VMware Kills Off A Pricing Scheme Customers Hated

Pat Gelsinger VMwarePat Gelsinger, new CEO, VMware

Photo: VMworld

Customers should love new VMware CEO Pat Gelsinger’s first big move.He’s killing off an unpopular pricing scheme that had really ticked off customers.

Called “vRAM,” it was a complex way of figuring out how much VMware would charge for its software licenses. It was introduced a year ago, when VMware launched the latest version of its flagship product, vSphere 5. The company started  calculating pricing based on how much memory each server used with VMware software instead of more conventional pricing measures, like counting the number of server CPUs.

Suddenly customers were being charged a lot more money for VMware software running on the same machines.

The company surveyed 13,000 customers, Gelsinger said during his keynote speech today at the company’s VMworld customer conference in San Francisco.

The top feedback they gave—”very loudly”—was “change your pricing,” he said.

“‘vRAM’ is a four-letter dirty word. We are striking this word [out],” he said to loud cheers from attendees.

VMware is the market leader in what it does, a technology called “server virtualization.” It’s not the only game in town, though. Customers can use low-cost technology available from Microsoft, Red Hat, Citrix, and others. Microsoft specifically called vRAM a “vTax.”

So VMware will go back to its original pricing schemes and try to increase per-customer revenue by selling them bundles of software for doing cloud computing.

This was a smart move. Customers are already interested in VMware’s cloud products, which allows them to get more use out of their servers and data centres. If they opt for other server-virtualization products, VMware loses a shot at selling them additional software.

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