VMware is discontinuing an unpopular server virtualization-licensing program and will focus on marketing vSphere and its other cloud computing products as a unified stack, CRN has learned.

In its upcoming release of vSphere 5.1, VMware is getting rid of vRAM entitlements, which debuted with vSphere 5 and determine how much memory customers are permitted to allocate to virtual machines on the host, according to sources familiar with VMware's plans.

VMware will return to its previous CPU-based licensing model and will announce the move at VMworld when it unveils vSphere 5.1, sources told CRN.

[Related: VMware Customers Fuming Over vSphere 5 Licensing Changes ]

VMware did not respond to a request for comment on its decision to discontinue vRAM.

Sources told CRN that VMware is ditching vRAM in part to maintain its competitive edge against Microsoft, which is adding several enterprise-class features in its upcoming release of Hyper-V 3. Microsoft, which has labeled vRAM as a "vTax," has been using the model in a campaign to lure away VMware customers.

Jettisoning vRAM will allow VMware to adopt a packaged licensing model, in which its other cloud products -- such as vCenter Operations, vShield and vCloud Director -- will be included with the base vSphere licenses. This will simplify matters for customers and eliminate what has been a source of friction in the channel, sources told CRN.

"A lot of customers feel like they are being nickel-and-dimed on things, which hurts the cost model of virtualization, so VMware is going to aggressively bundle. That bundle scheme made little sense with vRAM," said one source, who requested anonymity.

The vRAM model triggered an outcry from customers when VMware introduced it last July. The hubbub subsided after VMware increased its initial vRAM limits, but sources told CRN that many customers still view the model as overly complex and expensive.

"The vRAM entitlements confused the hell out of a lot of customers," said one source, who spoke with CRN on condition of anonymity. "They didn’t get why they had to burn multiple licenses for their memory-dense servers. It was because they were buying a ton of RAM to run lots of workloads."

NEXT: VMware And The Holistic Cloud Computing Stack

For partners that have been on the front lines educating customers about vRAM, VMware's change of course is a mixed blessing.

"We were very relieved to hear that the vRAM licensing model is going away, but also a little annoyed that it was put in place for such a short time," one source told CRN, speaking on condition of anonymity. "We have spent a considerable amount of time talking with customers about the pros and cons of the vRAM system, how it affects their environment, and what we needed to do to plan for the future."

VMware has been talking about selling its cloud stack as a unified whole for some time. In an interview with CRN last June, VMware COO and co-President Carl Eschenbach said the goal was to eventually give the channel an all-inclusive private cloud bundle. "Today there isn't a single SKU that pulls it all together, but that's the direction we're going as a company," Eschenbach said at the time.

VMware will also use vSphere bundles to jump-start adoption of vCloud Director, which has been sluggish, sources said. vCloud service provider partners have been slow to build out the infrastructure and business model for cloud services, and Project Zephyr, VMware's public cloud infrastructure-as-a-service, is seen in the channel as another attempt to address this issue.

vRAM is one of the few blemishes on outgoing CEO Paul Maritz's successful four-year tenure. Yet, Maritz never backed down when questioned about VMware's rationale for vRAM, noting on several occasions that VMware was merely adjusting its vSphere licensing to account for the greater value its customers were getting from it as they embraced the cloud model.

Maritz has also made it clear that additional licensing changes are coming as VMware moves to a consumption-based model.

"We're trying to be careful, and thoughtful, as we go forward, and be honest about the fact that over the next years ... the licensing is going to have to change," Maritz said in February at VMware Partner Exchange.

It wouldn’t be surprising if the decision to kill vRAM came from incoming CEO Pat Gelsinger, who spent 30 years at Intel and may not be keen on the idea of limiting what customers can do with today's multicore processors.

Starting Sept. 1, Gelsinger will take over as CEO of VMware, and Maritz will move to EMC as chief strategy officer.

PUBLISHED AUG. 20, 2012