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With chip makers packing more processing power into CPUs, a leading maker of virtualization software is overhauling its prices significantly to reflect the development. Will VMwares new fees push enterprise users into the cloud?

Its a reckoning that IT executives will be forced to consider come April. Thats when the companys new fee structure kicks in for hypervisor products that run multiple operating systems on a single piece of silicon. Some multinationals could face significant price increases under the new structure.

The Dell EMC subsidiary changed license fees for its Vsphere hypervisor kit. Instead of charging per CPU socket for motherboard connections, it will now base its fee on the number of cores in the CPU.

It will require one license for up to 32 cores. If a CPU has more than 32 cores, VMware will require a second license. And thats on top of the fees that users must fork over for the software that operates their physical and virtual machines.

The price increase plays into the hands of cloud vendors as chips gain in performance. They can now sell large corporations on the cost attractiveness of the clouds scalability and on the concurrent reductions in their IT maintenance and upgrade expenses.

That flexibility underpins the market share of the company. VMwares hypervisors are running in three-quarters of data center servers, according to industry analysts, with license fees accounting for around 40% of its $9 billion annual income in fiscal 2019.

Market leader Intel is touting a pair of chip lines called Ice Lake and Cooper Lake that contain 38 and 48 cores, respectively. Meanwhile, AMDs EPYC microprocessor family, launched last year, runs out 64 cores in its Rome CPU.

Away from the x86 instructions set architectures that those chips contain, a start-up called Ampere Computing is working on an 80-core processor. That chip is intended for cloud platform operators and built on an ISA licensed by Arm. The British chip designer also is pushing for its own piece of the data center market with a line of 32-core Cortex chips.

Huawei launched a 64-core chip based on an Arm design last year. And Amazon Web Services is using a customized Arm ISA called Graviton2 in its data centers.

Nevertheless, that hasnt quelled criticism about the change. It ranges from jabs at the language used to justify it to whether VMware is pushing customers to a preferred chipmaker, given that most Intel chips are below the 32-core threshold.

The larger issue is whether VMware provides the impetus for digital transformation. AsDel EMC offers cloud-hosting of computing, storage and networking services, the impact among competing vendors that run VMware in their data centers could reshape that market, too.

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Will VMware's New Fees Trigger Rush to the Cloud? - Toolbox