Here's Why Some VMware Partners Think NSX Software-Defined Networking Tech Is Priced Too High

VMware has published pricing for its NSX software-defined networking technology. Now that channel partners have had a chance to go through it, several told CRN on Friday it's more expensive than they'd anticipated.

VMware is selling NSX in two ways. For a perpetual license, list pricing starts at $5,996 per CPU, and customers can also buy it under a term license starting at $34 per virtual machine per month.

VMware is also offering volume discounts for NSX, but a VMware spokesperson declined to offer specifics.

VMware paid $1.2 billion for SDN startup Nicira nearly two years ago, and while it now has over 100 paying customers, the Palo Alto, Calif.-based vendor needs to get a significantly larger portion of its customer base on board.

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While VMware partners understand this, some told CRN they're not confident that customers will be willing to shell out for NSX at its current price points.

One partner told CRN he'd heard that VMware would be charging in the single digits for the monthly NSX option. At nearly $6000 per CPU, a 16-node cluster with NSX will cost nearly $200,000, the partner said.

VMware has recently begun pitching NSX as a network security enhancer, but the cost could be prohibitive for some customers, said the partner.

"[Six thousand dollars per CPU] is a lot when VMware is positioning this from a security standpoint," said the partner, who requested anonymity to avoid damaging his relationship with VMware. "Many interested customers aren’t looking at the 'full stack' from NSX. They like the security aspects."

Not all customers feel this way, however.

Bill Schell, president of August Schell, a Rockville, Md.-based VMware partner, said the NSX pricing is "a good starting point" for the channel, and one that's in line with his expectations.

August Schell, whose customers include enterprises and government agencies, has closed a number of large NSX deals, including one with the U.S. Department Of Agriculture. Since May 1, August Schell has done $2 million in NSX business overall, Schell said.

VMware's volume discounts in such deals are "aggressive," Schell said, though he declined to specify how much for competitive reasons.

NSX is already showing itself to be an effective tool for solving customers' issues with network security, according to Schell.

"If you have a network that is under attack, NSX lets you move that network instantaneously," Schell said. "That's an important use case for NSX."

NEXT: More VMware partners weigh in on NSX pricing

Scott Trinque, president of EchoStor, a VMware partner in Hopkinton, Mass., said the NSX pricing is in line with his expectations.

NSX is a disruptive technology that could have a similar impact in the data center as VMware's ESX server virtualization technology, according to Trinque.

"Our customers are seeing value in the product," Trinque said of NSX. "It's a platform play, and customers that have virtualized servers are now looking to move up the stack [to networking]."

Now that it has released NSX pricing, VMware is looking to get more partners selling NSX. Time is of the essence here, as VMware has a head start on rival Cisco by being first to release an SDN product into the marketplace.

Cisco has been publicly bashing NSX while touting its own competing SDN technology, called Application-Centric Infrastructure (ACI), which is hardware-centric.

But Cisco's SDN vision won't fully come together until it releases its Application Policy Infrastructure Controller (APIC). The networking giant has said this will happen this "summer."

Cisco wasn't immediately available for comment on VMware's NSX pricing. But the aforementioned VMware partner thinks the current NSX pricing won't be difficult for Cisco to undercut.

"Cisco has made no secret of the fact they plan to go after VMware on the pricing front. Given these numbers, I’m not sure they have to try very hard," said the partner.