Why VMware or Why Not after Broadcom?
The Truth
Yes, the news of VMware acquired by Broadcom has come to a realization. We cannot denied the truth since 22nd Nov 2023.
Prior the acquisition, if you have made a multi-year purchase before that, you will have whatever you can consume after the acquisition. VMware after the acquisition has release new bundle of all their offerings and end the perpetual licensing offer to the market.
The individual products are not make available and cannot be purchase as a standalone. But are offered via two bundle namely; VMware vSphere Foundation (VVF), VMware Cloud Foundation (VCF).
Both of which are all subscription licenses. It also ends all sales and renewal of any perpetual licenses.
Honestly, VMware has been trying to end its perpetual license and into subscription for the longest time. With the Broadcom acquisition, VMware has been one of the last major player that has moved to subscription license.
Customer who are on VMware, has been enjoying the great pricing with no limit of cores (limit per CPU of 32 cores only came in the last couple of years) and extension of maintenance (subscription and support) whenever a renewal has expired.
So what really has changed? We have to face the fact that a company cannot go into bottom line forever else it will be unable to fund for innovation and improvement. Just like what the other companies such as Microsoft, etc. has done, the new subscription licensing is now benchmark by fair market value (FMV) of a core pricing. But before you get all over it, let's do a simulated illustration why it is not as what it seems from many "news" from media portraying it as more expensive or irrelevant. Also, FMV does not means increasing a price by multiple times.
Rationalize
First we need to understand the key reason in the first place VMware technology was adopted in your environment instead of other offerings in the market. Due diligent was made to do assessment over all the hypervisors such as Microsoft, Citrix, Redhat, Nutanix, etc. to finalize that VMware vSphere was the right platform and all it's other coupled solutions such as NSX, vSAN, etc. VMware definitely is not the cheapest on the market, but it was chosen over others for many good definite reasons.
Why VMware? One of the major reason is it's ecosystem. It has one of the largest if not largest ecosystem to support almost all hardware and software that any organization would have used. It also has great integration out of the box within VMware stack of solutions this save lots of services requirement to make things work and also makes life of the VM admins more efficient. In terms of security, it has never compromise on it. It has its FIPS, Common Criteria, STIG, etc. certified which many talk about it but not achieving it. Just to list a few good reasons.
As a techie, picking up VMware was easy than many and that integration whether with its own stack of solutions or third parties, has always been there. There is no lack of choices. With it's API framework to get backup, storage, etc. to work just make it the right choice.
Before you start making the hash and rush decision and end up taking two steps back because of some "news" and not rationalizing the work you have done in the past, assess your situation again.
Remember you have the time. Even if you renew with VMware just for 1 year to assess whether to migrate off the platform, that is if you decided to after your assessment. There are plenty of tools today, to migrate off VMware, but think again, are there as many tools to migrate off any other platforms? So think it through, are you rushing to migrate yourself to a more restricted platform or are you making the smart decision to planned what's your next move?
Next ask yourself, is VMware a restricted platform? If VMware wanted to, they would have locked up its platform years ago. Look around, there are still tons of tools to migrate off VMware. But are there the same for others.
Price History
In the past, customers would have make purchase of perpetual license such as a 3 years contract which include license + support and subscription (S&S) for the first year and subsequent year just S&S for the rest of the 2 years. S&S are generally marked at 20% of the license cost for ease of calculation.
Here I am going to use an illustration. A customer using vSphere Enterprise Plus buying a production support could have spend $12M on the first year ($10M + $2M) and $2M on the subsequent year. That would be a total of $16M spent over 3 years for vSphere Enterprise Plus with production support.
vSphere Enterprise 3 years contract | |||
First Year Licensing + SnS | 2nd Year Renewal | 3rd Year Renewal | Total Contract (TCV) |
$10M+2M = $12M | $2M | $2M | $16M |
Assuming from reference for vSphere Enterprise, using $3,595 for each CPU with 16 cores. Based on $3,595 per CPU over $10M of license that will work out ~2,780 CPUs.
vSphere Enterprise Per CPU@16C | ||||
Total cost of license | Price Per CPU | Total CPU based from license cost | Total Contract Value (TCV) | Price Per Core per year (TCV/ 2,780 CPU / 16 cores / 3 years) |
$10M | $3,595 | ~2,780 | $16M | ~$120 |
The Total Contract Value (TCV) over 3 years will be $16M.
With amortization, taking each CPU contains 16 cores, price per core will be ~$120/year.
Most will assume to use $2M renewal as actual price which end up as ~$45 per core year. This will be inaccurate. Moreover, for perpetual license renewal has end of availability together with purchase of perpetual license.
Note: We have to take the total contract value and not just the renewal value which most users are benchmarking on. Also Tanzu Kubernetes Grid and vCenter Server price is not included. No discount are applied and all illustration are based on list price.
What if we reference VVF using old perpetual license pricing:
VVF is the same as vCloud Suite Standard. However, do note that the cost of the management packs (Aria Operations for Integrations), Tanzu Kubernetes Grid and vCenter Server are not included in this calculation for perpetual above but are included free as part of VVF.
Price reference
vCloud Suite Standard Per CPU@16C | ||||
Total cost of license | Price Per CPU | Total CPU based from license cost | Total Contract Value (TCV) | Price Per Core per year (TCV/ 2,780 CPU / 16 cores / 3 years) |
$16.8051M | $6,045 | ~2,780 | $26.888160M | ~$201.50 |
New Pricing
You might have come across article such as this on the new pricing based on 3 years ACV. From the article for 3 years ACV:
- VMware vSphere Foundation (VVF) = $130/core/year
- VMware Cloud Foundation (VCF) = $350/core/year.
The software components for the two:
VVF | VCF |
•vSphere Enterprise Plus •Tanzu Kubernetes Grid (TKG) •ESXi •vCenter Server standard •Aria Suite Advanced •Aria Operations Advanced •Aria Operations Integrations (exclude App & DB) •Aria Operations for Logs | •vSphere Enterprise Plus •Tanzu Kubernetes Grid •ESXi •vCenter Server Standard •Aria Suite Enterprise •Aria Operations Enterprise •Aria Operations Integrations (include App & DB) •Aria Operations for Logs •Aria Automation •NSX Enterprise Plus (Network & Routing) •HCX Enterprise •Aria Operations for Networks •vSAN Enterprise •VMware Data Service Manager •SDDC Manager |
The features comparison and entitlement between the two can be found here.
Check out here for all the offering from VMware by Broadcom.
Note: vCenter Server, TKG and Aria Operations for Integrations are included free as part of the new licensing.
Comparison
Let's use VVF for discussion. VVF comes with vSphere Enterprise Plus and Aria Operations and Aria Operations for Logs. Together you will also be able to utilize Aria Operations for monitoring using all its management packs unlimited without additional charges excluding Application & DB which only applies in VCF. That is an extensive amount of integrations we are talking about. Am certain there is no other that has the huge integration out of the box supported. Not to mention, vCenter Server is part of the licensing and on top of others such as TKG.
Next Aria Operations for Logs. This also comes with lots of Content Packs that support lots of devices and applications. You don't even need to spend time figuring out your unstructured data from log servers ever again. That is going to save you lots of time. Think about you able to now monitor and log your environment that are not currently managed due to e.g. cost, supportability, etc can now all be managed with Aria Ops and Log. Not to mention you can also integrate most monitoring applications to Aria Ops so you can have a holistic view from one source.
A bit of context what Aria Operations and Aria Operations for Logs can do. One customer managed to identify a brute force attack using Aria Operations and Aria Operations for Logs integration. There is no product that integrate Ops and Logs together not to mention identifying that behaviour specific to your environment and save it for future use.
From the price of ~$120 per core just with vSphere in licensing from the above price history example, comparing to VFF which is $130 per core based on 3 years ACV. There is really isn't a price increase though illustrated by many articles which did not use a break down comparison as I have done above. You got vCenter Server, Aria Operations and Aria Operations for Logs included with a cost of merely $10 which include support and unlimited usage in additional to the management and content packs. Can you find an Ops and Logs solution with just $10/core and included unlimited endpoints monitoring and support lots of software and hardware out of the box? Can you do a cost analysis with standalone vSphere + monitoring + log software that you are currently using would that be cost at $130 per core or more?
VMware vSphere Foundation per CPU @ 16 Core | ||
Price Per Core per year | Total Contract Value (TCV) | Annual Cost Value (ACV) |
$130 (Production Support) | $5.2M | ~$1.7M |
Even if you move to VCF, it will be $350 per core per year. That would include whopping 11 products in one bundle license which include Select support with Sev 1 with RCA entitlement. That's far more value than you can get from any integration with multiple point solutions together to piece it together to match one to one with what VCF can deliver today. Even if you can find a one to one point solution, the amount of cost to integrate it and migration cost will be huge not to mention if its successful.
Conclusion
In summary, did vSphere doubled or tripled its price? It didn't seems so. In fact, it brings more value with the new licensing model if almost no additional cost. Just imagine paying $10 for a quality bowl of noodle instead you decide to go to another shop at a cheaper rate of $8, but the taste of the bowl of noodle isn't as satisfied. This goes the same in this scenario, cost doesn't mean everything. Importance is what it matters to you for getting the expected quality for that bowl of noodle.
There are just too much "news" on new offering from VMware will be after Broadcom acquisition using past history of how Broadcom has orchestrated with other acquisition. Are they really accurate or just fake news? Are they comparing an apple to apple comparison? Did a detail breakdown was shown with illustration?
You make the judgement whether any content is accurate or just simply FUD.
Comments