15 Things IT Leaders Should Know About Broadcom’s VMware Licensing Changes
Executive Summary:
Broadcom’s acquisition of VMware in 2023 has upended VMware’s licensing model. Perpetual licenses are being phased out in favor of subscription-only deals, driving up costs and reducing flexibility for customers. IT, procurement, finance, and legal leaders must understand these Broadcom VMware licensing changes and take proactive steps to protect their budgets and plans.
Broadcom’s takeover of VMware fundamentally changed how organizations buy and support VMware products.
Perpetual licenses are no longer sold, product options have been consolidated into bundles, and stricter terms mean many enterprises face higher costs and compliance risks.
Here are 15 critical things to know about these changes – and what you should do about them:
1. Subscription-Only Licensing (No More Perpetuals)
What you need to know: Broadcom stopped selling perpetual VMware licenses; all new licenses are subscription-only.
What you should do: Identify your existing perpetual licenses and when their support ends, and plan whether to convert each to a subscription, switch to third-party support, or retire it.
2. Bundled Suites Instead of Individual Products
What you need to know: Most VMware products are now only sold as part of Broadcom’s bundles, not standalone.
What you should do: Compare the bundle’s components to what you use. If you’re paying for features you don’t need, consider negotiating for a better price or eliminating those components (or VMware entirely for that part).
3. Per-Core Licensing and Minimums
What you need to know: VMware licensing is now based on per-CPU core (with a minimum of 16 cores per order), so even small servers may require more licenses than before.
What you should do: Count how many cores you need to cover and avoid paying for unused capacity – consolidate small workloads or use other hypervisors to sidestep high minimums.
4. Higher Pricing and Fewer Discounts
What you need to know: Broadcom’s pricing is higher and discounts are fewer, so expect to spend more on VMware.
What you should do: Calculate how much more you’ll be paying and use that data in budget talks and negotiations. Additionally, trim any unnecessary VMware usage now to mitigate the cost impact.
5. No Free VMware Hypervisor Anymore
What you need to know: VMware’s free hypervisor (and other low-cost editions) have been discontinued, meaning even labs and small setups need a paid subscription.
What you should do: Identify any environments that ran on free VMware and decide whether to keep them on old versions, move them to a different platform, or include them in your VMware subscription.
6. Stricter Compliance and More Audits
What you need to know: Broadcom will strictly enforce license compliance – more audits, less leniency for unlicensed use.
What you should do: Double-check your VMware usage against what you’ve bought, and fix any overuse now. Keep records to demonstrate compliance if Broadcom audits you.
7. Less Flexibility in Deals
What you need to know: Broadcom is mostly sticking to standard bundle deals, with little room for custom terms.
What you should do: Prepare to accept Broadcom’s standard offer. If you have critical needs, present a strong case, but have a workaround ready in case they say no.
8. Potential Decline in Support Quality
What you need to know: VMware support has reportedly been slower or less helpful since Broadcom took over.
What you should do: Watch your support quality and escalate if needed. If you require fast support, consider paying for a higher tier or have a backup plan (third-party support or in-house experts).
9. Partner Channel Changes
What you need to know: Broadcom cut many smaller VMware resellers and service providers from its partner program.
What you should do: Verify that your VMware vendor remains authorized. If not, switch to a Broadcom-approved partner or be prepared to work directly with Broadcom.
10. Big Enterprises Favored Over Smaller Ones
What you need to know: Broadcom’s model favors big enterprises; smaller customers get less flexibility and relatively higher costs.
What you should do: If you’re a big customer, leverage that to negotiate better terms. If you’re smaller, consider pooling resources through a reseller or exploring alternatives if VMware becomes too expensive.
11. Third-Party Support as a Stopgap
What you need to know: Third-party support firms can keep your VMware running without Broadcom, letting you delay or avoid subscriptions for a while.
What you should do: Consider third-party support if Broadcom’s cost is too high and you can stay on your current VMware version. It’s a way to save money in the short term and gain leverage.
12. Need for Tight License Management
What you need to know: With Broadcom’s strict approach, you must tightly manage your VMware licenses to avoid non-compliance or overspend.
What you should do: Keep a close inventory of deployments and licenses. Approve any new VMware use only if it’s licensed, and regularly reconcile usage versus entitlements.
13. Considering Alternatives to VMware
What you need to know: Broadcom’s changes make alternatives (cloud, other hypervisors) more appealing to reduce VMware reliance.
What you should do: Identify systems you could move off VMware. Shifting even some workloads to the cloud or Hyper-V can cut VMware costs and give you leverage.
14. Careful Review of Contract Terms
What you need to know: Broadcom’s VMware contracts may have strict terms (auto-renewal, multi-year lock-ins) that can limit your flexibility.
What you should do: Have a legal review of the contract and negotiate out any terms that could trap you. Ensure you can adjust usage or opt out of automatic renewals if needed.
15. Plan and Involve Stakeholders
What you need to know: Adapting requires planning and involving key stakeholders, such as IT, finance, and legal, among others – it’s not a simple renewal.
What you should do: Start formulating your VMware strategy well before renewal. Assemble a team to explore options and get management support, so you’re fully prepared when dealing with Broadcom.
Key Differences at a Glance: VMware Licensing Then vs. Now
| Aspect | Before (VMware Legacy Model) | Now (Broadcom VMware Model) |
|---|---|---|
| License Model | Perpetual licenses (one-time buy) + optional support renewals | Subscription-only (no new perpetual licenses) |
| Product Choice | Many standalone products and editions available | Nearly all offerings bundled into a few suites |
| Licensing Metric | Per CPU socket (with core caps per CPU) | Per core licensing (16+ core minimums per order) |
| Pricing | Upfront purchase + support; significant discounts common | Recurring subscription; higher base cost, limited discounts |
| Support | Can renew support on perpetual licenses indefinitely | Support only with active subscription; none after term expires |
| Compliance | Infrequent audits; true-ups handled at renewal | Frequent audits; immediate enforcement of any shortfall |
| Partners | Large reseller ecosystem (incl. small partners) | Limited to Broadcom’s chosen big partners (smaller ones dropped) |
Recommendations
- Audit and Baseline: Know exactly what VMware licenses you have and how they’re used. This baseline informs all decisions and negotiations.
- Run the Numbers: Calculate your costs under Broadcom’s model vs. the old model. Hard data on increases gets executive attention and strengthens your bargaining position.
- Clean Up Usage: Eliminate waste in your VMware environment now. Retire unused VMs, consolidate workloads, and avoid unnecessary deployments – a smaller footprint means lower costs.
- Evaluate Alternatives: Test other options (cloud, different hypervisors) for non-critical workloads. Even a partial shift gives you a fallback and leverage in negotiations.
- Get Leadership Buy-In: Ensure your CIO, CFO, and other leaders know about these changes and support your strategy – whether that’s securing more budget or investing in a migration plan.
Checklist: 5 Actions to Take
- Inventory Your VMware Licenses: Document all your VMware licenses, support contracts, and where they’re deployed.
- Assess the Impact: Determine how the new model changes your costs and which products or features are affected.
- Outline Your Strategy: Decide which VMware components to subscribe to, retire, or replace (and note any fallback options like third-party support).
- Engage Vendors: Discuss options with Broadcom/VMware and alternative providers. Collect quotes and info to compare your options.
- Execute Early: Put your plan into action well before renewal deadlines – whether that involves negotiating with Broadcom or initiating a migration.
FAQ
Q1: Do we have to move to subscriptions immediately, or can we wait?
A: You can wait until your current support period ends. After that, you’ll need a subscription for any updates or support.
Q2: Will our VMware costs increase that much?
A: Likely yes – many see a big increase, especially if you only used a few VMware products. If you have already used most VMware offerings, expect some increase (though smaller).
Q3: What if we choose not to renew VMware support or subscriptions?
A: Your VMware software will keep running, but you won’t get patches or help from VMware. That might be okay for a short period if everything remains stable, but over time, it becomes risky (with no security fixes and no support if something breaks).
Q4: Can we negotiate with Broadcom for better terms?
A: Yes, especially if you’re a large customer. Broadcom might offer a discount or price lock for a big multi-year deal – but ask early and back it up with data (and alternatives).
Q5: What alternatives do we have if we can’t accept Broadcom’s terms?
A: You can use third-party support to delay switching, and/or migrate some workloads to other platforms (cloud, Hyper-V, etc.) to reduce reliance on VMware. Many companies are combining these tactics to reduce their dependence on VMware under Broadcom.
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