Cloud service provider TeleComputing has begun migrating 10,000 virtual machines to Microsoft's Hyper-V, after licensing model changes made it "too costly" to remain with rival VMware.

Scandinavian hosting firm TeleComputing delivers over 2,400 hosted applications to more than 800 small and midsize businesses and 75,000 individual users in Norway and Sweden. Its data centres contain 3,500 servers, 70 percent of which have been virtualised since it became a customer of VMware in 2006, and now supports 10,000 virtual machines.

Two years ago the firm, which is now a Microsoft Cloud OS Network partner, made the decision to migrate its entire virtualised estate from VMware's ESX hypervisor over to Hyper-V.

According to Kjell Tore Espeseth, chief technology officer at TeleComputing, the decision to switch was due to the introduction of the 'vRAM' pricing structure, which increased costs as its hosting business grew and more users were added onto its systems.

"Initially we used perpetual licensing, but then VMware changed the licensing for service providers. That was when we realised that it became just too costly and we couldn't compete in the market based on the usage we had and the terms and conditions for the service provider licensing."

Espeseth said that the changes "made it difficult to be competitive" in its market, as higher charges for licensing would have to be passed on to its own user base.

"We are selling IT as a service where we provide all the IT applications and all the data for our customers 'as a service', and we charge them per user per month," he said.

"The more we have to spend on licensing the less competitive we will be. It was not possible for us, with our business model, to put that additional cost on the customer."

He added: "With the volume we have, and also the expectations that we will actually on average increase the RAM we have for each virtual server, it started to make up a significant cost, so we were looking at ways to reduce that," he said.

vRAM licence costs

VMware introduced its vRAM licensing model in 2012, which involved switching from charging per physical socket to paying for the amount of virtual RAM assigned to a particular system. When the designated memory capacity is reached the user's licence cost is increased, potentially limiting the number of virtual machines that can be run on a physical server.

The new licensing model, dubbed 'vTax' by its detractors, angered many enterprise customers, with claims it unfairly increased costs and inhibited deployment flexibility. Following the criticism, and the threat of customers switching to cheaper open source and proprietary rivals, the vendor reversed the decision and scrapped the payment model. However the vRAM pricing was kept in place for service providers.

The changes prompted TeleComputing to switch to Windows Server 2012 with Hyper-V and Systems Center, which Espeseth says has become a viable alternative in recent years.

"We found that Hyper-V with Windows Server 2012 and Systems Center was certainly improving, and was more than good enough for what we needed. So we started a migration based on the 2012 versions. Now we have upgraded to the R2 versions of the Windows Server and it is getting even better."

By moving to the cheaper Microsoft software Espeseth said that TeleComputing is able to save a significant amount on licensing compared to VMware, with lower costs for adding guest virtual servers.

"It was a significant cost saving. I can say that it was more than fifty percent [of the licensing costs for hypervisor and virtual machine management]."

Speeding server migration

Since work began migrating servers a year ago, TeleComputing has swapped 1,000 virtual machines in the space of five months, and expects to have 3,000 completed by the end of this summer.

To support the migration process, TeleComputing is using Double-Take Move tools. The migration software copies all data, applications and registry settings from a source server to another physical, virtual or cloud server, with the migration occuring in the background, reducing downtime and allowing TeleComputing to meet its customer SLAs.

Espeseth said that the aim is to move as much of its 10,000 virtual machines to Hyper-V as is possible, having signed up with Microsoft's Cloud OS Network. This comprises of 25 service providers across the globe which provide cloud hosting services compatible with Microsoft Azure and Hyper-V virtualised environments.

However he acknowledged that it will difficult to totally remove ESX from its servers, due to the ubiquity of VMware in its customers' own data centres.

Espeseth explained: "It could be that a customer already has a VMware environment and wants to have disaster recovery in our data centre so wants some kind of integration, and that is going to be easier if we use VMware programs."

Licensing changes

Espeseth said that while other service providers may find that VMware licensing is less problematic in their individual case, he would like to see changes within the pricing structure.

"It is important for a service provider to see some kind of scalability, and we cannot have a licensing model where the licence increases at the same rate as the volume increases.

"This means that we can't have a licensing model where we have to pay per gigabyte of vRAM, and we wouldn't like to have a licensing model based on the number of VMs either. We would like to see a licensing model on, for instance, the number of physical sockets on the server."

VMware declined to comment on its licensing model for service providers.