When The Software Licensing Changes

“On THIS day, we end the sale of perpetual licenses per CPU,” – reports one provider of backup solutions. There are many indications that this is not an isolated case, and more companies will soon follow the same path. What does this mean for users?

Licensing models. Which is more important: customer welfare or profit maximization?

Backup software providers that change their licensing policies often face customer criticism. They usually explain their decisions by changing trends in the new technology market and the need to adapt to new realities. Are such changes necessary, and is profit maximization or actual customer welfare behind the official narrative?

Can Storware’s licensing policy, which relies on flexibility and free configuration of per-Host, per-VM, and per-TB variants for selected workloads, be a significant factor in building a competitive advantage?

Product licensing change – official narrative

“We have to keep up with the times” – is an argument very often put forward by manufacturers revolutionizing their licensing policies. A major player in the data protection product segment believes that promoting new, albeit less popular, licensing options to customers is intended to help them adapt to growing workloads in local, virtual, and cloud environments.

Another frequently cited reason for the change in licensing is the incompatibility of the ‘per CPU’ model with new functionalities emerging in the software. For example, using a ‘per terabyte,’ as opposed to a ‘per CPU’ model, allows licensing of workloads that do not run on hypervisor sockets, including physical Windows/Linux, NAS, AWS, Azure, and other servers.

In behind-the-scenes discussions, manufacturers make no secret that ‘per-CPU’ licensing is becoming less and less viable due to the increasing capabilities of servers and the various tricks used by hardware manufacturers. A classic example of this would be Lenovo’s move to launch a single-processor server with a 64-core AMD EPYC unit. This device can support more virtual machines at lower license fees than a machine with a pair of 32-core basic processors.

Customers do not like to be chained to a solution

Customers and business partners get irritated when manufacturers tinker too much with licenses. Nobody likes change, especially change that is followed by additional expenditure. Of course, all customers are not equal, and there is no template by which a perfect license can be created for all. But this does not mean that manufacturers should drastically narrow the range of choices. Often, there is information on vendor websites that they offer various licensing options, although the greatest opportunity and flexibility is provided by the ‘per terabyte’ license.

When a software provider withdraws from a particular form of licensing, they do not do it overnight. Although they may allow the user to stay with the existing model, the pricing policy makes this no longer viable. It is also rather amusing to hear manufacturers declare that customers are not obliged to migrate and that if the environment is not expanding. No new licenses are required, and it will be possible to continually renew support. At first glance, this looks like a friendly gesture by the vendor. However, it is hard to expect that at a time when we are experiencing exponential data growth and increasing IT performance needs, companies will not expand their IT resources.

The sneaky policies of manufacturers in limiting the types of licenses offered may be short-lived. After all, there is always the risk that some disappointed customers will start looking around for other products offered under different licenses, including the ‘per CPU’ option that some have abandoned.

The market needs data protection solutions, but it is also governed by the laws of economics. Monopolists cannot dictate terms to users because the days are over when replacing one solution with another was problematic and unprofitable.

The market has become highly competitive, and flexibility, scalability, and predictability are increasingly crucial to users. Therefore, aggressive licensing policies are causing customers to migrate to other vendors. A migration, we should add, that is painless and better value for money.

Grievances poured out in online forums

Fierce competition between vendors and pressure from their owners leads them to look for ways to maximize profits. No one will officially admit to this. Hence decisions to change the licensing system are often preceded by announcements full of marketing slogans. We learn from them that companies are driven primarily by the welfare of their customers and the changes taking place in the world of new technologies. However, this message is addressed more to those who cursorily follow the market for data protection solutions. More interesting information can be found in online forums, where delegated engineers have heated discussions with embittered users, admins, and business partners.

Posts by users and resellers show that although manufacturers declare their support, they are making life miserable and trying to extract additional money from them. A whole host of interesting comments can be found, among others, on the forum of one vendor which recently withdrew per CPU licenses from their price list.

According to one user, abandoning this way of licensing not only means a higher cost for him but also increases the time needed to add more VMs. In the ‘per CPU’ model, everything was limited to executing a single command. However, if you have to pay for a ‘virtual,’ the whole process consists of 10 operations!

1. Send a quote request to the VAR.
2. Wait for the VAR to get pricing from …. and create a quote in their system.
3. Receive the quote from the VAR.
4. Submit the quote for purchasing approval.
5. Wait for a PO number.
6. Submit the PO to the VAR.
7. Wait for the VAR to process the quote and create an order.
8. Wait for …. to process the order.
9. Get the new license file.

Another reseller admits that the ‘per terabyte’ licensing method can only work for companies that have built a large public cloud environment.

My clients are small and medium-sized companies, and 98 percent of their systems work locally. They have 6 sockets and a significantly higher density than 6 VMs per socket. In such cases, there is no economic justification other than ‘per-CPU’ licensing, he explains.

Another forum member writes in a similar vein. In his view, providers of backup solutions wrongly assume that almost all businesses are moving their resources to the cloud. However, this is not the case, and resellers or integrators cannot force customers to transfer data from their local environment to the cloud. This is because numerous companies are still concerned about the security of their data and do not want to hand it over to an external service provider.

Although we all know that the cloud is a good solution for the world today, it is the customers who will pay our bills, notes the reseller.

Storware and licensing policy

Storware follows the principle that customers should have access to a wide range of licensing models. We do not intend to push any one model by force, especially as the needs of businesses vary significantly in terms of performance or processing capacity. Meanwhile, the functionalities of various vendors’ products do not differ much. We are closely monitoring what the competition is doing, noting their customers’ frustration with convoluted licensing policies. We believe transparent and user-friendly software licensing can be part of our competitive advantage. This not only makes life easier for administrators but is also cheaper than other suppliers.

Storware offers several software licensing options for Backup and Recovery solutions. The choice of a particular option depends on the client’s individual needs and allows a solution to be tailored to the specific use in each case and achieve an optimal ROI.

Significantly, Storware continues to offer a ‘per host’ model, which some competitors are withdrawing from. ‘Per host’ licensing allows the use of unlimited virtual machines or TBs. If you have machines with more than 2 sockets, you need one host license for every two slots. Customers often choose this option because it has a high degree of predictability. A company using this model does not have to worry about the dynamically changing number of VMs or TBs in use.

Another model available to Storware users is ‘per VM.’ The customer selects the specific number of machines they wish to protect in this option. However, they can have any number of hosts or TB. MSP service providers typically choose this solution to match managed VM services to the pricing.

Storware also offers the ‘per Terabyte’ license mentioned earlier. In this case, it is only the storage size that matters. Also worthy of attention is the rather specific ‘per compute node’ licensing model introduced to meet the needs of container users.

If you’d like to learn more about Storware Backup and Recovery solution, feel free to contact us!

text written by:

Angelika Jeżewska, CMO at Storware