> Is there a different way they are licensing VMWare ESX host?

Here's what I've been told by the so-called Deloitte experts that are
doing our audit.

1 server, no matter how many hosts are on it and backing up, has a
limited number of physical CPU's/cores. If it turns out to be 8 cores
then even if there are 100 computers on that VM host you can only get
charged for 8 cores.

Once we are done with the audit we'll see how true that is. 
 
Geoff Gill 
TSM Administrator 
PeopleSoft Sr. Systems Administrator 
SAIC M/S-G1b 
(858)826-4062 
Email: geoffrey.l.gill AT saic DOT com