Update on VMware Service Provider Program (VSPP)

By: Mathew Lodge

The VMware Service Provider Program (VSPP) was created for partners who offer cloud computing and/or hosted IT services. Through a flexible pay-as-you-go license rental model, VSPP allows partners flexibility in service delivery with no up-front expenses. With over 5,200 partners in 45 countries today, VSPP has seen rapid expansion. That, plus feedback on how we can be a better business partner to our service providers, has led us to make some additions and changes to VSPP.

What is changing?

1. Two new vCloud Service Provider IaaS bundles are now available, based on vSphere 5.0. The previous vSphere 4 cloud IaaS bundles continue to be available to allow service providers to decide when to transition to vSphere 5.
2. The full vShield Edge product is now included in the Premiere vCloud Service Provider IaaS Bundle. This adds IPSec VPN and load balancing features at no extra cost.
3. We are changing the licensing metric for the cloud IaaS bundles from allocated virtual RAM to reserved RAM, to allow service providers to exploit the powerful memory oversubscription capabilities of vSphere (see below for details). Associated with this change, there is a 24GB reserved RAM price ceiling per VM and a minimum “floor” for reserved RAM to avoid excessive memory oversubscription (see details below).

What do these changes mean for service providers?

Service providers get improved profitability from VMware by gaining access to new revenue-generating features, and reduced operational costs through more efficient use of their physical server infrastructure.

By repackaging our vCloud Service Provider Bundles, you can choose the level of capability that fits your service offering: one for high-end cloud or hosting capable of handling the most demanding, complex applications and a lower priced bundle for less demanding applications.

The change in licensing metric allows service providers to sell more computing capability from the same infrastructure, helping you to “sweat the assets” of your compute service on a fixed-cost basis. VMware offer the highest consolidation ratio (VMs to physical hardware) of any IaaS vendor and therefore the lowest unit cost per VM, and this licensing change gives you a simple fixed cost basis too (compared to the allocated vRAM model used previously).

Please note that VMware’s new vSphere 5 perpetual licensing scheme (i.e., not the license rental model of VSPP) uses allocated vRAM and CPU sockets as its two pricing metrics. We have seen published commentary and analysis that confuses the VSPP license rental model designed for service providers with the perpetual licensing designed for IT groups virtualizing their own servers. They are different licensing programs and each uses different metrics. 

How can I increase profitability using reserved RAM metering?

We now charge you for the physical memory reserved for the VM, allowing you to vary the memory oversubscription ratio according to the needs of the application and the service level.

Secondly, there is a pricing cap of 24GB per virtual machine, so you can sell very large VMs (up to 1TB in vSphere 5) and you will only be charged for a maximum of 24GB reserved RAM by VMware. vSphere 5 excels at handing large VMs and mission-critical applications, and this provides an incentive to VMware customers to run them at VMware-virtualized service providers. 

Memory oversubscription works because many applications don’t use all the memory allocated to them, and this is compounded by application deployment guidelines for off-the-shelf applications that tend to over-estimate required memory. In addition, with VMs on the same host running identical copies of the same Operating System and/or application mean many memory pages are duplicates. Under vSphere, those VMs can share just one set of those identical memory pages, effectively “deduplicating” memory.

vSphere makes it possible to reserve less physical RAM for a VM without affecting performance, and has five main patented techniques to maximize memory oversubscription. Of course, it is possible to starve a VM of memory too, so there is a 50% reserved memory minimum (or floor, computed as the reserved RAM divided by allocated RAM). We chose this minimum on the advice of our engineering team. If you try to reserve less than 50% of allocated memory you will still be charged for a 50% reservation.

It is 24GB of reserved memory that triggers the cap. For example, a VM allocated 32GB of vRAM with a 50% reservation (i.e., 16GB of reserved RAM) does not trigger the 24GB memory cap.

Here are a couple more examples for clarity: 

Example 2: 10 VMs of 32GB each with 100% reserved RAM would be charged as 240GB total memory (10 x 24GB given the 24GB per VM cap).

Example 3: 10 VMs of 16GB each and 2 VMs of 80GB each, 100% reserved RAM, would be charged as 208GB (160GB + 48GB).

Example 4: 10 VMs of 32GB each with 50% reserved RAM would be charged as 160GB total memory (50% reservation means 16GB per VM x 10) 

As before, only powered-on running VMs are charged.

What’s better about the new bundles vs. those previously available?

The first major enhancement is that VMware has adopted vSphere 5.0 for the new bundles. Additionally, the standard bundle has been upgraded from vSphere Standard Edition to vSphere Enterprise Edition. We’ve also added the distributed network switch feature to the Standard Bundle, based on your feedback that this was a vital component for reducing networking infrastructure costs in your service designs.

For the Premier Service Provider Bundle, we offer vSphere Enterprise Plus and added the full vShield Edge license. The goal is to provide additional revenue generating opportunities from offering VPN and load balancing using vShield Edge, without requiring additional networking hardware or software.  See the charts below for a full outline of each bundle.  

Your feedback is always valuable:

Attenda, a VSPP member in the UK, has been helping shape some of the recent changes. Philip Longley, Product Manager at Attenda, sent us this:

“Attenda has been a part of the VMware Service Provider Program (VSPP) since the early beta program, and as an active member of the Service Provider Advisory Group have helped shape the latest change. The team at VMware listened to our early feedback on the change to VSPP pricing and introduced changes to closer match our business model.”

Pat O’Day at Bluelock, a vCloud Datacenter Service Provider, notes that the billing adjustments help enterprises better manage their resources by only paying for what they use: 

“VSPP provides us with a subscription-based pricing model that aligns well with our vCloud Datacenter offerings. The new reserved RAM pricing model takes advantage of key VMware technology features while allowing us to control memory allocation for optimal resource management.”

We’d like to thank all of the service providers who provided candid feedback and spent time proposing and discussing potential VSPP changes with our team. We appreciate it!

For future updates on VSPP and the VMware Service Provider community, follow @VMwareSP on Twitter.

For more information on VSPP, or how to become part of VMware’s service provider community, please visit the VMware Service Provider page.