Vmware

Broadcom VMware Licensing Changes Explained

Vmware

Broadcom VMware Licensing Changes Explained

The VMware Licensing Changel means:

  • No More Perpetual License Sales: Customers can’t buy perpetual licenses anymore.
  • Shift to Subscriptions: This will likely lead to increased revenue for Broadcom. By making this shift, Broadcom’s goal is to grow revenue from $ 4.7 billion to $ 8.5 billion in 3 years.
  • When will you need to buy a subscription? Expect VMWare to audit more customers; the only option is the subscription model if you need more licenses suddenly.
  • When is your current VMWare support contract expiring?: Expect VMWare to know and 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.

Introduction to Broadcom VMware Licensing Changes

broadcom vmware licensing

The recent announcement from Broadcom regarding VMware’s licensing and subscription model heralds such a change that carries substantial implications for businesses and IT professionals worldwide.

  • What prompted Broadcom’s decision to change VMware’s licensing and subscription model?
  • How will these changes affect current VMware users and potential new customers?
  • What are the immediate actions and long-term strategies you must consider in light of these changes?

Transition to Subscription-Based Licensing

The transition to a subscription-based model is a strategic pivot for Broadcom VMware.

It signifies a departure from the traditional perpetual license model, marking a significant shift in how businesses access and use VMware solutions.

  • End of Perpetual Licenses: The sale of new perpetual licenses has ceased, with an emphasis now on subscription offerings. This moves away from perpetual licenses.
  • License Portability and Trade-ins: A new bring-your-own-subscription license option has been introduced; customers with existing perpetual licenses cannot migrate or trade into the new subscription.

VMWare Products that are no longer for sale:

  • VMware Cloud Foundation
  • VMware vSphere
  • VMware vSAN
  • VMware NSX
  • VMware HCX
  • VMware Site Recovery Manager
  • VMware vCloud Suite
  • VMware Aria Suite
  • VMware Aria Universal
  • VMware Aria Automation
  • VMware Aria Operations
  • VMware Aria Operations for Logs
  • VMware Aria Operations for Networks

Customers who have purchased perpetual licenses can still use their products, but once their current SnS contracts end, they will not be eligible to access VMware support or update to newer versions.

Financial and Operational Implications

Broadcom VMware’s licensing and subscription model changes have significant financial and operational implications for businesses.

Understanding these changes is crucial for effective planning and budgeting.

  • Operational Continuity for Perpetual License Holders: There is no immediate change for businesses with active perpetual licenses. These licenses can continue to be used, but transitioning to a subscription model will be necessary to receive continued support​​once the contract expires.
  • Trade-in Incentives for Existing Customers: Broadcom VMware offers incentives for customers willing to trade their perpetual licenses for subscription products. This optional trade-in aims to provide a smooth transition while maintaining operational continuity​​.

Businesses must carefully evaluate their current VMware usage and contracts to adapt to these changes effectively.

The shift to a subscription model emphasizes the need for strategic planning, especially for those with imminent contract renewals or considering new VMware solutions.

Guidance for VMware Customers and Partners

In response to Broadcom’s VMware licensing and subscription changes, customers and partners must navigate this new landscape thoughtfully.

Here are key considerations and steps to take:

  • Evaluate Current Licenses: Assess the inventory of perpetual licenses, including refresh cycles and renewal dates. Understanding the current state of VMware infrastructure and management products is crucial​​.
  • Plan for Future Needs: Determine future business requirements, especially for those nearing contract renewals. Decisions should be based on whether ongoing support is needed or whether operations can continue without new support contracts​​.
  • Leverage Trade-in Options: Consider the benefits of trading in perpetual licenses for subscription licenses. Broadcom offers pricing incentives for this transition, which can be an effective way to update and streamline VMware usage​​.
  • Prepare: By knowing fully your license requirements, you should also investigate the negotiation possibilities for discounting the new model unless you stop using VMware products.

Top 4 Best Practices for Adapting to VMware New License Model

In light of Broadcom’s changes to VMware’s licensing and subscription models, businesses must adopt best practices, ensuring a smooth transition and continued operational efficiency.

Here are the top four recommendations:

  1. Conduct a Comprehensive License Audit:
    • Review all existing VMware licenses.
    • Understand the implications of the shift from perpetual to subscription models on your current and future projects.
    • Identify any gaps or overlaps in licensing that need addressing.
  2. Develop a Transition Roadmap:
    • Plan the transition from perpetual licenses to subscription-based licenses.
    • Consider factors like contract expiry dates, budget cycles, and operational requirements.
    • Collaborate with IT, finance, and procurement departments to align strategies.
  3. Leverage Financial Incentives for Transition:
    • Explore trade-in programs and pricing incentives offered by Broadcom.
    • Assess the cost-benefit of transitioning earlier than required.
    • Ensure that financial decisions align with long-term IT strategy and business goals.
  4. Stay Informed and Seek Expert Advice:
    • Regularly read VMware’s updates.
    • Attend webinars, workshops, and training sessions to stay abreast of best practices.

What does this mean for VMWare customers?

For VMware customers, the move to subscriptions involves critical considerations:

When will you need to purchase a Subscription:

  • License Deficiencies: Switching is needed if VMware finds missing licenses, with no option to purchase new ones.
  • Support and Security Needs: Requires updates and support after support agreements expire.

Expectations and Impacts:

  • Increased Audits: Anticipate more due to Broadcom’s revenue targets. Broadcom has said they expect to grow revenue by 100% over three years because of this change.
  • VMware’s Outreach: Expect VMWare account reps to contact you to initiate discussions.
  • Renewal Engagement: VMware will actively engage with customers nearing contract expiration, as those customers are more likely to need to purchase subscriptions.

Strategic Advice:

  • Early Planning: The sooner you start preparing and doing your homework, the more negotiation leverage you will have. If you reach out to Oracle when you are missing licenses or support is expiring in a few months, you have less negotiation leverage.

FAQ Section

As part of our comprehensive guide, we address some frequently asked questions about Broadcom’s changes to VMware’s licensing and subscription models:

  • Q: What happens to existing perpetual licenses?
    A: You can continue using perpetual licenses with active support contracts. Post-contract, consider transitioning to subscription models for ongoing support​​.
  • Q: How does the transition to subscription licenses benefit customers?
    A: Subscription licenses offer continuous innovation, faster time to value, and predictable investments, aligning with modern business needs​​.
  • Q: Are there incentives for transitioning to subscription licenses?
    A: Broadcom provides upgrade pricing incentives for customers who trade in their perpetual licenses for subscription products​​.
  • Q: How does the simplification of VMware’s product portfolio impact customers?
    A: It makes it easier for Broadcom to increase its revenue for VMWare products.
  • Q: Will there be support for perpetual licenses post-contract expiration?
    A: Once the support contract for a perpetual license expires, you must transition to a subscription model for continued support​​ , and you will run without updates.
  • Q: If we want to continue running VMWare products with support and updates, how do we do that?
    A: You need to purchase VMWare subscriptions for the same products.
  • Q: What should we do to prepare?
    A: Even VMWare states on their official FAQ around the announcement that you should perform a licensing assessment and review your options.

Need Guidance on VMware Licensing?

Navigating the complexities of VMware licensing can be a daunting task. That’s where Redress Compliance steps in.

Our expert team is ready to assist you with a comprehensive range of services:

  • VMware Licensing Assessment: We’ll thoroughly assess your VMware usage, helping you understand the intricacies of your current licensing situation.
  • Migration and Procurement Advisory: Looking to migrate or procure new VMware licenses? Our advisory services will outline your options clearly, ensuring you make informed decisions.
  • VMware Negotiation Strategy: When it’s time to negotiate or renew your VMware licenses, our expertise will give you the upper hand. We’ll help you secure the best possible terms tailored to your business needs.

Contact us today.

Author

  • 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, improving organizational efficiency.

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