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VMware Mum On NSX Pricing, Touts License Plan

VMware announced that NSX is now generally available. The company hasn't announced pricing. If you want a price quote, you have to talk to a salesperson. However, the company did discuss its licensing structure in an interview with Network Computing.

Until now, VMware has been a bit vague about NSX licensing. It's wanted to focus the conversation on the advantages of network virtualization and how radically different it is than anything used before. That's a classic selling technique: Emphasize the value of a product rather than the cost. This technique is usually deployed when the product is likely to be on the higher end of the cost scale.

NSX will not be offered in the standard VMware licensing bundle. I applaud this decision. Too many of VMware's key differentiators are locked behind Enterprise (or Enterprise Plus) licensing at first.

For instance, vMotion formerly required Enterprise licensing. Now it's available on any platform. VMware Distributed Switch, the company's enterprise networking software that predates NSX, used to require an Enterprise Plus license. It now appears to only be available with vCloud Networking and Security (vCNS) bundles.

Forcing customers to choose the most expensive licensing options creates feature bloat for customers. If I'm forced to buy Enterprise Plus because I need VM mobility, I may never use all the other options that are thrown in. Conversely, I may find that the one feature I need the enhanced license to use isn't critical. I may then change my architecture to reduce the need for that feature and get by with a cheaper license.

[Cisco and VMware are competing to rule the data center while also maintaining a partnership. Get insight into their tangled relationship in "Cisco Skips VMware's NSX Coming Out Party."]

NSX changes things by going with a per-use license structure. NSX is licensed per VM, per month. That makes sense when you think about the NSX deployment model. NSX isn't designed to be a "rip and replace" technology.

VMware believes customers will begin with a limited deployment to augment the existing network, and then phase the software into production as it proves itself. I've sold systems in a similar way in the past. Enterprise VoIP was a dirty word at my VAR until I showed the value of call clarity in a test environment. The cutover happened that weekend. NSX wants to do much the same by proving the value of its product before full deployment happens.

What Is This Going To Cost Me?

VMware has been very guarded about the pricing for NSX. I haven't seen any documents or presentations about it. When I asked about price in our conversation, the answer was, "It depends." In other words, you'll have to talk with VMware about how many licenses you want. The company did mention that volume discounts would be available as a deployment grows, but didn't provide details on what constitutes a volume agreement.

While the lack of detail is frustrating, VMware's strategy makes sense: Ddon't force customers to pay for more than they are going to use out of the gate. It mimics the pricing model for cloud services. Customers can xperiment with the software with a limited financial risk; if it proves valuable, they can spend more money to expand a deployment.

My guess is that VMware will negotiate with customers that decide to deploy it across the enterprise. Maybe the company will offer yearly discounts, or cap the number of VMs that are required to be licensed.

However, I'm also guessing that the list price for NSX will be substantial. The company has a reputation for premium pricing, and its reluctance to share an actual number leads me to think that the number is significant.

NSX is still in the honeymoon phase with potential customers. Everyone is excited about the upside. VMware has been careful to minimize the downsides, especially the price and licensing terms. But eventually VMware will be forced to publicize the real expense associated with NSX.

Do you like VMware's licensing approach with NSX? Would you rather have it rolled in with Enterprise Plus? Leave your thoughts in the comments. I'm sure VMware will be watching.