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Virtualization licensing and pricing complexity may choke this market

I am pretty certain that the licensing and pricing complexity will choke this market. Virtualization, no matter how hard you and I would like to believe, is still pretty nascent in the "minds of the traditional IT guys". We all have them around us and we are part of that equation as well.

This article on Microsoft's licensing on virtualization is one of the examples of such frustration.

"If you are getting any benefit from Microsoft's software, you need to have a license, whether that benefit is for physical machines or virtual machines," Voce said in a session titled "Microsoft Licensing in a Virtual World." "You cannot engineer your way around licensing requirements. You can't use the technology as a way to cut corners around licensing."

Some customers are trying to cut corners, though. A recent Burton Group report said customers of numerous software vendors deal with support limitations by "accidentally" failing to disclose that an application is running on a virtual machine, or by cloning virtual machines to a physical server before calling support. (Compare server products.)

One question is whether Microsoft intends to use licensing policies to steer customers away from VMware 's hypervisor and onto its own upcoming server virtualization software, known as Hyper-V. Two audience members who are rolling out desktop virtualization initiatives reported that Microsoft would charge them extra for operating system licenses if they use VMware or Citrix rather than Microsoft's own desktop virtualization software.

...and then you have those licensing pricing, which you need to understand pretty well. Blogger Brian attempts to fathom the pricing issue with Citrix offerings:

My first reaction was "Yes! This is cool!" (And to be fair, anytime any vendor offers something for free or a heavy discount, it's cool.) But after thinking through this, it still seems kind of weird.

To understand why, let's take a step back. Citrix has offered Terminal Server-based application delivery solutions for ten years. So now in 2008, why isn't every single application in the world delivered via Terminal Services? Two reasons. The first is that some apps or use cases are not compatible with Terminal Server. (app won't install, users need to be able to install their own apps, etc.) The second reason the whole world doesn't use Terminal Services is that some apps or use cases are just not compatible with server-based computing. (apps are needed offline, apps are graphically-intense, apps need realtime audio, etc.) VDI products like Citrix XenDesktop solve the first problem since the apps don't run on TS, but they don't solve the second problem since they're still SBC solutions.

So what's this have to do with Citrix's application tax complexity?

If you can get all of your applications and use cases to be compatible with SBC, great, because you can buy XenDesktop for $295/$395 and get XenApp for free. (Remember the version of XenApp that's bundled with XenDesktop can only be used to deliver apps to XenDesktop sessions.) But if you can't use an SBC desktop then you need to buy the old school version of XenApp for $350-$600.

In other words, you're penalized $55-$205 per user for using XenApp with a non-XenDesktop-managed desktop.

So you tell me, first we try to convince the world and mainly the customers that they should adopt virtualization. They don't like it at all but still we hold all those endless conversations with the community. We hold numerous conferences and even attempt to host "independent conferences and executive forums" where all the consumers are paying out of their noses to listen to all the balderdash that we are blowing in their ears. So if you take all those conferences (VMworld, Citrix, Microsoft etc etc) then you have spent already enough dough just to get someone to talk to you about virtualization.

Then you do adopt virtualization, well somewhat, in your test environments and then we have this thing going on about complex licensing and pricing issues. Penalties and lawsuits could come too, should you violate some EULAs. Gosh, are we really killing this market? I'm sure a lot of parties, especially a lot of hardware vendors are going to nod in unison: "This nascent, virgin market better die!".

And we have not even explored the issues of support. We are talking about consolidating the hardware but we are spreading out the confusion in the application vendor space, and god only spare you if the app vendor "coincidentally" happens to also own a hypervisor, meaning being a virtualization vendor itself. Microsoft applications and OS support on VMware will not be taken lightly by Microsoft, they will have "friendly policies" for those who do the "I switched from VMware to Microsoft Hyper-V in 90 days" kind of competition. The market and the 3rd party vendors are all going to join the party and start playing the game. They'll turn their back at you the second the other has something significantly interesting to offer.

At some point of time, a lot of vendors will have some sort of some standards-conform virtualization offerings embedded within their applications. You just cannot afford to have someone else multiply your apps/OSs endlessly. So the challenges lie in the "getting out of the siloed box together". TOGETHER! Will that happen? Will all vendors hold hand-in-hand and make peace? Very unlikely!

After all it all comes down to money. This market opened a lot of opportunities, but for whom? Some 600+ 3rd party vendors? Some 85+ virtualization management vendors? Or you, the naïve, innocent consumer? You definitely are the only one who is shelling out those dollars/euros, that I can guarantee you. The rest is siphoning the hose to just get acquired by bigger party and get on to some next wave, say Cloud Computing? Grid Sourcing? Teleputing? (Where is the bullshit generator when we need one)

Not everything is bad though, I love the capabilities of VMware's workstation and fusion product, Parallels Desktop and to some extent also Sun's VirtualBox (these guys too ended up selling their stuff to Sun). So we are back to where we started, right?

When I started off playing with VMware back in late 90s and seriously later, it was the workstation product. today, I still am a consultant and I still use these products (across my MacBook and other notebooks). So I've learned some new tricks but my activities are pretty much the same, how about you? Are you willing to adopt virtualization? Why? Why not?

Check out my video on licensing and pricing, also see my slides on: Virtualization: Shi(f)t Happens! (I'll post a video of it on youtube soon tonight).

P.S: I'm back and I'll get more aggresive here on my blog to tell you the real truth (pun intended).

Here's my interview on Virtualization, here I also address issues surrounding the complex pricing, support and licensing issues:

Part 1

Part 2


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