Oracle Licensing

Oracle licensing VMware – Six Solutions

How does Oracle licensing VMware work?

  • vSphere ESXi up to 5.0: License all physical cores of ESXi hosts within clusters connected to shared storage.
  • vSphere ESXi 5.1 and later: License all physical cores of all ESXi hosts within the same vCenter Server Instance, even across data centers.
  • vCenter Server 6.0 or higher: License all physical cores of all ESXi hosts across all vCenter Server Instances.

Oracle Licensing on VMware: Navigating Complexity

Oracle Licensing on VMware: Navigating Complexity

Licensing Oracle on VMware can be daunting due to Oracle’s complex policies. Companies often struggle to understand proper licensing and may receive conflicting expert advice.

This article explores solutions for Oracle licensing on VMware and emphasizes the importance of working with independent Oracle licensing experts for accurate guidance.

Oracle’s Licensing Requirements for VMware

Older VMware Versions (vSphere ESXi up to 5.0)

  • Requirement: License all physical cores of the ESXi hosts connected to shared storage within the VMware environment.
  • Reason: Shared storage was necessary to move virtual machines, prompting Oracle to require licensing of all connected physical cores.

Newer VMware Versions (vSphere ESXi 5.1 and Later)

  • Requirement: License all physical cores of all ESXi hosts within the same vCenter Server Instance, including across data centers.
  • Reason: Live migration of virtual machines no longer requires shared storage, allowing movement anywhere within the vCenter Server Instance.

vCenter Server 6.0 or Higher

  • Requirement: License all physical cores of all ESXi hosts across all vCenter Server Instances with ESXi 5.1 or later hypervisors.
  • Reason: Running virtual machines can be moved across vCenter Server Instances, impacting licensing across the entire environment.

Importance of Independent Oracle Licensing Experts

Importance of Independent Oracle Licensing Experts

Why Work with Independent Experts?

  • Unbiased Guidance: Independent experts provide objective advice, free from Oracle’s direct influence.
  • Expertise: Deep understanding of Oracle’s licensing policies and VMware configurations.
  • Compliance Assurance: Ensures your company meets Oracle’s licensing requirements, avoiding potential fines or penalties.
  • Audit Preparation: Helps prepare for and respond to Oracle license audits.

Oracle on VMware – What You Should Know

Using Oracle technology on VMware and undergoing an Oracle audit is a serious concern that requires careful attention. Running Oracle on VMware presents significant IT asset management challenges.

If you haven’t received an audit report yet, you have options to address the situation; however, options become more limited once the audit report is received.

Oracle has profited significantly from auditing customers using VMware by asserting that servers not running Oracle software still require licensing.

This contentious issue has persisted for years, causing difficulties for many companies during Oracle audits. Oracle’s position on VMware licensing is vague and not explicitly covered in its licensing agreements, leading many customers to enter Oracle User License Agreements to manage this issue.

Oracle’s Position on Licensing Oracle Technology on VMware

Oracle's Position on Licensing Oracle Technology on VMware

Unclear Contractual Position: Oracle’s licensing agreements do not explicitly address virtualization or soft partitioning policies, creating confusion.

User License Agreements: Many customers have resorted to Oracle User License Agreements to clarify their licensing terms.

Insider Insights on VMware and Oracle Licensing

Observation from Former Oracle Employees:

  • The issue of Oracle licensing on VMware was often exploited to extract significant payments from customers during audits.
  • Oracle did not actively educate customers on proper licensing for VMware environments.

Internal Discussions:

  • When vSphere 6.0 was released, there were internal discussions about its implications. Some believed the demands were unreasonable and chose not to inform customers.
  • Typically, non-compliance due to virtualization did not result in customers paying the full amount initially claimed. Paying around 10% of the initial findings was often considered a success.

Strategies and Recommendations

Pre-Audit Preparation:

  • If you are not yet audited, seek guidance from independent Oracle licensing experts to understand your position and options.

During an Audit:

  • Engage experienced consultants to help navigate the audit process and negotiate with Oracle.

Negotiation Tactics:

  • Be aware that Oracle might claim all processors need licensing, but negotiations can significantly reduce the final amount owed.


Understanding Oracle licensing on VMware is complex, and Oracle’s unclear contractual position adds to the challenge.

Working with independent experts can help ensure compliance and manage audits effectively, avoiding substantial penalties and optimizing licensing costs.

What is our experience

What is our experience: 

  • When we joined a service provider in 2015, I was tasked with helping small and large customers understand Oracle licensing and contracts.
  • I found that all types of companies struggled with how to properly license Oracle on VMware, from Fortune 500 firms with large software asset management teams to small companies with just a few servers.
  • I often received questions about how to address this issue when deploying virtualization technologies, specifically VMware.
  • Unfortunately, there is no one-size-fits-all solution to this problem. Even when consulting with Oracle licensing experts, it is common to receive conflicting advice.
  • No specific contract or published article clause can definitively state whether Oracle’s stance on this issue is correct.
  • It is important to carefully review your contract and policies and determine the right action. You have the option to pay Oracle or not. 
  • Working with an independent Oracle licensing expert who can offer different strategies and advice on this topic can be helpful. Here are some options that our clients have chosen and that I have heard other Oracle licensing experts discuss:

Six Solutions to Oracle Licensing on VMware

1. Pay Oracle’s Demands:

  • Some companies pay Oracle’s requested amounts, even if they are substantial. They might sign a User License Agreement (ULA) to minimize future issues. Within a ULA, concerns about VMware licensing are mitigated.

2. Contractual Amendments:

  • Some companies negotiate contractual amendments with Oracle, agreeing to storage and network isolation. Although this solution is common, it can be seen as impractical and restrictive. Seek independent licensing advice if considering this option.

3. Refusal to Comply:

  • Some customers reject Oracle’s licensing stance, even during audits showing large gaps. These disputes often remain unresolved without reaching court, as customers refuse to pay.

4. Dedicated Environments:

  • Companies create bare metal or isolated virtualized environments specifically for Oracle deployments, adhering to Oracle’s virtualization rules.

5. Following VMware’s Advice:

  • Some customers follow VMware’s guidance, which may contradict Oracle’s stance. VMware’s blog offers further insights on licensing issues, such as those related to Java.

6. Migrating Workloads:

  • Companies move Oracle workloads from VMware to other solutions like AWS, Azure, Oracle Cloud, or Oracle Cloud at Customer, benefiting from per-vCPU licensing. Alternatively, they might migrate to Oracle Private Appliance using trusted partitions with VMware.

FAQ: Oracle Licensing on VMware

What is Oracle’s licensing policy for VMware environments?

Oracle requires licensing all physical cores of the ESXi hosts connected to the VMware environment, depending on the vSphere version and configuration.

How does Oracle license VMware with vSphere ESXi up to 5.0?

Oracle requires licensing all physical cores of the ESXi hosts within the cluster connected to shared storage.

How does Oracle license VMware with vSphere ESXi 5.1 and later?

Oracle requires licensing all physical cores of all ESXi hosts within the same vCenter Server Instance, even across data centers.

How does vCenter Server 6.0 or higher affect Oracle licensing?

Oracle requires licensing all physical cores of all ESXi hosts across all vCenter Server Instances with ESXi 5.1 or later hypervisors.

Can Oracle license audits include servers not running Oracle software?

Yes, Oracle may demand licensing for all physical cores of connected ESXi hosts, even if they are not running Oracle software.

What is a User License Agreement (ULA) with Oracle?

A ULA is a contractual agreement allowing unlimited use of certain Oracle products, which can help mitigate licensing concerns.

Is there a legal precedent for Oracle licensing disputes on VMware?

There have been no known cases that have gone to court over Oracle licensing on VMware.

Can companies negotiate storage and network isolation with Oracle?

Some companies agree to storage and network isolation as part of their contractual amendments with Oracle.

What if a company disagrees with Oracle’s licensing demands?

Some companies choose to reject Oracle’s demands and do not settle the licensing gaps, leading to unresolved audit findings.

Can creating dedicated environments help with Oracle licensing?

Some companies create bare metal or isolated virtualized environments specifically for Oracle deployments to comply with licensing rules.

Does VMware guide Oracle licensing?

VMware provides its own guidance, though it may not align with Oracle’s stance. VMware’s blog provides more information.

What are alternatives to VMware for running Oracle workloads?

Alternatives include AWS, Azure, Oracle Cloud, Oracle Cloud at Customer, and Oracle Private Appliance.

How does migrating to Oracle Cloud help with licensing?

Oracle Cloud offers per-vCPU licensing, which can be more straightforward and cost-effective.

What are trusted partitions with Oracle Private Appliance?

Trusted partitions allow for Oracle licensing on Oracle Private Appliance, providing a compliant environment for virtualization.

Why is it important to work with independent Oracle licensing experts?

Independent experts offer unbiased guidance and help ensure compliance, optimize usage and navigate complex licensing scenarios effectively.


  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.

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