What Broadcom Actually Did to VMware
When Broadcom completed its $61 billion acquisition of VMware in late 2023, it moved fast. Within months, the company had dismantled VMware's entire commercial model and replaced it with something unrecognizable to customers who had been buying VMware products for the past two decades. The changes are not incremental. They are structural. This is the most significant disruption in enterprise virtualisation in the past 20 years.
Here is what Broadcom did:
- Ended the sale of perpetual licenses — you can no longer buy a VMware license and own it outright
- Collapsed VMware's product catalog from over 160 offerings into two primary bundles
- Replaced per-socket licensing with per-core licensing, imposed a minimum purchase of 72 cores per order
- Introduced a 20% late-renewal penalty, reduced the authorized reseller channel
- Cut VMware's support and account management staff dramatically
The combined effect of these changes has produced cost increases that range from 3x for the most favorably positioned large enterprises to 12x or more for mid-market and education customers. A large UK university reported its annual VMware renewal jumping from roughly £40,000 to £500,000. Forrester Research documented a client reporting a 500% increase after mapping existing usage to Broadcom's new packaging. These are not outliers. They are the pattern.
Broadcom's stated objective is to grow VMware's revenue from $4.7 billion to $8.5 billion within three years. That $3.8 billion gap has to come from somewhere. It is coming from customer price increases.
The End of Perpetual Licenses
The shift from perpetual to subscription licensing is the most consequential change. Under perpetual licensing, you owned the software. You could run it indefinitely. Support was optional. If the vendor raised prices, you could decline the support renewal and continue running what you had. That optionality is gone.
Under Broadcom's subscription model, every workload running VMware software is on a recurring billing relationship. If you do not renew, you lose the right to run the software. This is a fundamental shift in power from buyer to vendor. Broadcom can now raise prices with the knowledge that the cost of migration often exceeds the cost increase — at least in year one.
The perpetual-to-subscription shift also means that enterprises with large volumes of legacy VMware suites or bundles no longer have the option to "run what you have." Every component must be relicensed under the new model or it becomes unsupported and eventually unusable.
The VCF and VVF Bundle Trap
VMware Cloud Foundation and vSphere Foundation are not equivalent to the products they replaced. VCF bundles vSphere, vSAN, NSX, and Aria Operations. If you are running vSphere without vSAN, without NSX, and without Aria, you are now paying for those components regardless. The bundle trap captures customers who used a subset of VMware's portfolio and forces them to pay for the full suite.
The economics are unforgiving. An enterprise that previously licensed only vSphere and vSAN separately must now purchase VCF which includes components they do not use. They are paying for capability they will never leverage.
Per-Core Pricing and the 72-Core Minimum
The shift from per-socket to per-core pricing was designed to capture the value of CPU core count growth. Modern servers from Dell, HPE, and others commonly ship with 32 to 64 cores per socket. A two-socket server with 64 cores per socket totals 128 cores — nearly double the 72-core minimum.
For organisations that had licensed on a per-socket basis with large-core CPUs, the transition to per-core licensing can produce a 3x to 5x cost increase from the metric change alone, before any price-per-unit increase is applied. The minimum 72-core purchase requirement means that even small deployments incur the cost of licensing 72 cores whether they use them or not.
This metric shift is pure revenue extraction. There is no operational benefit to Broadcom in moving to per-core — it is purely a mechanism to increase revenue from the same workloads.
What Enterprises Must Do Now
If you operate VMware software at scale, here are the four critical steps:
1. Conduct a Complete License Audit Before Your Renewal Date
Know exactly what you have deployed and what Broadcom's new pricing looks like for that configuration. Use our free assessment tools to quantify your exposure. Do not accept Broadcom's first proposal as the final word.
2. Model the Broadcom Negotiated Cost, Not the List Cost
Broadcom's list pricing is not the starting point for negotiation — it is the ceiling. Based on 200+ post-acquisition engagements, we know that Broadcom's negotiating authority is far higher than their opening position suggests. Model your renewal cost at 25% discount (typical) and 40% discount (achievable).
3. Evaluate Migration Alternatives with Honest TCO Modelling
See our Broadcom VMware Evaluation vs. Alternatives Advisory for vendor-agnostic analysis. Many vendor-led assessments conclude that migration is cheaper because the vendor proposing the assessment benefits from the migration. An independent evaluation will tell you whether migration actually makes financial sense.
4. Engage External Advisors with Post-Acquisition Negotiation Experience
The old VMware playbook does not work with Broadcom. Broadcom negotiates differently. They have different concession points, different discount authority levels, and different escalation paths than VMware did. If your renewal involves more than $1 million in annual spend, bringing in independent advisors with post-acquisition Broadcom experience is highly likely to pay for itself many times over.
See the $16M VMware exit case study
Related Resources
- VMware and Legacy Suite Unbundling — How Broadcom's bundling strategy affects customers
- Broadcom Simplified VMware Product Portfolio — What's included in each bundle and what's discontinued
- Broadcom/VMware Assessment Tools — Free tools to quantify your cost exposure
- Broadcom VMware Evaluation vs. Alternatives Advisory — Vendor-agnostic evaluation of stay vs. migrate
- Broadcom Advisory Services — Custom negotiation and evaluation engagements
- Broadcom/VMware Knowledge Hub — All resources in one place
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Contact Our Broadcom Advisors
If you are facing a Broadcom VMware renewal and want to benchmark your proposal or explore alternatives, contact our Broadcom advisory team. We have completed 200+ post-acquisition engagements and can typically identify cost reduction opportunities of 15-35% versus initial proposals.