VMware has announced that it will change its pricing scheme for vSphere 5 after its initial plans left current users staring down the barrel of hefty price hikes, and evaluating competing products.

Pricing of vSphere 4 is tied to the amount of physical memory and number of processor sockets and cores present in a server. As announced in July, VMware is changing that model for vSphere 5, and will instead base pricing on the amount of virtual RAM assigned to virtual machines. With Wednesday's announcement, that's still going to be the case, but the pricing will be somewhat cheaper in three ways.

First, the entitlements that each license provides have been increased. vSphere Enterprise+ and Enterprise both see their entitlements doubled, from 48GB and 32GB to 96GB and 64GB, respectively. vSphere Standard, Essentials+, and Essentials get a 33 percent increase; they all now have a 32GB entitlement, up from 24GB.

The second change is that virtual machines will have their virtual RAM charge capped at 96GB. To run a 1TB virtual machine—one of vSphere 5's new capabilities—companies will only have to buy licenses for the first 96GB of that 1TB. The rest is free.

Third, pricing is now based on the 12-month average of virtual RAM usage, rather than peak usage. This in particular alleviates concerns with disaster recovery and testing scenarios, where additional virtual machines might be spun up temporarily during transitions—an action that could easily result in the doubling of RAM usage.

The free vSphere Hypervisor product has also received a boost, having its physical memory limit raised from 8GB to 32GB.

These changes may take some of the sting out of the new pricing, but the impact they have will vary significantly between organizations. Users running a number of smaller virtual machines will still experience higher prices due to the per-license reduction from 256GB physical memory to 96GB virtual memory. The entitlements for vSphere 5 are still lower than they were for vSphere 4, and the virtual RAM capping doesn't help if your virtual machines use less than 96GB. A two socket, 256GB system running vSphere 4 required two licenses (one per socket, with each license enabling use of 256GB physical memory); that same system may now need three licenses, as two Enterprise+ licenses will only permit the use of 192GB virtual RAM. The major downside to the new scheme hasn't been eliminated; it has only been diminished a little.

User responses are still somewhat tepid. Users with existing servers, often equipped with 192GB or less per socket pair, are the big winners from the new policy; their license requirements will remain the same with vSphere 5 as they were with vSphere 4. But users with larger servers—and many are finding that 256GB or more per socket pair is the new pricing sweet spot, from a hardware perspective—are still going to end up paying more. Certain pricing quirks also remain: though Enterprise+ provides greater functionality than Enterprise, it does so with a lower cost per gigabyte of virtual memory.

VMware claimed that its original license plans would only negatively impact a small minority of users—though many in the company's support forums disputed this claim—and the updated plans will reduce, but not eliminate, that impact. Is the move enough to keep you on VMware's platform, or do the price hikes and the signalling of the company's future pricing intentions mean that it's still worth checking out alternatives?