Is VMware screwing the non-View VDI community with the vSphere 5 licensing changes?

Yesterday VMware announced Version 5 of their main product, vSphere. (In other words, they announced ESX 5.)

Yesterday VMware announced Version 5 of their main product, vSphere. (In other words, they announced ESX 5.) While vSphere 5 has tons of new features, it also has a new licensing model. Early reactions from the community are that the change in licensing will lead to much higher costs, in some cases 2x-3x more cost for the same hardware when moving from vSphere 4 to 5.

While many people are speculating that this is going to be a showstopper for a lot of customers, it's exacerbated in VDI environments where servers typically have very high memory-to-processor ratios. So what does this new licensing mean for VDI? Will VMware create a special SKU just for virtual desktops? Will this SKU apply to all virtual desktop environments, or just VMware View? Let's dig in to find out.

Understanding VMware's new licensing model for vSphere: introducing "vRAM"

The first thing I read about vSphere's new licensing model is that it's based on the total memory of your vSphere environment, which VMware is calling "vRAM." While I initially confused that with "VRAM," I spent time yesterday reading VMware's 12-page white paper which explains the details of the new pricing and licensing.

If you don't want to read the whole paper, the gist of it is that instead of licensing based on physical servers, processors, and cores, vSphere 5 has a giant virtual pool of RAM that's shared between as many hosts, CPUs, cores, and VMs as you like. So if you have licensed 128GB of vRAM, you can run a single VM with 128GB, or 32 VMs with 4GB each, or 128 VMs with 1GB each. You can run them on one huge host or lots of smaller hosts. You can have as many vCPUs and cores as you want. (Pools can even span multiple vCenters.) And when you want to add more RAM capacity for your entire environment, you just pop in another license key which enables more RAM that you can distribute however you see fit. You only pay for the memory which is allocated to actively running VMs--not the total memory you have in the a machine.

The only weird thing is that you still buy these vRAM licenses in the form of physical processor license packs, each with comes with an entitlement for a certain amount of vRAM. You need one processor license for each physical processor in your environment. For example, the "base" level of vSphere 5 is $999 for a processor license which includes 24GB of vRAM. So if you have a server with 4 processors and 192GB RAM, you'd actually need to buy 8 of those base processor licenses (192/24) to get the RAM coverage to fill it up, even though you only have 4 processors.

I guess they do that just to ensure they still get their money even in environments that have a lot of CPU but don't need much memory, although frankly that weird purchasing method is probably the reason they need a 12-page white paper to explain licensing instead of a tweet. (Speaking of twitter, @JeroenvStokkum pointed me to a cool PowerShell script for calculating your vSphere 5 licensing options based on a total RAM / Processor combination.)

What does this licensing model mean for VDI?

The general reaction of the community towards this new licensing methodology is what you might classify as "negative." A thread about the changes on VMware's community site has 178 replies and counting, and twitter's burning up with a new #vtax twitter hashtag.

And while it appears that no one outside of Palo Alto cares for the changes, early back-of-the-napkin math seems to show that VDI environments will be particularly hard-hit. This is due to the fact that VDI hosts typically have very high memory-to-processor ratios as well as high utilization. (Typically servers like dual six-core processors with 192GB, etc.) While these types of servers running at full capacity would only require two standard licenses ($995 each, $1990 total) in vSphere 4, they'll require 8 licenses for vSphere 5 ($995 each, $7960 total). Yikes!

VMware, for their part, points out that in vSphere 5 you're only paying for the memory that's actually allocated to running VMs. So if you base your vSphere pricing on the total memory of all physical vSphere 4 servers you have, you'll end up buying too much. (And this is their response to everyone who thinks their costs are going to double or triple.) But while that might make sense for general datacenter/cloud/server workloads, VDI desktop workloads are different. VDI host servers are typically very highly utilized. And that's the real catch. If you have 1,000 desktop VMs running Windows 7 with 2GB RAM each, you need 2,000 GB worth of vRAM licenses for vSphere 5, which will run you about $84k. Assuming 90 desktops per physical host, your entire existing vSphere 4 environment would have only cost you $24k for 12 servers. (Ok, make it $26k for 13 servers so you have some spare capacity for HA.)

This leads to a big question: For your VDI environment, are you using vSphere, or VMware View? While you might think that's an inappropriate "apples to oranges" comparison, remember that if you're using VMware View then you buy View licenses which also include vSphere licenses. But if you're using a non-VMware VDI product (like Citrix XenDesktop or Quest vWorkspace), then you're buying vSphere licenses on your own (in addition to whatever licenses you buy from Citrix or Quest).

Here's why that matters: VMware View is sold on a "per user" basis. You pay $150 (for VDI only) or $250 (for VDI plus local, ThinApp, and image sharing) per concurrent connection. That $150 or $250 that you pay includes the licenses needed to run vSphere (and vCenter) on as many physical hosts as you need for your VDI desktops and related View components. So if you're a View customer, the new vSphere 5 licensing cost and method is totally irrelevant to you since you get your vSphere licenses with View. But if you're planning to use Citrix XenDesktop or Quest vWorkspace on vSphere, then you don't get vSphere in a per-user way (since that only comes with View). XenDesktop and vWorkspace customers have to buy vSphere on their own. And if they plan to upgrade to vSphere 5, then they're potentially looking at a huge price increase.

What's interesting is that the version of vSphere that a customer gets with View (called "vSphere Desktop Edition") is functionally identical to vSphere Enterprise Edition, except from a legal standpoint you're only allowed to use it to run VMs associated with your View environment. This means desktop OSes only, and servers only if they have a specific dedicated role in your View environment. (Connection brokers, View Manager, etc.)

What will "vSphere 5 Desktop Edition" look like?

The fact that there was a special "vSphere Desktop Edition" in the vSphere 4 days was very straightforward and non-controversial. VMware View customers got their vSphere licenses bundled into their $150-$250 concurrent View connection licenses, and XenDesktop and vWorkspace customers who still wanted to use vSphere just bought normal vSphere licenses.

But now that we know that "traditional" vSphere licenses could potentially quadruple in price for vSphere 5 based on typical VDI host hardware, what will current VDI customers do? We can assume that View itself will be updated so that the bundled vSphere Desktop Edition licenses can be used for vSphere 5. So View customers will be fine.

But non-View customers who still want to do VDI on vSphere? They have a few choices:

  • Migrate off of vSphere and onto XenServer or Hyper-V.
  • Keep running vSphere 4 forwever.
  • Upgrade to vSphere 5 and pay the huge price increase.
  • Throw away XenDesktop or vWorkspace and move to View.
  • Buy View licenses just to get the special "vSphere Desktop Edition" that lets them run desktop OSes on vSphere, but continue using their existing VDI platform and throw the View licenses in the trash
  • Hope that VMware releases a general-purpose "vSphere 5 Desktop Edition" product which they can purchase without having to buy View

Obviously the last two options are the most interesting.

If the regular vSphere 5 licenses are too expensive for VDI, will customers instead buy View connection licenses just to get the right to use vSphere and vCenter for their desktops, but then still install XenDesktop or vWorkspace? Based on the quick cost analysis from the top of this article with 90 users per dual-proc 192GB server, that would be $13.5k in View licensing per server instead of $8k for straight vSphere 5, so actually that looks worse. Of course the vSphere Desktop Edition SKU you'd get by buying View licenses is the like vSphere Enterprise, so maybe comparing the more expensive Enterprise Edition of vSphere 5 is the way to go, which would total $17.2k for your 192GB server. But really most VDI desktops probably don't need the features of vSphere Enterprise, (HA and vMotion are both Standard Edition features), so it's probably more accurate to compare $8k for vSphere 5 Standard to $13.5k for View licenses.

So while vSphere 5 will be four times more expensive than vSphere 4 for those 90 VDI desktops, it's still cheaper (in this specific use case) to just pay for the regular vSphere 5 rather than trying to buy View licenses just to get access to vSphere Desktop Edition.

This could all change if VMware decides to release a standalone "vSphere Desktop Edition" that's available for a lower cost without having to buy View. (Maybe $50 per desktop connection?) In fact blogger Brian Knudtson wrote that a separate SKU for this use case would be available, writing, "This was quietly added on the partner SKU list for non-View VDI implementations. This provides a low cost hypervisor for XenDesktop implementations (a fairly common occurance)."

No one else is saying anything about that, and we don't know whether that SKU will exist. (Or if it does, whether it is an actual standalone SKU or just the vSphere Desktop Edition SKU you get when you buy View.)

[UPDATE AS OF 9am EST: Commenter ermac318 posted a link to this paper from VMware confirming that there WILL be a vSphere 5 Desktop Edition available for non-View customers. Yay! It will be sold in 100 concurrent desktop packs for $6500, with unlimited vRAM entitlements. (As long as you're running desktop OSes.) The feature level will be equivalent to vSphere Enterprise Plus. The only weird catch is that you can only buy vSphere 5 Desktop Edition for new vSphere licenses. If you have existing vSphere 4 licenses that you're using for desktops, you have to upgrade those to their equivalent regular vSphere 5 licenses.

So this is cool. Why VMware doesn't mention this at all in their 12-page vSphere 5 licensing paper is beyond me?? Look for a full analysis tomorrow.]

The aftermath

We'll see how this shakes out. It's important to remember that vSphere 5 isn't even out yet, so this is all hypothetical at this point. And we'll surely learn more about VMware's View licensing on vSphere 5 soon.

That said, there's a few final interesting tidbits that have come out of this discussion:

First, maybe this is VMware's attempts to drive everyone towards enterprise agreements? If you just buy for your whole enterprise, then maybe you aren't getting into the nitty-gritty details of RAM, processors, and cores?

One of the commenters on that huge community thread also asked whether VMware's new licensing model would respect Moore's law. "If not," he wrote, "our VMware license cost will double every 18 months!"

The final silver lining, however, might be that this causes everyone to wake up and realize that the THE DATACENTER IS FREAKING EXPENSIVE! RUNNING YOUR DESKTOPS THERE WILL COST YOU MORE MONEY THAN RUNNING THEM ON YOUR DESKTOP. Not that that's a bad thing. Just something to keep in mind. :)

[UPDATE AS OF 1:48pm EST: I just built a downloadable Excel-based cost calculator to compare the licensing costs for desktops running on vSphere 4 versus vSphere 5.]

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This vSphere 5 licensing kerfuffle reminds me of a similar one Citrix found itself in after announcing XenDesktop 4 would drop CCU licensing and only be licensed per named user.

The community spoke out about that and Citrix came back a short while later with per device licensing for XD.

Something tells me if enough large VMware customers make it clear this means they'll move their VDI environments to XenServer or Hyper-V, VMware will listen.  Our CIO has already directed us to begin planning the transition.


The people behind Business as usual (i.e. traditional desktops), Citrix, Microsoft, Quest, Virtual Bridges, and the like are all smoking cigars and celebrating, I think. Or at least pointing and snickering.

I'd guess there's some info coming at VMworld about View, but I wonder if VMware will be able to wait that long while people get upset.

Also, I wonder how the service providers using vSphere will make out. I'm sure there's separate licensing, but still. That is just radical.


"Hope that VMware releases a general-purpose "vSphere 5 Desktop Edition" product which they can purchase without having to buy View"

VMware has already announced a separately licensed vSphere Desktop Edition license. It's $65 per powered-on desktop, you buy in 100 packs. You can see more about it here:


Mike, not only did Citrix introduce per device, but they also have now  re-introduced CCU licensing for XD (at least in Europe), if your partner can't find the SKU, go check with a Citrix sales rep.


I agree with Brian's last statement; using local resources and buy just one OS-license per workstation makes much more sense than spending money on the workfloor and again in the datacenter. I like the Virtual Computer's NxTop solution though, that will enable you to create virtual desktops and run those locally. If I were a company woth a burning desire for a Virtual Desktop Infrastructure I would definitely give it a try....


Steve, yeah, I know Citrix reintroduced CCU last ... December maybe?  I bet that was customer driven as well, but the per device license was a pivot by Citrix right after the initial switch to only per named user.

We actually just bought a few hundred XenDesktop 5 CCU licenses, as well as 1000 user/device licenses.

Going to check out the link to the possible non-View vSphere 5 SKU.


Rene/Brian - Can either you guys provide any data source that validates your claim that buying a new PC is significantly cheaper than a VDI desktop?

I'm all for sensationalist vitriol, but usually I like to back it up with something more than BRIAN SAID SO IN ALL CAPS.


@Tal; That's just plain math - if you connect to a VM in the datacenter you'll probably use a licensed OS on your endpoint and you'll need a Virtual Access license for your virtual desktop as well.

Also you'll need storage, CPU and memory locally as well as in the datacenter.

With the NxTop solution you would only need local hardware and limited resources in the datacenter (just to create and store your corporate 'golden' images) and only one license per VM. Oh, and of course a NxTop license for your endpoint (but that's rather cheap I believe).

I can't offer more proof but this seems obvious to me....


@Tal, I'll put together an article on that topic after BriForum. I've written a lot about it, but never hit the target head on. (Although my "how to lie with cost models" is a good start.


@Tal; (Of course you wouldn't even be needing to buy brand new PC's if the NxTop Ready tool would give you clearance to use your existing hardware - even cheaper!)

Let me state that I have no connections to Virtual Computer but I really am impressed with their product....


Better use XenDesktop on XenServer. Go with Citrix end to end citrix solution,


VMware introduced this license model almost a year ago for the VMWare VSPP partners with the VSPP 3.0 license model and at that point I calculated a MS SQL server with 12 GB RAM to become almost 10x more expensive from VSPP 2.0  (pay pr. VM) to VSPP 3.0 (pay pr. vRAM/hour).

But VMWare has made a small tool called "VMWare vCloud Usage Meter" ( that helps keeping track om the vRAM usage, because license is paid pr. vRAM/hour In the VSPP license.

I think this new license model, might be cheaper than the old one for VSPP partners...but it's a hell lot more complicated.


@Rene - I think NxTop competes with XenClient alone.. I wouldn't do a cost comparison between local VM and VDI because I think they both have a place in a desktop virtualization rollout.

@Brian - I'm doing similar research on my side. Let me know if you want to compare notes. I honestly think the initial cost difference between VDI and new desktops is a wash (not really more expensive or less expensive) - my belief is that the cost savings really start after the initial rollout.


Question regarding NxTop : if you store your golden image in the datacenter, don't you need VDA licence from Microsoft ? I've heard that, once OS is virtualized (regardless if it is VDI, streamed of local VM), you'll need to pay the "VECD" (plain terminology Entreprise Centralized Desktop) to be compliant...

At last, this is what MSFT locals told me when I've planned to use Xenclient alone.


Who in their right minds runs virtual desktops on pay for versions of vSphere anyway?  When HP released the ML series servers with their awesome redundant power supplies, RAID controllers and hot-pluggable drives, we didn't rush out and put one under every desk.  Is it just me, or does paying incredible amounts of money for vSphere to run your desktops just a cool thing to do?


How do the new vRAM entitlements affect you?

Please take 2 minutes of your time to fill out this vSphere 5 migration survey:

We need more data! Results will be posted in the main vSphere 5 licensing thread over at VMTN:

First round of results here:


So VMWare has basically 4X pricing, and now says they have a special Desktop only license at half that price at $65, and we should believe that is a good deal.

What hasn't been mentioned yet is software maintenance.  I just prices out s 5 year lifecycle with Enterprise +, and the maintenane was 3X the license cost!   What is the maintenance for this $65/seat license?  

Anyone can see  they are trying to increase the price to deploy XenDesktop, while at the same time leveraging and bundleing for VIEW.  Do I pay $65 and then go buy Xendesktop (sorry mr customer, no discount available), or do I buy VIEW for $150 (great willingness to negotiate).  

Bottom line is everyone looses.  This stuff is just to expensive and complex to do.  Long live the PC!


Everyone should take a look at the link posted by Matt Lesak above:

The upshot is that either using the vSphere that comes with View, or the new VSphere Desktop license, you get VDI support with unlimited vRAM entitlement.