Enterprise hybrid cloud adoption is rising. It’s a trend that prompts vendors that serve enterprise IT to respond with hybrid cloud “in a box” solutions. In a previous post, I squared-off two such offerings—Microsoft’s Azure Stack vs. VMware’s Cloud on AWS (VMC on AWS). I made the comparison based on services and delivery model. Much was yet to be disclosed at that time by either vendor on pricing. Now that VMworld 2017 has come and gone, where VMware announced VMC on AWS availability and pricing, potential customers can begin to compare the two on a cost basis.
First, it is important to keep in mind that both are acquired by customers as an on-going service that is delivered, managed and supported by the relevant vendors. With Azure Stack, a customer buys or leases the supporting hardware from one of four Azure Stack partners: currently Cisco, Dell EMC, HPE and Lenovo. Azure Stack software licenses and services are layered on top. With VMware Cloud on AWS, the entire hardware, software and services stack is delivered, operated and supported by VMware.
Second, because these are initial offerings, much will change as time goes on as the vendors adjust and adapt to use cases and customer preferences. However, here’s how the pricing models “stack-up” today.
VMware Cloud on AWS
At VMworld 2017, VMware announced the initial availability and pricing of VMware Cloud on AWS in the US West (Oregon) region with plans to expand to additional AWS regions worldwide throughout 2018. Upon initial availability, customers will acquire the service on an hourly basis and pay only for each hour that a host is active. VMware will make one- and three-year reserved subscription options available in the future. However, under these reserved commitment plans, customers are billed for every hour during the term, regardless whether the hosts are in use. A Hybrid Loyalty Program will provide discounts to customers with on-premises VMware vSphere, NSX, and/or vSAN licenses up to a maximum or 25%.
In conjunction with the announcement, VMware has posted a pricing comparison model of the hourly, 1-year and 3-year options. Not surprisingly, the 3-year commitment would yield the greatest discount of 50% over hourly pricing. Additional discounts are available when the Hybrid Loyalty Program is factored-in. Pricing is based on the number of hosts where each host has 2 CPUs, 36 cores, 512GB RAM, 15TB of local flash storage (3.6TB cache, 10.7TB raw storage capacity). A minimum of 4 hosts is required per cluster. Additional hosts can be added or subtracted in units of 1. Pricing includes hardware, VMware software and support plus AWS infrastructure, but does not include charges for data transfer, IP addresses and direct connections to AWS services.
Microsoft takes a different approach. First, even though Azure Stack is delivered as a hardware/software integrated system, customers are responsible for purchasing the hardware infrastructure. Hardware support and maintenance are provided by the hardware vendor partner. Second, the pricing model is pure pay-for-use services that are licensed by Microsoft via its Enterprise Agreement or Cloud Service Provider programs. Azure Stack can be added to an existing Azure agreement so that subscriptions, monetary commitment and invoices are all included. In addition, existing enterprise licenses for Windows Server, SQL Server, etc. can also be applied.
Metering for usage is “similar” (Microsoft’s term) to that used in Azure. Customers pay separately metered and priced hourly rates for virtual machines, storage and application services. Azure Stack services are billed along with other Azure services in use and on the same invoice. Two support contracts will also be required—one with Microsoft, the other with the Azure Stack hardware provider.
I’ve put the details in this post for a reason: Making total cost of ownership (TCO) projections will be complicated by the fact that as-a-service is still a relatively new purchasing model and one that will be complicated by lots of moving parts. Market research indicates both hybrid cloud platforms are in demand. And it will often be the case that large enterprise customers will sign-on to both platforms—Azure Stack for Windows-centric application suites like Office 365, and VMC on AWS for VMware environments.
Now that pricing metrics can be compared, potential customers will likely revisit their initial assumptions. By VMware’s own calculations, the list price per host under a three-year commitment will be $109,366.00 per year or $3,038.00 per month. A minimum configuration will multiply those costs four-times those amounts. VMware executives stated that their aim was to price the service on a per VM basis lower than a traditional on-premises implementation and on-par with a native cloud instance. However, these calculations presume an undisclosed degree of platform oversubscription when moving traditional vSphere instances to VMC on AWS.
Azure Stack is simpler but the pricing metrics are very granular. A Base Virtual Machine costs $0.008/vCPU/hour. Azure Blob Storage costs $0.006/GB/month. And as with VMC on AWS, a least four servers are required at the customer’s data center site. Actual TCO may not be fully understood until a customer is well into the program. Assuming that customers use their existing software licenses for discounting leverage, Microsoft guides to Azure Stack fees being lower than Azure. This is true they say because the customer takes on the hardware TCO burden, but they don’t offer an assumed comparison to a traditional model in the same way that VMware does.
In either case, enterprise customers will now be sharpening their pencils as they look for all means available to exact discounts from both vendors.