Broadcom VMware Licensing Changes Explained

The VMware Licensing Change means:

• No More Perpetual License Sales: Customers can no longer buy perpetual licenses.
• Shift to Subscriptions: This will likely increase Broadcom’s revenue. By making this shift, Broadcom aims to increase revenue from $4.7 billion to $8.5 billion over the next three years.
• When will you need to buy a subscription? Expect Broadcom to audit more customers; if you suddenly need more licenses, the only option is the subscription model.
• When is your current VMware support contract expiring? Broadcom will contact you to initiate discussions about switching to the more expensive contract model.
• Replacement Products – Which products replace my existing VMware licenses? Read our analysis of this in this article.

For In-depth Analysis – Read VMware Licensing Changes Post-Broadcom Acquisition: Strategies for CIOs and Procurement Teams.

Introduction to Broadcom VMware Licensing Changes

Broadcom’s recent announcement regarding VMware’s licensing changes marks a significant shift in how businesses access and utilize VMware’s solutions.

These changes, which include eliminating perpetual licenses in favor of subscription-based models, are designed to align with Broadcom’s strategic goals while impacting customers’ plans and management of their IT infrastructures.

Broadcom’s Announcement on VMware Licensing Changes

Broadcom has declared the end of perpetual license sales for VMware products, transitioning entirely to subscription-only models.

Key Reasons for the Shift from Perpetual Licenses to Subscriptions

1. Revenue Growth Objectives: Broadcom aims to grow VMware’s revenue from $4.7 billion to $8.5 billion within three years by focusing on recurring revenue from subscriptions.
2. Market Trends: The IT industry increasingly prefers subscription models due to their flexibility, scalability, and continuous innovation.
3. Operational Simplicity: Subscription models simplify license management and enhance Broadcom’s ability to offer integrated solutions.

Implications for VMware Customers

1. Increased Costs: Many customers may face higher costs as subscription models replace perpetual licenses.
2. More Frequent Audits: Broadcom has indicated an increased focus on license compliance, meaning customers should prepare for potential audits.
3. Renewal Engagements: Customers nearing the expiration of their support contracts will likely encounter proactive outreach from Broadcom representatives, encouraging them to switch to subscriptions.

Read CIO Playbook: Broadcom’s VMware 2024 Licensing Changes.

Broadcom’s Global Shift to Subscription Licensing

Broadcom’s late 2023 takeover of VMware immediately accelerated VMware’s transition to a 100% subscription licensing model, ending the sale of perpetual licenses and support contracts worldwide​.

This means organizations can no longer purchase new perpetual (everlasting) VMware licenses or renew standard support; only subscription or fixed-term licenses are offered.

Broadcom aims to create a steady, recurring revenue stream and align with industry trends favoring SaaS-like models.

• End of Perpetual Licenses: Effective early 2024, VMware, now under Broadcom, stopped selling perpetual licenses and halted renewals of support for existing perpetual contracts after their current term. Customers can continue using their existing perpetual VMware products, but once support expires, they must either migrate to a subscription-based model or use third-party support to receive updates. In short, owning software outright is no longer an option; it’s now either “rented” via subscription or goes unsupported.
• Global Uniformity: These changes apply globally – all regions and customer segments are impacted equally by the licensing shift. Broadcom’s strategy is global, aiming to double VMware’s revenue (from approximately $4.7B to $8.5B in three years) primarily through recurring subscriptions. Even sectors that traditionally received special terms (e.g., education, government) are seeing prior discounts reduced or eliminated under a “one-size” subscription model, as some public institutions have reported (more on cost impacts below).
• Portfolio Simplification: Broadcom reduced VMware’s product catalog from over 160 offerings to a few consolidated bundles​, alongside the licensing model change. Instead of selling dozens of standalone products, VMware now emphasizes two primary solution bundles – VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF) – plus a couple of targeted vSphere editions for smaller deployments​. This dramatic simplification was driven by customer feedback that VMware’s portfolio was too complex​. In theory, the streamlined lineup should make purchasing an end-to-end solution easier and get more value bundled in. In practice, it also means some optional features are only sold as part of larger bundles, which can raise entry costs for smaller needs (discussed later).
• Subscription Benefits (Broadcom’s View): Broadcom positions the subscription model as beneficial for customers, promising continuous innovation, faster time-to-value, and predictable costs. Instead of large upfront investments and infrequent upgrades, subscriptions offer regular feature updates and support at a single price. A “bring-your-own-subscription” model is also being introduced, allowing portability of VMware subscriptions across on-premises and approved cloud environments​ – useful for hybrid cloud strategies. However, these claimed benefits come with significant costs and operational adjustments that IT leaders must weigh.

Read CIO Playbook: Navigating VMware vSphere+ and vSAN+ Subscriptions in the Broadcom Era.

Major VMware Products Affected and Licensing Changes

These changes have touched every major VMware product line. The table below summarizes key product licensing shifts under Broadcom’s new regime:

Implications of Product Bundling: For large enterprises, integrated bundles (VCF, in particular) deliver a comprehensive stack—compute, storage, networking, and cloud management —all in one subscription. This can simplify procurement and ensure that all components are licensed in sync.

However, mid-market and smaller users may find that these bundles include features they don’t need, potentially forcing them to pay for more than they used to.

For instance, an organization that only wanted vSphere and vSAN now must subscribe to the full Cloud Foundation (including NSX and Aria) or, at the very least, vSphere Foundation (which includes Tanzu and Aria operations).

The modular, à la carte approach is essentially gone. VMware has kept just two smaller standalone vSphere options (Standard and Essentials Plus kits) for “lighter requirements.” However, anything beyond basic virtualization requires broader bundles.

From Perpetual to Subscription: How Licensing Has Changed

Broadcom’s changes aren’t just nominal; they fundamentally alter how VMware licenses are sold, measured, and renewed.

Key changes in the licensing model include:

• Subscription (OPEX) vs. Perpetual (CAPEX): Under the old model, many VMware customers purchased perpetual licenses (a one-time capital expense) and paid for annual support and services (SaaS) to receive updates. Now, licenses are recurring subscription expenses (typically billed annually or over multiple years) that cover usage and support. This shifts VMware spending to an operational expense and may affect budgeting and accounting. IT leaders must plan for ongoing subscription fees rather than one-time purchases, which can impact cash flow and IT budget planning over multi-year cycles.
• “License per Core” Model: Traditionally, VMware vSphere was licensed per physical CPU (socket), up to a capped number of cores (previously 32 cores per CPU license for vSphere). Broadcom has moved to a per-core licensing model for vSphere and its bundles​. Every quote now has a minimum of 16 cores counted per CPU​, meaning even a CPU with fewer cores is counted as 16. Furthermore, starting in 2025, Broadcom is dramatically raising the minimum purchase to 72 cores per order. In other words, the smallest license transaction you can buy is 72 cores worth of VMware, whether you need that many. This is a major overbuy for a customer with a single small server (e.g., 1 CPU with eight cores): you would still pay for 72 cores. Broadcom’s guidance: “If a customer has a single-processor server with eight cores, VMware by Broadcom will license 72 cores.”​. This change ensures a much higher entry price for small deployments. Mid-market customers with only a few hosts may now license tens of cores that they won’t use, and partners must adjust their quotes accordingly. The per-core model also means that on larger servers, costs scale with CPU core counts – a host with 64 cores now effectively requires 64 licenses, or four times what a 16-core baseline would cover. Net effect: Organizations must pay closer attention to hardware specifications and consider core count when budgeting for VMware, as high-core CPUs or multiple small deployments can significantly increase licensing costs.
• Subscription Terms and Renewals: All VMware subscriptions have a set term, such as 1, 3, or 5 years. Timely renewal is critical – Broadcom has introduced a late-renewal penalty of 20% of the first-year subscription cost if you renew after your anniversary date​. This is a stark change from the previous flexibility where SnS renewals could sometimes be del or co-terminous without heavy fines. If a customer lets a VMware subscription lapse and tries to renew later, they face a hefty surcharge. Broadcom uses this to enforce on-time renewals, hence steady revenue. IT teams must proactively track VMware renewal dates to avoid penalties or consider starting a fresh subscription if that’s more economical than a late renewal. This change also means less negotiating leverage at renewal time – customers are incentivized to stay on schedule rather than shop around past their term.
• License Portability: On a positive note, VMware is adding a Bring-Your-Own-Subscription (BYOS) flexibility. This allows customers to port their VMware licenses to approved cloud providers or between on-premises and cloud deployments without needing a different license for the cloud deployment. For example, a vSphere subscription could be used on VMware Cloud on AWS or other VMware-validated cloud hosts. This portability can help organizations with hybrid cloud strategies avoid double-paying for cloud-hosted VMware instances. It treats the subscription as a floating entitlement that can follow the workload, a nod to customer demands for more flexible consumption.
• Support Model Changes: With subscriptions, software support is bundled (you get support and updates as part of the subscription). However, some customers have raised concerns about the quality of support under Broadcom. Broadcom had a reputation in previous acquisitions for cost-cutting support. Indeed, after the acquisition, customers observed a deterioration in support responsiveness and expertise for VMware. Broadcom appears to prioritize the largest “strategic” customers, potentially leaving smaller clients feeling underserved. From a licensing perspective, customers no longer choose different support tiers; instead, everyone receives a default support level with their subscription. However, Broadcom did say that higher support tiers are included in some new bundles​. Enterprise customers might appreciate the inclusion of premium support. In contrast, smaller customers might feel they are paying more for support they rarely use, and if that support is perceived as worse now, it adds insult to injury. In short, the shift is in license metrics and how support is delivered and valued.
• Trade-In Incentives: Broadcom offered “trade-in” programs for customers switching from existing licenses to new subscriptions, making the transition process easier. Notably, if done promptly, there was an early offer of 50 %+ off the list price for switching to a subscription, coupled with upgraded support levels. These incentives entice customers to give up their perpetual entitlements and commit to a subscription. Enterprises negotiating their renewals should inquire about such migration discounts. Broadcom has indicated it will work with customers to convert their installed base to subscriptions with upgrade pricing. However, customers report that even with trade-in discounts, the net cost is often higher than their previous maintenance costs due to the new bundle packaging and metrics (see next section).

Read CIO Playbook – Diversifying Virtualization to Reduce Risk

Impact on Costs and Operations: Enterprise vs. Mid-Market

The new licensing scheme has significant cost implications. Depending on the customer size and use case, impacts range from moderate operating expense increases to astronomical price hikes in some reported cases.

Below, we outline how the changes are affecting both large enterprises and mid-market organizations, with specific examples:

• Enterprise Customer Example – Strategic Bundle Uplift: A striking example comes from the education sector. One large UK university, considered a “strategic” customer by VMware/Broadcom, saw its annual VMware renewal quote increase by approximately 1,250% – from around £40,000 for one year of support to roughly £500,000 per year under the new subscription model. Over three years, they were quoted £1.1 million, whereas previously, around £ 120,000 would have covered the same period. The reason was that education customers are now required to buy the full VMware Cloud Foundation product without a discount, unlike the smaller vSphere and vCloud Suite licenses they had before. In other words, they are forced into the top-tier bundle (which includes vSAN, NSX, and Aria) and lose their academic pricing. This kind of uplift is extreme, but it highlights the sticker shock some enterprises face when they adopt a comprehensive bundle that far exceeds their previous scope. Such cases drive some organizations to escalate complaints (even considering legal action in Europe) and seek alternatives aggressively.
• Mid-Market/SME Customer Examples – Multi-fold Cost Increases: Many mid-sized businesses and public organizations report big cost spikes, even if not as extreme as the case above. In a webinar and analysis by a VMware partner, some customers are experiencing ~450% increases in support costs when comparing their old maintenance to the new subscription pricing​. For instance, a company that paid $100,000 for SaaS might now be asked to pay $450,000 for a subscription with equivalent functionality. Forrester Research noted that at least one client reported a 500% price increase after mapping their VMware usage to Broadcom’s new packages. These mid-market increases often come from two factors: (1) bundled features – you must pay for a suite that includes separate products (and perhaps you didn’t previously buy all of them), and (2) per-core counts – many had VMware environments sized under older licensing metrics that now convert inefficiently to per-core subscriptions. Budget-constrained sectors (K–12 education, local government, healthcare SMEs) are especially hard hit, as they operate on tight budgets planned in multi-year cycles. A sudden 3- to 5-fold jump in virtualization licensing costs can blow up an IT budget, forcing tough choices, such as cutting other projects, staff, or reducing the VMware footprint.
• Small Environments – Minimums and Entry Costs: Small businesses or remote branch deployments that used to run VMware cost-effectively now face significantly higher minimum costs. Eliminating the free ESXi hypervisor means that even labs and test environments need a paid subscription​. The new 72-core minimum purchase rule means a site that may have needed 2 CPU licenses (previously, maybe a few thousand dollars) must now buy 72 cores worth of subscription​crn.com. Consider a small site with two 6-core CPUs, totaling 12 cores, as a rough illustration. Under the old model, one might buy two vSphere Standard licenses (~$ each) and cover a total of 12 cores with support and maintenance (SnS) – perhaps a small cost. Under the new model, that site must pay for 72 cores of subscription (even if the actual use is only 12 cores), which could be 6 times the cost or more than what they used to pay. The cost per host for small deployments has effectively skyrocketed, making VMware less viable for very small deployments. These customers may turn to simpler hypervisors, such as Hyper-V or Proxmox, or opt for the cloud instead if VMware’s cost is too high.
• Operational and Process Impacts: Beyond the price tag, there are practical impacts on IT operations:
  • Renewal Management: Teams must actively manage subscription renewal timelines to avoid lapsed coverage and penalties​. This adds administrative overhead and requires coordination with procurement well in advance of deadlines. It’s a shift from the previous, somewhat routine support renewal to a more critical point in vendor engagement.
  • Budget Forecasting: The switch to recurring subscriptions means IT finance departments must forecast VMware spending annually and expect vendor-driven increases. Broadcom is known for prioritizing profitability so that customers can expect regular price increases or true-ups. Multi-year deals might lock in pricing temporarily, but renewal costs could increase if usage grows or Broadcom raises its list prices.
  • License Compliance Audits: Broadcom has indicated it will be vigilant about compliance with the new model. More frequent audits and license verification efforts are expected. For example, customers should be ensured they aren’t using more cores than they are subscribed to or haven’t continued using EOA products without a subscription. This might demand improved license tracking on the customer side. It’s advisable to audit your own VMware deployments and entitlements to preempt any compliance issues (more on that in Recommendations).
  • Channel and Support Changes: Broadcom also affected VMware’s partner ecosystem. They reduced the number of resellers and partners authorized to sell VMware, focusing on those aligned with Broadcom. Many smaller partners or OEM channels were dropped or faced disruptions during the transition. Some customers found it temporarily difficult to get quotes or even license keys as Broadcom overhauled systems. Strategically, enterprises may have to engage directly with Broadcom or a limited set of distributors, potentially losing long-time, trusted resellers who are familiar with their accounts. It also potentially reduces discount leverage since fewer intermediaries could foster a “pay the set price” approach. Additionally, support is now centralized under Broadcom (or big partners), so the days of leaning on a local VAR for support are waning. Organizations must adjust vendor management strategies accordingly.

In summary, the impact ranges widely: enterprises may absorb some increases as part of doing business or leverage their scale to negotiate transitional discounts. Meanwhile, mid-market and smaller customers are wrestling with how to afford VMware’s new cost structure or whether to exit the VMware ecosystem altogether.

Read Top 20 Tips for Negotiating with Broadcom.

These changes are prompting hard strategic discussions about the future of VMware in many IT organizations.

Strategic Implications for Licensing, Renewals, and IT Budgets

From an IT decision-maker’s perspective, Broadcom’s VMware licensing overhaul carries several strategic implications:

• Licensing Strategy & Vendor Lock-In: The forced move to subscription can strengthen vendor lock-in. Customers lose the safety of owning a perpetual license, which they can run indefinitely. If you stop paying, you lose the right to use the software (or at least receive support and updates). This raises the stakes of staying with VMware in the long term. IT leaders should reassess their infrastructure’s dependence on VMware and consider exit options, such as alternative hypervisors or the cloud, if costs become unsustainable. Broadcom’s aggressive approach is “drawing a line in the sand” with a higher entry fee, which some believe will push customers to explore alternatives​. Strategic planning should include evaluating the viability of continuing with VMware vs. replatforming portions of the environment over the next few years.
• Budget and Cost Management: With predictable annual costs comes the challenge of higher total costs in many cases. IT budgets must increase to accommodate VMware subscriptions, or funds must be reallocated from elsewhere. Enterprises might need to make a case to senior management for larger operating budgets for IT infrastructure. Also, bundling means it’s harder to do fine-grained cost optimization; you can’t drop a component for savings – for example, even if you don’t use NSX, you still pay for it within VCF. This could lead to architectural standardization (you might start using those extra features since you’re already paying for them). On a multi-year horizon, organizations should model the total cost of ownership (TCO) of VMware under subscription versus perpetual licensing. In some cases, if VMware software now costs four times more over five years than an alternative solution would, that delta could fund a migration project. CIOs must justify VMware’s value at a higher price point, which may involve quantifying the benefits of staying, such as avoiding staff retraining and leveraging existing operational tooling, versus the cost savings of switching.
• Renewal & Contract Negotiation Tactics: The new renewal penalties and reduced partner channels indicate Broadcom wants to eliminate slack in the system. Customers should start renewal discussions much earlier than before. Engaging with Broadcom or authorized distributors at least 6 months before a VMware term expires is prudent to secure quotes and consider options. Since Broadcom is less likely to offer discounts broadly (except for initial trade-in incentives), large customers may consider enterprise license agreements (ELAs) or multi-year commitments to secure locked-in pricing. There’s also a strategic angle in aligning VMware subscription terms with budgeting cycles – for example, choosing a 3-year subscription to avoid annual increases and provide cost certainty for a few years. However, beware that if you sign a multi-year deal, you are committing to Broadcom’s model; ensure you have the budget and willingness to stick with VMware for that term.
• Operational Flexibility vs. Cost: Including features like Tanzu (Kubernetes) and Aria operations in the bundles could strategically enable new initiatives, such as cloud-native apps and improved monitoring, if leveraged fully. IT leaders might turn this situation around by bundling the additional capabilities, effectively getting more value from the higher cost. For example, if you were paying 5x more and now have NSX and Aria in the stack, perhaps you can consolidate some security or management tools into the VMware suite (since you’ve paid for them) and eliminate other third-party software costs. Align your IT roadmap with the tools at hand to justify the spend. On the other hand, if these features overlap with existing investments or aren’t part of your strategy, you’ll be paying a premium without benefit. This calls for a strategic review: Can we adopt more VMware components to maximize ROI, or should we reduce our reliance on VMware to cut costs? It’s a pivotal question many are asking.
• Risk Management: Uncertainty surrounding future pricing and the quality of support is a risk factor. Broadcom’s moves have introduced FUD (fear, uncertainty, doubt) in the VMware customer base. Strategically, IT should have a contingency plan in case VMware’s direction doesn’t align with organizational needs, such as accelerating cloud adoption, investing in automation to manage a more complex multi-vendor environment, or even lobbying Broadcom through customer councils for more favorable terms. Also, track the competitive landscape: if enough customers push back, Broadcom may soften policies, or competitors might offer attractive migration incentives (e.g., alternative virtualization vendors could seize the moment). As an IT decision-maker, staying aware of these external factors will help you determine whether you should double down on VMware or diversify away from it.

In essence, the VMware licensing changes force a strategic recalibration. Organizations must decide how VMware fits into their future. Some will consolidate more on VMware (to utilize what they’re paying for), and others will diversify to reduce dependence.

All will need to manage bigger budgets and stricter license compliance. Gartner-like advice here is to treat this as an opportunity to plan for your infrastructure stack in the long term, rather than just a commercial annoyance.

Read the CIO Playbook – Negotiation with Broadcom.

Third-Party Support Options for Legacy VMware Deployments

One short-term tactic many organizations consider is leveraging third-party support providers to maintain their VMware environments without switching to Broadcom’s subscription model immediately.

Third-party enterprise software support is an established market (popular with Oracle and SAP customers), and now it’s emerging for VMware:

• Why Third-Party Support? Suppose you have active perpetual VMware licenses that Broadcom will no longer support after their term. In that case, companies like Rimini Street, Spinnaker Support, and Origina offer support services for VMware’s products​. This means you can continue running your current VMware versions and have a third-party provider provide break-fix support, technical assistance, and, in some cases, security patches. The appeal is that you save on costs (third-party support is often cheaper than vendor subscription) and you “buy time” to decide your long-term strategy. For example, an enterprise whose VMware support renewal costs increased to hundreds of thousands of dollars might drop VMware’s support and pay a third-party significantly less to support the environment for a couple of years while they evaluate alternatives or prepare for migration.
• Scope of Support: Third-party providers expand their offerings to cover core VMware infrastructure products, including vSphere hypervisors, vCenter, vSAN, NSX, and newer components like Tanzu Kubernetes and Aria operations suites. They typically provide services to keep your existing versions running smoothly, including troubleshooting, ongoing fixes, and sometimes custom patches to address security vulnerabilities, as you won’t receive official patches from VMware support. This can extend the useful life of “frozen” VMware deployments that companies aren’t ready to upgrade or convert to a subscription.
• Considerations and Risks: It’s important to note that third-party support is not a long-term substitute for product innovation. These providers will not deliver new features or major version upgrades. You’ll be able to stick with your current software versions effectively. Security is a consideration – while reputable third-party firms provide security patches, some organizations may feel uneasy not getting official patches. Additionally, certain VMware products, especially cloud services, cannot be supported this way – they are mainly for on-premises, perpetual-licensed software. Analysts caution that third-party support for VMware may be a temporary bridge; most customers using it are also formulating an exit or upgrade plan. According to one industry analyst, perpetual VMware licensees switching to third-party options are likely already planning their next move – whether that’s eventually subscribing to Broadcom (perhaps after waiting for better offers), migrating to an alternative platform (like Nutanix AHV or another hypervisor), or moving workloads to a public cloud service.
• Examples of third-party support include Rimini Street, which is well-known for its support of third-party Oracle and SAP solutions. The company has launched a VMware support service, touting savings and the ability to “avoid vendor lock-in” by keeping your perpetual licenses active. They position it as a way for VMware customers to “evaluate if they will eventually accept the new licensing model and fees” while being supported in the interim. Other firms, such as Spinnaker Support and Rimini Street, also offer VMware solutions. Some hardware maintenance companies offer VMware software support as part of their data center support contracts. If you consider this route, check that the provider covers the VMware products you use and carefully negotiate the terms, such as service levels and liability.

In summary, third-party support can be a strategic stopgap for organizations that need more time or cannot immediately budget for Broadcom’s subscriptions. It can keep mission-critical VMware infrastructure running securely without requiring a new subscription.

The trade-off is that you’ll be running static versions and must eventually plot a course, either by accepting Broadcom’s model or replacing VMware. Many see it as gaining 1-3 years’ breathing room to make an informed decision.

If you choose this path, ensure that top management is aware that it’s a temporary measure and that a transition plan, such as migration or subscription adoption, is being actively developed in parallel.

Read Broadcom – VMware and Legacy Suite Unbundling.

Recommendations for IT Decision-Makers

In light of these changes, IT leaders should take proactive steps.

Below is a set of actionable recommendations to navigate VMware’s new licensing landscape effectively:

1. Audit Your VMware Install Base and Contracts: Begin with a comprehensive audit of your current VMware licenses, support renewal dates, and usage footprint. Identify which licenses are perpetual vs. subscription, their support expiration, and what products you use. This will clarify your risk exposure (e.g., when support ends) and help map what new subscriptions would be required for equivalence. Ensure you know the core counts of all hosts to anticipate subscription needs. Given Broadcom’s focus on compliance, this audit is crucial and could save you from surprises.
2. Engage Early with VMware/Broadcom or Partners: Start the conversation now if you have renewals or expansions in the next 12-18 months. Discuss trade-in programs and promotional pricing—for example, see if you can still get a “transition” discount (e.g., 50% off) for converting to a subscription. Early engagement might also give you insight into future roadmaps or pricing updates (such as the 72-core rule) so you can plan accordingly.
3. Model the Financial Impact: Perform a cost comparison of scenarios, continuing with VMware under the new subscription model versus potential alternatives. Include 3- to 5-year projections since subscriptions will recur annually. Factor in not just license costs but also operational costs, such as training on new features or platforms, and support differences. This model will inform your strategy and help you negotiate. For instance, if continuing with VMware will cost $X million over five years and switching to another solution costs $Y million, you have a data point to inform your decision-making. Also, consider the opportunity cost: paying more to VMware might mean having a smaller budget for other initiatives, which need to be justified.
4. Optimize Bundle Usage (Don’t Shelfware the Extras): If you move into one of the new bundles (VCF or vSphere Foundation), make a concerted plan to leverage the included components. For example, if Aria Operations is now included but you were using a third-party monitoring tool, consider migrating to Aria to save that third-party maintenance cost. If NSX is included but not used, evaluate whether it can bring value, such as micro-segmentation security. Getting tangible value from every part of the bundle will help rationalize the expense to your stakeholders. In essence, turn on the features you’re entitled to and consolidate tools where it makes sense.
5. Consider Phased Adoption or Partial Migration: You don’t have to go “all or nothing.” Identify segments of your environment where VMware is most critical and consider accepting the new licensing (e.g., core data centers with heavy virtualization), versus areas where you might diversify or migrate (e.g., edge locations, development, and test environments). For example, some organizations keep VMware for private cloud but move VDI to cloud desktops or replace smaller vSphere deployments with Hyper-V to avoid high costs at the edge. A dual-vendor strategy might mitigate risk and cost, giving you leverage and flexibility. Just weigh the added complexity of managing multiple platforms against the savings.
6. Explore Third-Party Support (Short Term): If your VMware support renewal is imminent and the cost is unaffordable, consider a third-party support contract for a year or two. This can maintain support coverage while freeing up funds and time to make a longer-term decision. However, use this window wisely – plan for how you will either migrate or negotiate a better VMware deal down the line. Third-party support is a tactical move, not a permanent solution for most. Ensure you stay on supported hardware and stable software versions during this period to avoid any gaps, as you won’t receive new updates from VMware directly.
7. Revisit IT Budgeting and Approval Processes: Update your budgeting approach to accommodate ongoing subscription costs. You may need to work with finance on how multi-year subscriptions are accounted for, such as whether to pay all at once or in annual installments. Also, higher costs may now require higher-level approvals. Prepare a solid business case for maintaining VMware, emphasizing the value it delivers to justify the budget ask. Conversely, prepare a case for any proposed migration by highlighting long-term savings or strategic benefits. Communicate early with finance and leadership about the expected increases – no CFO likes a 500% surprise during budget season.
8. Stay Informed and Advocate: Keep a close eye on communications from VMware/Broadcom – licensing policies are still evolving (for instance, the 72-core minimum and penalties were announced via partner memos​). Join user groups, webinars, or forums where these changes are discussed. Networking with other VMware customers can provide valuable insights (many share experiences on forums like VMware’s subreddit, albeit cautiously). If you have a TAM or sales contact at VMware, demand clarity on the roadmap and pricing. Voice your concerns – if enough enterprise customers push back on certain policies, Broadcom might adjust (for example, if the outcry is strong that SME pricing is unworkable, they could introduce a smaller bundle or a different metric). As a customer, leverage your influence and any available channels, including analysts like Gartner or licensing advisors, to ensure that Broadcom hears the market feedback.
9. Evaluate Alternative Solutions (Prudently): As a strategic exercise, evaluate alternatives to VMware for feasibility – whether that’s migrating some workloads to the public cloud, adopting a different hypervisor for new projects, or using container platforms (Kubernetes) instead of spinning up more VMs. While VMware often runs critical workloads that are not easily moved, you may find that some areas are viable and cost-effective alternatives. For example, for new greenfield apps, maybe use cloud-native services instead of building on VMware. This reduces incremental dependence on VMware over time. Even if you remain with VMware, sketching a Plan B out improves your negotiating hand. Avoid knee-jerk reactions; any migration comes with costs and risks, so do thorough due diligence.
10. Plan for the Long Term: Broadcom’s transformation of VMware is part of a longer journey. Expect that future licensing will remain subscription-based and may also be based on usage. Consider how trends like cloud, DevOps, and emerging tech (e.g., Private AI offerings VMware hinted at) fit into your strategy in the long term. Ensure your licensing strategy aligns with your architecture roadmap. For instance, if you plan to reduce your on-premises footprint in favor of the cloud, opt for shorter subscription terms or smaller quantities now. If you plan to stay on-prem heavy, lock in a multi-year deal before prices increase. Always align licensing decisions with technology strategy and business goals.

IT decision-makers can better control the narrative, cost, and risk around VMware licensing in this new Broadcom era by taking these steps. The key is to be proactive and informed. Broadcom’s changes, while challenging, can be managed with careful planning and a strategic mindset.

Remember that many other organizations are in the same boat – sharing knowledge and approaches (where possible) can help the community adapt.

FAQs

What is the main change in VMware licensing announced by Broadcom?
Broadcom has stopped offering perpetual licenses for VMware products and transitioned to a subscription-only model for new purchases and continued support.

How do the changes impact businesses using existing perpetual licenses?
Businesses can continue using their perpetual licenses, but once support contracts expire, they will lose access to updates, security patches, and technical support.

Why has Broadcom moved VMware to a subscription model?
Broadcom aims to create a predictable revenue stream and grow VMware’s revenue from $4.7 billion to $8.5 billion over the next three years by focusing on subscriptions.

Which VMware products are no longer available as perpetual licenses?
Products such as VMware vSphere, vSAN, NSX, and Cloud Foundation are now only available through subscription licensing.

Can perpetual license holders transition to subscriptions?
Yes, Broadcom offers trade-in programs for perpetual license holders, allowing them to switch to subscriptions with incentives like discounted rates.

What financial impacts should businesses expect from this shift?
Subscription models involve recurring costs, which may be higher over time than those of a one-time, perpetual license purchase. Businesses should evaluate the long-term cost implications.

How should organizations prepare for potential audits by VMware?
With Broadcom’s increased focus on compliance, organizations should conduct regular internal license reviews to ensure they meet VMware’s terms and avoid penalties.

What happens if businesses do not transition to subscriptions?
Without a subscription, businesses will lose access to critical updates and support, which can lead to operational risks and security vulnerabilities.

Are there alternatives to Broadcom’s subscription model?
Third-party support providers, such as Rimini Street and Spinnaker Support, offer maintenance and support for perpetual licenses, allowing businesses to avoid subscription fees.

What steps should businesses take to plan for the transition?
Organizations should evaluate current licenses, assess future needs, explore trade-in options, and begin discussions with Broadcom early to secure favorable terms.

What benefits do VMware subscriptions provide compared to perpetual licenses?
Subscriptions offer continuous updates, access to the latest features, and predictable costs that align with evolving IT requirements.

Will VMware account managers proactively reach out to customers?
Yes, Broadcom representatives are expected to contact customers nearing the end of their contracts to discuss subscription options and facilitate the transition.

What risks do businesses face if they delay the transition to subscriptions?
Delaying could result in lapses in support, increased costs during audits, and limited negotiation leverage as deadlines approach.

How can businesses negotiate better terms for subscription licenses?
Starting early, preparing a detailed analysis of licensing needs, and exploring opportunities for discounts or additional support can help secure better terms.

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