VMware hikes vSphere prices, shrinks licence options

Ithink we are going to see two choices:companies that value their data and don't trust the cloud and companies that do not care about availability, security, confidentiality, and all the other etc's, except price. VmWare is betting on the companies that make the first choice mentioned above to make money.

So VMWare think that the way to counter the loss of incoming from on-prem installations is to raise prices. I suppose the thought of lowering prices just never crossed their minds....

The problem for VMware is that their licensing model is socket based. That means that, since the number of cores per socket is increasing, the number of licenses needed decreases. They've tried to move away from that model with the vRAM tax, but that got them lots of flak. So, the only thing that is left, is to raise the price per socket.

This isn't limited to VMware, we've seen the move by Microsoft from socket to core for SQL Server and there are indications of Microsoft moving to such a model for Windows 2016 as well.

Digging their own grave..

Not much more to say really.

Will be interesting to see what they do with Essentials and Essentials Plus.

Don't worry

The subscription price list will be out soon, with bargain per-month charges at the beginning.

Drifting towards irrelevance.

Meanwhile various cloud providers are dropping their prices on a regular basis. No wonder the VMW stock price is through the floor

Well, something that isn't said in this article is that VMware shifted their strategy, they no longer pay that much attention to enterprise, Service providers are money makers for VMware.

While this happens on the frontend, in the backend they are being more aggressive in the Service providers with better and more granular bundles and way cheaper, in VSPP for example the vcenters aren't charged and you just pay the billed ram, that tipically is 50% of assigned memory for the VM.

This approach is more efficient for VMware, because few account managers in europe as an example can manage milions in revenue, instead of having sales around paying dinners to customers, other benifit is the operational, Service providers have often very qualified VMware engineers and the number of cases they raise are very little compared to enterprise customers, so in practice Vmware doing this can reduce operational costs gaining a very efficient 1st level team they don't have to pay.

Aside of that you can't forget something else, VMware is betting in their own cloud as well with some focus in DR as a service.

Vmware may be firing people somewhere more expensive, but they are as we speak hiring in Bulgaria for example 500 engineers in multiple areas and just built a 2nd building there.

If they succeed, today they may be decreasing revenue, but their profit will be higher and raising the price to end customers is a way to push them to service providers, Vmware isn't alone on this, Microsoft did the same with SQL, Red Hat did it.... the list continues.

The retail alike market is loosing market and Vmware isn't to be blamed, all companies are outsourcing their IT one way or the other, they are just adapting.