit after many budgets have been established for 2020, I expect that there will be a number of 2020 projects impacted, particularly ones that were due to begin after April 2.
I would not be surprised to see this licensing change result in server purchases being accelerated into the first quarter of the year to get ahead of the price increase, at least for those projects that demand high core count servers.
I’m not sure that doubling, tripling, or even quadrupling hypervisor licensing costs (in some cases) for customers was a decision that makes sense for the long-term, particularly given the fact that high core counts are here to stay and there are viable alternatives to vSphere on the market.  It may have made more sense to consider vSphere as the foundational building block that it is and reconsider pricing for other add-on components.  However, we are where we are.  And, as I said in my previous article, I still understand why VMware made this decision, but I do foresee the potential for this decision having negative consequences for both VMware and customers, if not in the near-term, definitely in the longer-term.