Phasing Out our Socket-based Licensing

[ChrisGundry]

Except the time goes into an opposite direction with Veeam

What I mean is that originally and for very many years, VUL (and it predecessors) were Subscription-only.
And only most recently, less than two years ago, we have decided to also introduce the Perpetual option.

Hi Gostev

I contacted our reseller to get a refreshed quote for VUL. I requested quotes for:
1. Renewal of our existing sockets
2. VUL subscription
3. VUL perpetual

I have been advised by them that VUL is only available in subscription. They referred me to their Veeam contact to clarify, he has also confirmed to me that "There are two options available for our existing customers: either to stay with current perpetual model or to migrate to VUL subscription model."

I asked to confirm that there is no VUL perpetual model and he tells me there is not...

I sent him a screenshot of https://www.veeam.com/licensing-policy.html where it shows that VUL perpetual is an option and he says "Thank you for pointing that out to us, that information on our website is outdated and we are fixing it now. I have once again confirmed this with our licensing specialists and there is no migration option from existing perpetual socket-based licenses to perpetual VUL."

Can you please confirm:
1. Is there a VUL perpetual model?
2. Can we migrate from perpetual sockets to perpetual VUL? Or is it only for new customers or something else?

Thanks

Chris

[ChrisGundry]

The same chap has just confirmed that there is perpetual VUL, but for new customers only, we cannot migrate from socket perpetual to VUL perpetual.

I am therefore assuming his comment about the website being outdated referred to the part of the website which states: "Customers with “Active” Support and Maintenance Agreement may migrate their Socket-based Veeam Backup & Replication, Veeam Availability Suite or Veeam Backup Essentials Perpetual License to a Veeam Universal License (VUL) Subscription for additional benefits. Migrations from Socket-based Perpetual License to Perpetual VUL are also available.

For more information, please contact Veeam Renewals by submitting a form at https://www.veeam.com/renewal.html."

[Gostev]

1. Yes, there is a VUL perpetual model.

2. I have just confirmed with the responsible person in the pricing team: yes, existing customers can migrate from Perpetual Sockets to Perpetual VUL. However, there's no standard process like for migrating Perpetual Sockets to Subscription VUL. Thus, such migrations are currently done on case-by-case basis, as exceptions and via a custom process. He explained that there's no standard process due to lack of demand for such migrations.

[ChrisGundry]

Thanks Gostev, I will go back again and see if I can get a quote.

[ChrisGundry]

For anyone interested, I finally have an update about this after we eventually got our VUL quotes back after several weeks wait. The main outcomes are:

1. The migration to VUL subscription was semi-reasonable and in maybe 3yrs time we would start to see a cost reduction overall, but only if we didn't increase our VM count. In the short term our 1st year cost for the 'migration/upgrade' to VUL would see a fairly large increase, compared to the socket license renewal. If we increased our VM count within those 3 years then we would delay any savings/potentially not see any depending on the size of the increase. Obviously with our socket license we won't see any increase within those 3 years, unless Veeam decide to raise the renewal cost. Of course our hosts with current socket licensing could only support so many new VMs before we would need to buy more sockets, but as we have a fair amount of headroom, that new VM number would be reasonably high.

2. The migration to VUL perpetual quote was just silly in my opinion. Yr1 was 2.6x our current perpetual socket renewal cost and yr2 onwards renewal costs were 2.2x our current renewal costs, only marginally lower than the yr1 costs. I asked twice to confirm this was accurate and was told it definitely was.

3. Note that these VUL quotes were only for the VMs we actually want to/currently backup. We run quite a few more VMs within our environment which don't require backing up for various reasons, but are obviously consuming CPU resources. If we didn't have those VMs we would have quite a bit more CPU capacity available, which would further delay and increase to our socket count, meaning the socket licenses would remain even more viable for us for even longer, making the VUL subscription even less attractive to us.

3. I notice that the part on the website about license migration to VUL has been changed. The part which used to say "Migrations from Socket-based Perpetual License to Perpetual VUL are also available" has now been removed. The new text says: "Customers with “Active” Support and Maintenance Agreement may migrate their Socket-based Veeam Backup & Replication, Veeam Availability Suite or Veeam Backup Essentials Perpetual License to a Veeam Universal License (VUL) Subscription for additional benefits."
Note that VUL perpetual is no longer mentioned.

We have now renewed our perpetual socket licenses as VUL is just not viable for us.

I hope this is seen by Gostev or someone else in sales involved in the socket licensing argument.

Thanks

[Gostev]

Well, I must say I'm happy to see those migration offers turning from "unacceptable" to "semi-reasonable" with time! To me, it means that our Pricing team is on the right track with their changes to the program... no one said they can arrive to the perfect solution immediately, plus we practice the "Innovate & Iterate" approach here at Veeam. Trust me, they've been carefully monitoring migrations to determine what other changes and incentives might be required in the future.

The biggest challenge they are facing is that no particular customer is a reflection of all customers as it comes to migrating off of a Socket license. For instance, with low density customers, migrating to VUL Subscription can be quite the savings and we see lots of such customers migrating. Also for lower edition customers, migrating to VUL can again be a great deal. There may be some cases where migrating to VUL will be less of a savings, but in all cases, the goal for our Pricing team is to make VUL the most attractive option for our customers - both now and into the future.

But the way I see it, if through these iterations they can't eventually make the migration work for some customers, then Veeam should just let those remaining customers stay on Socket for as long as they want. With the caveat being periodic indexation of a Socket renewal price, to account for growing VM density per socket due to hardware advancements (like we've already been doing for some time). VUL obviously won't be a subject to such a price indexation, as it's simply not applicable there.

[pirx]

*high frustration level ahead!* Veeam is now forcing us to look into new backup solutions for the future. After migrating to VUL we'd see a massive price increase (6 digit) due to the higher subscription renewal fee (at least that's what I understand). I'm not involved in the details but looking into the different Excels and tables this is also not very straight forward to me. We are in discussion with Veeam now for a couple of months now. This and the problems with the product in the last 12 months (fully patched v10, 4-5 private patches and still bugs that "might" be fixed in 11a) leaves a bitte taste for now. If I add the costs for the TB's of old data that was not deleted from S3 due to a bug, Veeam is getting really pricy for us.

[Gostev]

we'd see a massive price increase (6 digit) due to the higher subscription renewal fee (at least that's what I understand). I'm not involved in the details

Sorry to say but this is not really a constructive feedback then, because it's ALL about those details for example, I know that one of the core concepts of our VUL migration policy is a perpetual discount on future subscription renewals, which is specifically designed to ensure your subscription renewal costs are in line with what they were with the socket license.

Further, "looking into the different Excels and tables" should not be needed. Eventually you should ask your Veeam rep to just present you with two numbers: here's how much you pay for your Socket license renewals now, and here's how much you're going to pay in the following years if you migrate to VUL. Then you compare and decide if migration is worth it for your environment, just like Chris did. And if there are more people like Chris, then when the next renewal time comes, the migration offer will hopefully be further improved for their scenarios. This is how we hope to eventually arrive to the "golden middle": what is acceptable for both our customers and for Veeam as a for-profit business.

[Gostev]

I think I should remind yet again that this thread was sparkled by me saying the following in my newsletter:

Your feedback about migration experience remains as important as ever, and we will continue to iterate and improve the migration policy based on what we hear from you – and also by observing "how the water will flow" [...] It is extremely important for us to have a solid migration policy from Sockets to VUL that most customers are comfortable with, before we can start phasing out our Socket-based licensing.

If you like the VUL migration offer, take it. If you don't like the offer, vote against it by staying on sockets - and so long as many customers keep refusing it, further migration policy changes will be made to make it more attractive.

[mmasching]

Well, for me it sounds pretty strange, that if Veeam is keen to push their customers to a VUL subcription model, why early adopters are not honored by an attractive offer to follow that path.
While there is currently a ratio of 1:10 offered, which might fit the customers environment, but doesn't necessarily have to, options to meet dedicated customer situations seem not to be available due to a fixed discount level.

If you announce further adjustments to the migration policy, which should fit customers needs better, why should anybody walkon currently?

From my point of view keep satisfied customers, even in terms of commercial details should be goal number 1

[Gostev]

Actually there's no such thing as 1:10 these days I believe, this is something from last year and Migration Policy v1. These days it is a completely different approach.

If you announce further adjustments to the migration policy, which should fit customers needs better, why should anybody walkon currently?

Because it is extremely attractive already for many? For the majority of existing customers, migration to VUL provides access to full functionality while maintaining same (or even reducing) their renewal costs. So why would anyone keep paying more for less functionality?

Sure, adjustments may still come - but it is unlikely they will be for scenarios in which our customers are already happily migrating to VUL. Rather, I expect any future adjustments and incentives to be focused on those scenarios where migration using the current policy does not make much sense.

Until then, I fully expect such customers to stick to sockets, as I would do the same myself.

[ddayton]

Just wanted to add another thought to this topic. This doesn't mean we will never use a subscription based license, but we avoid it.

I have been working in the same industry for over 30 years and suffered through changes that subscription licensing is not ideal.

Company name changes from being sold to new owners and in some cases that included several months of the business shutdown and everyone locked out. New owner can also mean being forced to use new resellers.

The other one is getting through several chapter 11's where the only safe license was an owned license. All contracts and subscriptions are the first to go and then renegotiated or must be proven to be an absolute necessity.

[richard.cooper]

Good Afternoon,

I have a question on VUL - we are coming up to renewal time and for completeness I asked for pricing to remain on per socket but also to move over to VUL.

I am told that we would have to move from Basic to 24/7 support to do this which would hugely increase the cost - is that right? We've been fine with Basic support for the last 5 years or so, and don't see a need to upgrade.

Thank you.

[Mildur]

VUL is Production Support Only.

It‘s documented in the license Policy:
https://www.veeam.com/licensing-policy.html

[Gostev]

I am told that we would have to move from Basic to 24/7 support to do this which would hugely increase the cost - is that right?

I guess this would be the case if you upgraded your support program from Basic to Production while remaining with the socket license. Although even then it would not be "hugely" because the difference in these support programs is just a few % of MSRP (5% if I'm not mistaken).

However, VUL only comes with Production support so there's no notion of you having to separately upgrade your support program or anything like that. Just considering it as another perk of being on VUL, in addition to access to the full functionality equivalent to having top product edition with the socket license.

Thus you should only worry and evaluate your costs of migrating to VUL and your future VUL renewal costs. As I noted above, existing socket customers get the remaining value of their perpetual licenses transformed into a life time discount (while you remain a customer) off of VUL MSRP, which helps to keep VUL renewals costs inline with what they paid for their Socket license renewal costs. So see what you can negotiate in your case for the migration offer and take it or leave it - but you don't need to worry there would be any additional unforeseen costs for example due to a switch to Production support program.

P.S. We decided not to offer Basic support program going forward based on our observation that virtually all customers on Basic program still contact our support outside of business hours in case of any real major disaster like ransomware attack, and we obviously have to support them then in any case - we can't really tell them to come back after the weekend in such situations. But this did not work well from support staffing perspective because 24/7 shifts are manned according to the percentage of customers on Production support program (as these shifts during "weird" hours are generally significantly more expensive due to local laws in many countries).

[richard.cooper]

Hi Gostev,

Thank you - I typed out a long reply but then it wanted me to sign in (I already had!) and lost it. Hey ho.

I suspect we will stick with a straight renewal of support this year, but expect we will have to look at changing next time. We have always been well aware of the time limitations on basic support don't expect out of hours if we're not paying for it

[Gostev]

OK so it's been almost half a year since my original newsletter so I thought I provide an update on the current status.

All in all, it is looking like Veeam will in the end go ahead and stop selling Socket-based licenses sometime next year, just as I expected. This makes sense from the business perspective as these licenses cannot be used for the majority of workloads Veeam can protect these days. Since I like analogies: there's no point to keep selling gas that allows cars to drive on certain types of roads only. Having said that, you still have the option to keep your existing Socket licenses.

The exact cut-off date is still to be defined, but as always we will make the announcement well in advance (in the coming weeks), so everyone who needs to stock up with more Sockets while they are still available will have plenty of time and the opportunity to use either 2021 or 2022 budget.

Considering all feedback received in this topic so far, here's what we're inclined to do as a part of this transition:

1. We will allow existing customers to stay with Socket-based licenses they already own if this is what they prefer, and keep renewing Sockets maintenance. In other words, from technical perspective we have no plans to discontinue Socket license support in future product versions.

2. No customer will be forced to migrate from Sockets to VUL. The upgrades to VUL will be driven using "carrot" (incentives) versus "stick" (end of life) approach. The Pricing team will continue to tweak the migration policy by learning from your feedback on previous offers.

3. We will keep VUL available on both Subscription and Perpetual contracts, because in some markets customers only have the option to purchase on perpetual contracts.

Any comments or thoughts? Are there any unaddressed concerns we have missed, FAQs we have to cover, etc.

Appreciate your feedback!

[m.novelli]

Feel sad

[Gostev]

It'll be OK

[jtupeck]

Honestly, it's really good to know this for sure. I have suspected for a couple years that this would be the case. I recently moved to the VAR side from a customer who had Enterprise Plus Veeam for almost a decade and as I get more and more experience with customer environments, it's amazing how many times I see a feature (most notably, SOBR extents) that my customers are limited with. Having moved a few environments over to the perpetual VUL model with some great discounts (that persist as long as their VUL count stays above the initial migration numbers) in the past 6 months, as much as I wanted to kick against it at first, I really do see the benefits with VULs for non-Enterprise Plus socket-based customers. Even for some who are socket based and need Agent and NAS backups, as well.

[ChrisGundry]

Can you please confirm what this means for existing socket customers buying new hardware? For us for example, we have multiple socket licenses and plan to stay on sockets for the reasons mentioned previously in this thread. At some point may need to buy another host to expand our DC if we run low on resources. Does this mean we can no longer purchase sockets, even as an existing socket customer? If so, what are we to do? Somehow manage our existing hosts with sockets, but then somehow manage any new hosts with VUL? Or is there an exception for existing socket customers to be able to purchase additional sockets in the future still? Thanks

[Gostev]

The overall plan is that Sockets will be off the books completely so no one will be able to buy them - neither existing nor new customers. So if you want to stick with Socket licensing and already know you will be buying additional hosts soon, then the best idea would be to pre-purchase Sockets for all your short-to-mid term expansions before their End of Sale. For longer term expansions, you will need to talk to your Veeam sales rep to determine the best path then, as it is impossible to predict what rules will we have at the time (particularly around exceptions).

I would also note that we see relatively few customers expanding their sockets these days, of course with an exception when they do a pilot first and then go "all in" with Veeam. But normally, it is the opposite: contraction averaging 10% per year due to customers getting more and more powerful hosts during each hardware refresh. It's not untypical for a new host to double the VM density per Socket comparing to a decommissioned one. So you will too likely have Veeam licenses freeing up as the time goes, and these licenses will be re-usable for any additional hosts you acquire.

[Regnor]

I would still love to see both sockets and VULs, so each customer can choose what fits best for their environments. I see advantages for both and non of both models can fit for everyone. But I feel that this will be the future and we won't be able to do much about it. At least from a consultant/technican view VULs are great as they offer a complete feature set and the best support.

All in all, it is looking like Veeam will in the end go ahead and stop selling Socket-based licenses sometime next year, just as I expected. This makes sense from the business perspective as these licenses cannot be used for the majority of workloads Veeam can protect these days. Since I like analogies: there's no point to keep selling gas that allows cars to drive on certain types of roads only. Having said that, you still have the option to keep your existing Socket licenses.

I'm wondering if you do have an insights about the shares/percentages of workloads Veeam customers are securing with VBR. This would be interesting to know, as most environment I've seen consist of VMs; next are agents with a 1-digit percentage rate.

[Gostev]

Actually you bring up a very good point, because this year we already have over two thirds of our net new bookings coming from VUL. The majority of our prospects are choosing VUL over Socket licensing while both options are still available for purchase! So most do see the benefit of VUL portability. Moreover, I get a feeling that the remaining one third is to the most part due to our channel selling what they know best and are most comfortable quoting. Because I often ran into new customers who were not even offered VUL option by our partner, and have no idea it exists!

Agents represent a much bigger chunk of our new license revenue than you think maybe most environments you're dealing with are good old customers who are close to 100% virtualized and/or still thinking Veeam=VMware (which was true for so many years)? I would say we completely saturated that market over the first 10 years, and it's specifically due to agents that we were able to start talking to other customers, those with mixed environments.

[sasilik]

Hello

1. We will allow existing customers to stay with Socket-based licenses they already own if this is what they prefer, and keep renewing Sockets maintenance. In other words, from technical perspective we have no plans to discontinue Socket license support in future product versions.

We have N socket license now but we plan to renew N-8 licenses at the end of the year. Our local sales representative said that if we want at later time to increase number of sockets to N again then we can do that if we pay for the support for these 8 retroactively. Can we do that?

[Regnor]

...

Well Standard/Enterprise Sockets are no longer available (besides Essentials), so the decision for most new customers is Enterprise+ versus VUL. And in that case VUL will win if a customer didn't acctually plan with E+ or had high-density hypervisors.

I'm sure agents make a huge share and I'm glad that you've introduced them; just like you say, before them Veeam just didn't fit for certain customers/environments. I just don't see the license mobility as a that big advantage. But this is only my limited view of what I've seen so far; it can totally be different for anybody else.

[Gostev]

We have N socket license now but we plan to renew N-8 licenses at the end of the year. Our local sales representative said that if we want at later time to increase number of sockets to N again then we can do that if we pay for the support for these 8 retroactively. Can we do that?

Increasing the number of licensed sockets will not be possible after their End of Sale.

Also, please keep in mind we didn't make any announcements even internally yet, so your local sales rep is completely unaware about any of these possible future changes we're discussing here.

[sasilik]

Thank you for an answer. I keep that in mind.

[JPMS]

Actually you bring up a very good point, because this year we already have over two thirds of our net new bookings coming from VUL. The majority of our prospects are choosing VUL over Socket licensing while both options are still available for purchase! So most do see the benefit of VUL portability. Moreover, I get a feeling that the remaining one third is to the most part due to our channel selling what they know best and are most comfortable quoting. Because I often ran into new customers who were not even offered VUL option by our partner, and have no idea it exists!

Or maybe it's because there has been no mention of socket based licences on the Veeam sales site for at least 18 months - 2 years? If you searched the Veeam site for pricing, all it mentioned is VULs. Didn't even mention that socket licences existed. If I wanted to get pricing for socket licences I had to firstly know they existed, and then had to search third party websites to get pricing.

[Gostev]

Indeed, Sockets were removed from Pricing pages a couple years ago. But this does not explain why this year alone, the buying behavior changed from 35% VUL (as of 1 year AFTER the change was already made) to 70% VUL (now). Which is why I believe this shift is primarily due to the majority of customers wanting the ability to also protect workloads not running on hypervisor sockets (support for many of which we added relatively recently) and appreciating license portability between physical/virtual/cloud. At least the new workloads adoption numbers seem to confirm that. This is not to say there's no other little things that made some difference too, of course.