VMware Makes a Hosting Move and Changes Pricing

Perhaps hoping to add further value to its impending IPO, VMware has announced that it was going to update its pricing model as it enters the hosting market.

The company announced its VMware Service Provider Program (VSPP) for Web hosting services, telecommunications companies and outsourcing businesses to help bring to market new virtual infrastructure as a service offering.

The VSPP offers a new licensing model to charge hosting providers on a per-virtual machine, per-month basis so that they can pass it along as utility computing to end customers. This would allow hosting providers to offer a “rentable” virtual machine or virtual machine capacity to its customers so that they could instantaneously add or reduce their hosted virtual infrastructure capacity to align with event driven demand.

“The VSPP opens new doors for managed service providers to reinvent hosting services and reach new customers of all sizes,” said Raghu Raghuram, vice president of product and solutions marketing at VMware. “The added flexibility and availability of VMware Infrastructure as a service enables hosting providers to offer their customers immediate access to the proven benefits of virtual infrastructure as easily as flipping on an electric switch. Hosting customers can now rely on production system availability not possible with traditional hosted offerings, as well as automatic data and systems protection and rapid recovery from failures, while paying only for the computing capacity they require at the time.”

It sounds like VMware is going to start encroaching on SWsoft’s sweet spot in the hosting arena. While virtualization in general makes perfect sense for a hosting company, VMware has traditionally in my opinion priced itself out of the market. Perhaps this new program will change that. But is pricing alone going to be enough to disturb the market currently dominated by SWsoft’s Virtuozzo software?

Continuing with the thought about pricing, I still have other unanswered questions. VMware is usually up front and matter of fact with their pricing; however, I haven’t seen any numbers on the new hosting service. I do know that they offer it in two packages: VMware Infrastructure Enterprise or Starter. But how much is it? And along with how much, I wonder what existing customers will think about the new pricing mechanism? Will company datacenters also want to price their infrastructure with the same hosting rate rather than the current per socket license they pay today? And will that even be an option offered to them?

To find out more information about the VSPP, click here.