CIO Playbook: Navigating VMware vSphere+ and vSAN+ Subscriptions
As VMware transitions its flagship virtualization platforms to subscription-based offerings, CIOs face new licensing models, cost structures, and operational considerations. VMware vSphere+ and vSAN+ shift from traditional perpetual licenses to per-core annual subscriptions.
With Broadcomโs acquisition of VMware, this shift has accelerated and comes with strategic changes that CIOs must understand and plan for.
This playbook provides independent advice on vSphere+ and vSAN+, how they differ from legacy licensing, and how to prepare your organization for the new model.
VMwareโs Shift from Perpetual to Subscription Licensing
For decades, VMware sold software like vSphere (for compute virtualization) and vSAN (software-defined storage) under perpetual licenses โ a one-time purchase per CPU with an optional annual support contract. Now, VMware is moving to a subscription-only model across its portfolio.
This transition began with VMwareโs initiative to offer cloud-integrated subscriptions (vSphere+ and vSAN+ launched in 2022) and was turbocharged by Broadcomโs 2023 acquisition of VMware. Under Broadcomโs leadership, VMware has eliminated new perpetual license sales in favor of subscription licenses.
Why the change? The software industry broadly prefers recurring revenue models for their predictability and growth potential. VMwareโs cloud-era customers also demand more flexibility, faster innovation, and cloud-like consumption.
Subscription licensing aligns with these trends by bundling continuous updates and cloud services into an annual fee. Broadcom, in particular, has strategic revenue targets that lean on converting VMwareโs huge installed base to subscriptions.
The result is a rapid portfolio simplification and licensing overhaul: many standalone VMware products are now only available as part of subscription bundles. CIOs must recognize that this is not just a pricing tweak but a fundamental shift in how VMware technology is delivered and supported.
vSphere+ and vSAN+
vSphere+ and vSAN+ are VMwareโs subscription editions of its core on-premises infrastructure products.
In essence, these offerings take the familiar vSphere hypervisor and vSAN storage software and wrap them in a cloud-connected, subscription-based model:
- Subscription per core, per year: Instead of buying a perpetual CPU license, you subscribe to vSphere+ and/or vSAN+ based on the number of processor cores in your servers (with a typical 1- or 3-year term, renewable). For example, a dual-socket server with 32 cores total might require 32 core subscriptions per year. This annual fee includes the right to use the software and receive support and updates. If the subscription is not renewed, the rights to use the software lapse (unlike a perpetual license, which you own indefinitely).
- Cloud-connected management: vSphere+ and vSAN+ introduce a VMware Cloud Console that connects with your on-premises vCenter and vSAN through a secure gateway. This provides centralized visibility and administration of your infrastructure from a cloud portal. It also enables access to additional VMware Cloud services (backup, disaster recovery, ransomware protection, capacity analytics, etc.) on demand. In practical terms, your on-prem vSphere clusters remain on-site running workloads, but a SaaS layer for management and add-on capabilities augments them.
- Included components and enhancements: The vSphere+ subscription isnโt just the hypervisor โ it typically bundles vCenter Server (management plane) and enterprise-grade features. For instance, vSphere+ corresponds to a vSphere Enterprise Plus feature set (including capabilities like a distributed switch, advanced scheduling, and even Kubernetes integration via Tanzu Kubernetes Grid). vSAN+ similarly unlocks vSAN Enterprise features for storage. These subscriptions often include capabilities that previously might have required separate licenses (like monitoring or log analytics via VMware Aria Suite, formerly vRealize). In short, the โ+โ offerings package more value (compute, storage, management tools, and hybrid cloud readiness) under one subscription umbrella.
How do vSphere+ and vSAN+ differ from traditional licensing? The key differences lie in how you pay, whatโs included, and how you manage the environment. Below is a comparison:
Traditional vs. Subscription Licensing: Key Differences
The table below contrasts traditional VMware perpetual licensing with the newer vSphere+ / vSAN+ subscription model across major dimensions:
Aspect | Traditional Perpetual Licensing | vSphere+ / vSAN+ Subscription |
---|---|---|
Cost Model | Large one-time purchase per CPU (up to a core limit) + optional annual support (typically ~20% of license cost). Costs are front-loaded as CapEx. | Recurring annual (or multi-year) subscription fee per physical CPU core. All licensing costs are spread over time as OpEx. Higher core-count CPUs incur higher subscription fees (scales linearly with cores). |
License Term | Support and software upgrades are separate (via Support & Subscription contracts). If support is active, you get patches and new versions; if you let it lapse, you can still run existing software but canโt upgrade. | Time-limited license โ rights to use contingent on active subscription (1, 3, or 5-year terms common). If the subscription lapses, usage must stop (no indefinite rights). New license keys are issued at renewal. |
Support & Upgrades | Built-in cloud connectivity and services. vSphere+ and vSAN+ link to VMwareโs Cloud Console for unified management of multiple clusters/sites. Add-on cloud services (for disaster recovery, security, capacity analytics, etc.) can be activated easily. The environment becomes hybrid-cloud-ready by design. | Support and continuous upgrades are included in the subscription by default. Youโre entitled to all updates and new releases during the term, and vendor support is provided as part of the subscription fee. Thereโs no separate support contract to manage โ itโs baked in. |
Cloud Integration | None out-of-the-box. Management is on-premises (vCenter) only. No inherent access to cloud services; youโd need to adopt separate products for capabilities like DRaaS, cloud monitoring, etc. | Treated as an Operational Expenditure (OpEx): an ongoing yearly (or periodic) expense that must be budgeted every year. This approach offers a predictable expense stream but reduces flexibility โ skipping payments means losing the software. Over a multi-year span, total costs may equal or exceed the old model, so CIOs must plan for a permanent increase in baseline IT operating expenses. |
Budgeting Implications | Treated as a Capital Expenditure (CapEx): a big upfront cost to purchase licenses, which can be depreciated over time. Annual support renewals are smaller and can be budgeted as operational costs, but you have flexibility to defer upgrades by pausing support (at some risk). Budgeting is often cyclical, tied to hardware refresh or expansion projects. | Treated as a Capital Expenditure (CapEx): a big upfront cost to purchase licenses, which can be depreciated over time. Annual support renewals are smaller and can be budgeted as operational costs, but you have the flexibility to defer upgrades by pausing support (at some risk). Budgeting is often cyclical, tied to hardware refresh or expansion projects. |
Table: Traditional VMware Perpetual Licensing vs. vSphere+ / vSAN+ Subscription
In summary, vSphere+ and vSAN+ shift VMwareโs value proposition to โsoftware as a serviceโ for your data center. In exchange for committing to a recurring payment model, you get the convenience of always-current software and optional cloud enhancements. Next, we will look at the concrete benefits this brings and then examine the implications of Broadcomโs influence on these offerings.
Key Benefits of vSphere+ and vSAN+
Adopting vSphere+ and vSAN+ can provide several advantages for IT operations and innovation:
- Centralized Cloud-Based Management: With vSphere+, IT administrators gain a single cloud console to manage all vCenters and clusters across sites. This means global inventory visibility, centralized alerts and performance metrics, and the ability to monitor or provision VMs across disparate on-prem environments from one pane. Admins no longer have to log into individual vCenters for different data centers or edge sites โ the cloud portal aggregates management, improving efficiency, especially for distributed environments.
- Integration with VMware Cloud Services: The โ+โ model opens the door to on-demand services that augment on-premises infrastructure. For example, you can enable VMware Cloud Disaster Recovery or ransomware protection services that tie into your vSphere+ environment without a heavy on-prem deployment. vSAN+ can potentially integrate with cloud storage expansion or analytics. This hybrid capability lets organizations use cloud services (backup, DR, capacity planning, security analytics, etc.) for on-prem workloads without migrating those workloads to a public cloud โ effectively bringing cloud value to your data center.
- Simplified Lifecycle Management: Because the subscription includes all updates, companies can more easily stay current with vSphere/vSAN. vSphere+ enables one-click updates for vCenter and streamlines the process of updating ESXi hosts through its services. The cloud console can detect configuration drift and recommend remediation. This reduces the operational burden of maintaining the virtualization stack, leading to improved security (patching vulnerabilities faster) and access to new features as soon as theyโre available.
- Kubernetes-Ready Infrastructure for Developers: vSphere+ subscriptions bundle VMwareโs Tanzu Kubernetes capabilities (in the Enterprise Plus equivalent edition). This means an organizationโs existing vSphere clusters can be turned into an enterprise-grade Kubernetes platform for developers, unifying virtual machines and containers. Developers get self-service access to Kubernetes clusters on the same familiar infrastructure. This accelerates modern app initiatives for CIOs without requiring a separate Kubernetes environment โ a boon for developer velocity and ROI on existing investments.
- Flexible Consumption and Scalability: The per-core subscription model can be advantageous if you plan incremental growth. Instead of a big upfront purchase anticipating 5 years of capacity needs, you can start with what you need and scale up by subscribing for more cores as your environment grows. This pay-as-you-go growth model can align costs more closely with usage. Additionally, because subscriptions can often be transferred or reassigned to new hardware, adopting new server generations or cloud-adjacent VMware services is easier without worrying about stranded perpetual licenses tied to old machines.
- Always-On Support and New Features: With a subscription, thereโs no ambiguity about whether youโre entitled to support or the latest software โ itโs guaranteed. This ensures that VMware (now Broadcom) always supports mission-critical environments and can run the latest versions (e.g., vSphere 8 updates and beyond). New features delivered via cloud services can be accessed immediately. For example, if VMware releases a new capacity optimization AI service, vSphere+ customers might enable it in a few clicks via the console.
In summary, vSphere+ and vSAN+ aim to combine the best of on-premises performance and control with cloud-driven innovation and simplicity. They let organizations benefit from SaaS-like capabilities (fast feature delivery, global management, and integration with other cloud offerings) while running workloads in their data centers. However, these benefits come with new financial and vendor relationship considerations, especially under Broadcomโs stewardship, which we explore next.
Broadcomโs Licensing Strategy and Its Implications
Broadcomโs acquisition of VMware has brought a distinct strategic direction to VMwareโs licensing and product packaging.
CIOs should know how Broadcom is reshaping the business model, as it will impact planning, budgeting, and negotiations.
Key aspects of Broadcomโs post-acquisition licensing strategy include:
- Perpetual Licenses Discontinued: Broadcom has eliminated the sale of perpetual VMware licenses. Effective in 2023, customers can no longer buy vSphere, vSAN, or other VMware products as perpetual entitlements. All new licenses must be subscription-based (or term-based). This means organizations that need to expand capacity (e.g., adding a new host) or renew support must transition to the subscription model. It effectively puts an eventual expiration date on the use of perpetual licenses โ once your support contract lapses or hardware is refreshed, youโll be pushed into the subscription. CIOs must plan for this inevitability in their refresh roadmaps.
- Aggressive Bundling and Simplified SKUs: Broadcom has dramatically simplified VMwareโs product catalog, condensing roughly 9,000 SKUs to just a few hundred. The strategy centers on selling a few comprehensive subscription bundles rather than many-point products. VMware is promoting two flagship bundles: VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF), each available by subscription. VCF is an all-in-one suite (vSphere, vSAN, NSX, and the full Aria management suite, plus extras like HCX for mobility) aimed at enterprises wanting a fully software-defined data center stack. VVF (vSphere Foundation) is a slightly leaner bundle that includes vSphere Enterprise Plus, vSAN, and core management tools (suitable for those primarily using vSphere and vSAN). VSphere Standard and vSphere Essential Plus Kit subscriptions are still more basic options for smaller deployments. Implication: Customers will more often get โeverything plus the kitchen sinkโ in a bundle instead of picking and choosing individual VMware components. This can deliver more value for broad use cases (the top-tier bundle is heavily discounted relative to buying all components ร la carte). Still, it might also force some customers to pay for functionality they wonโt use. The bundling can lead to โshelfwareโ โ features included that your organization isnโt ready to leverage, unless proactively managed (weโll address this in recommendations). On the positive side, having a single subscription covering multiple technologies can simplify vendor management (one contract, co-term dates) and ensure compatibility across the stack.
- Fewer, but Larger, Licensing Options: Reducing SKUs also means fewer product editions. For example, their subscription counterparts are replacing standalone vSphere editions like Enterprise Plus or Standard in perpetual form or folded into new bundles. VMware initially offered vSphere+ and vSAN+ as separate standalone subscriptions (with cloud management), but Broadcom has folded these into the new โFoundationโ offerings. Early indications in 2024 showed that vSphere+ and vSAN+ (with their cloud-console features) were not available for new purchase; instead, customers were directed to the new core bundles, which currently function in a more โdisconnectedโ mode (on-prem license keys without cloud integration). Broadcom appears to be prioritizing a clean, simplified licensing structure first. The cloud management features of vSphere+ may return as optional add-ons later, but initially, the focus is on getting all customers onto a small number of subscription packages. CIOs adopting the new licenses should confirm what cloud features are or arenโt included at purchase, as this may evolve.
- Revenue and Pricing Pressure: Broadcom is known for its efficiency and profitability focus on acquired companies. They have openly stated ambitious revenue growth goals for VMware in the next few years, roughly doubling VMwareโs revenue by driving subscription adoption. This translates to an expectation of higher costs for customers over time. Many organizations will find that renewing under a subscription might increase their annual spending compared to the old support renewals for perpetual licenses. Broadcom has been offering some initial discounts to encourage early subscription conversions, but once the transition period passes, CIOs should expect rising list prices or reduced discounting. In some cases, especially for customers with high core-count CPUs or large vSAN capacities, the cost model may significantly increase total costs. Itโs important to model out multi-year TCO (as weโll discuss) and prepare management for the likelihood that VMware will consume a larger portion of the IT budget if all else is constant.
- Operational Expense Emphasis: All these changes mean a shift from capital expenditure to operational expenditure in accounting terms. Broadcomโs bundling strategy may also push more of your IT stack into a subscription model (e.g., network virtualization via NSX, management tools, etc., all rolled into the subscription). This could lead to more predictable budgeting year over year, but less flexibility to delay or avoid costs. The OpEx increase might be challenging for enterprises that traditionally bought licenses upfront and kept hardware/software for many years. Additionally, Broadcom often sells multi-year deals โ for example, they may require a 3-year term for larger customers as a minimum, which means committing budget further into the future. CIOs must work closely with finance to adjust this new expense pattern and possibly reallocate funds that would have gone into depreciable capital projects into the operating budget.
- Fewer Contract Negotiation Levers: With fewer SKUs and more bundling, negotiating custom deals may become more straightforward and more constrained. Broadcomโs approach tends to be less about custom-tailored arrangements and more about volume-based tiering. Enterprises might have less wiggle room to drop a component they donโt want for a cheaper price because everything is packaged. On the other hand, broad bundling could allow CIOs to consolidate spend and perhaps negotiate enterprise license agreements that cover the full VMware stack at a macro level. Be aware that Broadcom has segmented customers (e.g., top-tier โStrategicโ accounts versus smaller accounts) and may impose different rules: large strategic customers might be required to buy direct and opt for the full Cloud Foundation suite, whereas mid-market customers might still go through partners and choose lighter bundles. Understanding where your organization stands in Broadcomโs eyes can inform your negotiation strategy.
- Stricter Compliance and Audits: Alongside licensing changes, expect a tighter enforcement regime. Broadcom has signaled more frequent license audits to ensure customers are compliant (and to drive subscription sales if unlicensed usage is found). Since subscription licensing is tied to exact core counts and capacities, tracking usage is critical. CIOs should anticipate that compliance will be closely monitored; any expansion of the environment that isnโt properly licensed via subscription could trigger a true-up requirement quickly. In addition, with software that can expire, itโs a new risk โ failure to renew on time could technically leave you without a license to operate that infrastructure. This makes renewal management (and internal compliance audits) an essential practice moving forward.
Broadcomโs stewardship is simplifying, promoting bundle-centric sales, and pushing toward recurring revenue. The upside is a potentially more integrated VMware stack and fewer purchasing decisions.
The downside is reduced flexibility, higher costs, and the required vigilance. CIOs must adapt their technical and financial planning to this new reality.
Preparing for the CapEx-to-OpEx Transition
Shifting from one-time license purchases to ongoing subscriptions isnโt just a procurement change; it has ripple effects on budgeting, financial planning, and operations.
CIOs and IT finance teams should start laying the groundwork to accommodate VMwareโs subscription model.
Key preparations include:
- Budget Planning & Financial Policy Changes: Work with your CFO and finance department to reclassify VMware spending from CapEx to OpEx in your financial plans. This might involve increasing the IT operating budget to account for subscription fees that recur every year. If, historically, you purchased licenses upfront and capitalized that cost, youโll need to adjust how those costs are handled. Itโs important to communicate that while the annual spending will increase, it will cover continuous updates and support. Update your multi-year IT spending forecasts to include VMware subscription fees for each year (with reasonable growth assumptions). For many, this means treating software more like a utility bill than a one-time asset purchase.
- Procurement and Approval Processes: Review your procurement process for software to ensure it can handle recurring renewals and subscriptions. For example, you may need to set up standing purchase orders or vendor contracts that renew annually or multi-year. The approval process for a subscription renewal might need to happen well before expiration to avoid any lapse. Ensure procurement has a calendar of VMware subscription renewal dates synchronized with the vendorโs schedule. If multi-year subscriptions are available and make financial sense, consider securing a 3- or 5-year term โ this can lock in pricing and provide short-term budget certainty (at the expense of committing upfront). Also, be prepared for consolidation: instead of many small license purchases over time, you might negotiate one larger subscription agreement โ involve procurement early to get the best volume pricing and terms.
- Renewal & Asset Management Discipline: Under perpetual licensing, if you forgot to renew support, your software kept working (you just risked falling out of support). In the subscription world, a missed renewal is not an option โ it could legally interrupt your right to use the software. Treat VMware subscriptions as critical renewal assets. Track them in your IT asset management system with alerts before expiration. Establish internal processes to review renewal quotes and true-up counts and get approvals with plenty of lead time. Itโs wise to begin discussions with VMware/Broadcom or your reseller 90+ days before renewal. This also gives you time to evaluate if the current subscription tier is still the right fit or if you should upgrade/downgrade bundles, add or remove capacity, etc., based on the past yearโs usage.
- Cost Modeling & Showback: Update your IT cost models to reflect the new licensing. This is especially important if you charge or show back IT costs to business units. Whereas previously, you might amortize a license cost over 3-5 years in your cost model, now you will allocate a fixed subscription cost per period. The move to per-core licensing means if a business unit doubles the VMs and requires more host cores, their allocated cost will increase accordingly in the next term. Make this transparent to stakeholders so they understand the cost of the capacity they consume. You may need to educate your finance team or business unit leaders on why virtualization costs are now a recurring service cost instead of a sunk cost.
- Evaluate Financial Impact of Bundles: The new bundles may include products your organization previously didnโt use (e.g., NSX or Aria Operations). From a preparation standpoint, identify which components could offset other expenditures. For example, suppose Aria Operations (vRealize Ops) is now included in your subscription, but you were paying for another monitoring tool. In that case, you might retire the third-party tool to save cost and fully leverage what youโre paying VMware for. This way, you mitigate the OpEx increase by consolidating capabilities under the VMware subscription. Engaging your enterprise architecture or IT strategy team to map out which parts of the bundle to adopt is an important exercise before renewal time.
- Accounting for Legacy Investments: Consider how youโll handle the existing perpetual licenses you own. You may keep them running for a while (thereโs no requirement to rip them out as long as you donโt need additional capacity beyond what you have). However, using them long-term without security patches might be risky once support ends. Some organizations look at third-party support providers for legacy VMware environments as a short-term stopgap โ this can be an interim strategy if you need more time to transition to subscription or explore alternatives, but it wonโt last forever. If you have a significant investment in perpetual licenses, ensure management understands their remaining useful life and the plan to transition (e.g., โWe will use our existing licenses on these hosts until 2025, then convert that cluster to subscription or decommission itโ). Align this with your depreciation schedules for those assets, if applicable.
By proactively addressing these operational aspects, CIOs can avoid surprises in the year that subscription costs hit the books and ensure a smoother transition. The goal is to make the new licensing model a predictable part of IT operations rather than a disruptive force.
Recommendations for CIOs
CIOs should take a strategic and hands-on approach to successfully navigate the shift to vSphere+ and vSAN+ subscriptions (and VMwareโs Broadcom-influenced licensing regime).
Below are actionable recommendations:
- Pilot vSphere+ / vSAN+ in a Non-Production Environment: Test the waters before full-scale adoption. Identify a suitable non-production or lab environment and subscribe a portion of your infrastructure to vSphere+ and/or vSAN+. This pilot will let your team experience cloud-connected management โ for example, setting up the VMware Cloud Console, linking a vCenter, and using any add-on services. Monitor how the subscription licensing mechanism works (e.g., no license keys, just core counts in a portal) and any impacts on operations (such as internet connectivity requirements, data collected by VMware, etc.). A pilot helps surface practical considerations: integration with your identity management, proxy settings, training needs for administrators on the new interface, and so on. It also gives you a benchmark to evaluate the benefits (did centralized management reduce effort? Are the cloud features valuable for your use cases?). Use these findings to inform a broader adoption plan or to decide which subscription bundle makes sense. Piloting in a safe environment will build confidence and uncover challenges early without risking production uptime or compliance.
- Revisit Budgeting and Forecasting Models: Adjust your financial plans for a recurring OpEx model. As discussed, you should update IT budgets to incorporate annual subscription fees for VMware software. Work with finance to determine how these will be funded โ e.g., through IT operational budgets or allocated to business units. If your organization has typically treated major software purchases as capital projects, you may need to advocate for a policy change or an increased operational allowance. Start forecasting the 3-5 year total cost under subscription versus the old model; this analysis will be important to set expectations with the CIO, CFO, and perhaps the board. Show the trade-off: for example, โOver five years, the subscription will cost X% more than buying perpetual + support, but in return, we get A, B, and C benefits and reduce technical debt.โ Incorporate these costs into project ROI calculations as we advance (since the cost of maintaining the platform is now a continuous operational line). It may also be wise to set aside a contingency budget for potential price increases โ Broadcom has a track record of raising prices or annual uplift percentages, so consider a higher year-over-year increase assumption for VMware costs than you historically did.
- Monitor Broadcom/VMware Strategy and Communications: Stay alert to evolving licensing updates and roadmaps. The post-acquisition licensing landscape is still shifting. Broadcom and VMware may introduce new bundles, alter terms, or re-enable cloud management features as optional extras. Ensure that someone in your organization (e.g., your vendor management or architecture team) actively follows VMwareโs announcements, product roadmaps, and partner communications. Engage with your VMware account manager or reseller regularly to get the latest information, for example, any changes to pricing models (such as core minimums or capacity entitlements) or available promotions. Watch for announcements about how long existing support for perpetual licenses will be honored and any end-of-life dates.Additionally, keep an eye on industry analysis and peer insights: other CIOs, user groups, or advisory firms often share how they respond to Broadcomโs policies. Being well-informed will help you anticipate changes (for instance, if Broadcom decides to raise prices after a certain date or requires cloud connectivity for all subscriptions in the future, you want to know early). Treat this vendor relationship as dynamic โ the more you monitor, the fewer surprises when negotiating or renewing.
- Engage Independent Licensing Experts for Cost and Risk Assessments: Donโt navigate the new licensing complexity alone. Consider consulting with third-party licensing experts โ firms like Redress Compliance (which specializes in VMware licensing) or similar IT procurement advisors โ to get an outside perspective. These experts can help model your costs and risks under various scenarios: staying with VMware vs. switching to alternatives, converting all at once vs. phased conversion, etc. They can validate whether the quotes and terms youโre getting from VMware/Broadcom are in line with industry norms and assist in identifying any hidden โgotchasโ (for example, how vSAN capacity might drive up costs or how contract terms should be structured to protect your interests). Moreover, independent advisors can support your negotiations with data โ they often know what discounts or concessions are realistic. They can help craft a strategy (like timing a renewal to coincide with quarter-end for better deals or leveraging competitive alternatives in negotiation). Beyond cost modeling, a licensing expert will help assess compliance risks, ensuring you understand the subscription metrics, how to track usage, and how to avoid unintentional shortfalls that could trigger penalties. Engaging such expertise is particularly valuable given Broadcomโs hard-nosed approach โ having a knowledgeable ally can save money and headaches long-term.
In addition to the above actions, maintain an open dialogue with your technical teams about the transition. The ops team should catalog which features in the new bundles can be utilized (to maximize value), and the security team should vet the implications of cloud connectivity in vSphere+.
By taking these proactive steps, CIOs can turn what might seem like a vendor-driven mandate into a well-managed evolution of their IT environment.
Key Market and Vendor Trends (Summary)
- 100% Subscription Licensing: Enterprise software is solidly trending toward subscription models. VMwareโs move to eliminate perpetual licenses is part of a broader market shift to โas-a-serviceโ offerings, trading one-time sales for recurring revenue. This aligns with how companies consume public cloud services, and vendors are pushing the same model on-premises for consistency and financial predictability.
- Broadcomโs Influence โ Streamlined Portfolio, Higher Spend: Under Broadcom, VMwareโs portfolio has been streamlined to a handful of bundles, simplifying choices and bundling more products together. Broadcomโs aggressive revenue targets mean customers should anticipate tougher negotiations and potentially higher aggregate spend on VMware in the coming years. Discount levels may drop as the vendor leverages its dominant position in customer data centers.
- Hybrid Cloud Integration (with Some Turbulence): VMwareโs strategy with vSphere+ and vSAN+ reflects an industry trend of blending on-prem and cloud management for a hybrid experience. Organizations want the convenience of cloud management and services for their internal infrastructure. However, the Broadcom transition caused short-term turbulence in these plans (pausing the cloud features). In the long run, we expect VMware to continue enhancing on-prem subscriptions with cloud capabilities as hybrid cloud IT operations become the norm.
- OpEx Budgeting and Financial Planning: CIOs are shifting their financial planning as IT departments adopt more subscription-based software (VMware and beyond). The clear trend is towards OpEx-dominated IT spending. This allows for more incremental investment and easier scaling up/down, but it challenges traditional budgeting cycles. Companies that successfully adapt will treat IT costs more like utility bills โ predictable and ongoing, rather than large capital projects. This trend also focuses on tracking ROI continuously since youโre โrentingโ capabilities rather than making a one-time investment.
- Vendor Management & Compliance Emphasis: With software vendors increasingly delivering via subscriptions, they gain more control and insight into customer usage. This is leading to stricter compliance enforcement across the industry. Weโre seeing a trend of more frequent audits and true-ups from VMware/Broadcom and other major software providers.
- CIOs are responding by strengthening software asset management practices and seeking more transparency in licensing. Additionally, consolidating products into bundles means vendor management is about strategically managing one large relationship (VMware/Broadcom) instead of juggling many point product vendors. This can be a double-edged sword โ it simplifies communications but concentrates dependency on the vendor, raising the stakes of each renewal or negotiation.
Closing Note: VMwareโs vSphere+ and vSAN+ subscriptions represent both an opportunity and a challenge for IT leadership. They offer a path to a more cloud-like, agile infrastructure but require adjusting how organizations plan, budget, and govern their IT investments.
By understanding the new licensing landscape and taking proactive steps outlined above, CIOs can stay ahead of the change and turn it into an advantage for their companiesโ digital infrastructure strategy.