AMD's beefy core counts on its EPYC Rome processors, not to mention its far lower per-core price points, are a big advantage for the company as it grapples with Intel for data center market share. However, an announcement from VMWare today appears to blunt some of that advantage: VMWare will essentially double the price of licensing the company's software for CPUs that have more than 32 cores.
The new move applies to all of VMWare's software, and given that the Dell-owned company holds ~75% of the server virtualization market, the change will have a far-ranging impact on data center processors with high core counts, like AMD's EPYC Rome. Intel will also be impacted which its processors move to 56-core Cooper Lake models (slated to begin production in H1 2020).
In the enterprise world, software is often licensed on a per-core or per-socket basis, meaning software customers have to pay a set fee based on either the number of CPU cores they wish to run the software on, or the number of CPU sockets. That means that the price of the hardware is often a secondary consideration compared to the cost of software licensing.
Processors with faster cores often win the total cost of ownership (TCO) equation for software licensed on a per-core basis because they utilize software licenses more fully. In short, faster cores result in more performance for each license, which then reduces the need for additional licenses (and overall cost of the server platform).
And these fees aren't chump change: For instance, an Oracle Enterprise Edition database license can cost up to $47,500 per license based on the company's current pricing models. Other Oracle applications span up to $300,000 per license. However, Oracle uses a complex matrix to come to the final pricing values, so you might need multiple licenses for each CPU based on the number of cores it has, creating a type of quasi-per-core licensing model. Meanwhile, other companies license enterprise software strictly based on the number of CPU cores.
Historically, Intel Xeon processors have generally been thought to be better for these types of per-core licenses due to their faster per-core performance.
However, the knife cuts both ways. While some software is licensed on a per-core basis, others are licensed based on a per-CPU basis. So a single processor, regardless of core count, gets assigned a single license fee. Data centers and enterprises running these types of software can really benefit from EPYC's advantage of more cores: If you pay one fee for an entire processor, paying that fee for 64 cores of EPYC is obviously a better value than paying the same license fee for a 'mere' 28 Intel cores.
AMD's EPYC Rome has been a wonderful value for VMware, which used to charge only one license fee per CPU, regardless of the number of cores. VMWare's current pricing depends on the product, but spans up to $7,472 per license. For comparison, AMD's high-end 64-core EPYC 7742 costs 'only' $6,950.
With up to 64 cores and 128 threads crammed into a single socket, AMD's Rome offers not only a new level of performance density, but also gave customers more value from their virtualization licensing fees.
Unfortunately, that trend changes today with VMware's announcement that it will now charge for two licenses for any CPU that has more than 32 cores. That effectively doubles the price of VMware licenses for AMD's 48- and 64-core models. The change applies to both single- and dual-socket servers, so a dual-socket EPYC system with 48- or 64-core chips will now require four licenses, instead to two.
"Today we announced an important update to our per-CPU pricing model, reflecting our commitment to continue meeting our customers’ needs in an evolving industry landscape. This new pricing model will give our customers greater choice and allow us to better serve them. While we will still be using a per-CPU approach, now, for any software offering that we license on a per-CPU basis, we will require one license for up to 32 physical cores. If a CPU has more than 32 cores, additional CPU licenses will be required. " - VMware statement.
The impact to data center operators with 48-core (and beyond) AMD chips will be felt immediately, but Intel customers will emerge unscathed. At least for now. Intel's top-end general-purpose server chips currently tap out at 28 cores per socket, and while the company does have its 48-core Cascade Lake-AP models on offer, those chips don't seem to have gained much traction outside of specialized applications, so the impact will be slight on the broader market.
Intel will eventually move on to 56-core Cooper Lake processors that are slated for production in the first half of this year, but the jury is out on the pricing model that will largely determine if they could be considered general purpose chips.
The move to denser chips has foreshadowed a looming change on the licensing front, as noted by an insightful (if not prophetic) piece by ServeTheHome last year. Given market-leader VMware's licensing change, we can expect other software providers to follow suit and change their fee structures in the coming months.
