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Everything written about Broadcom in the last three years has been about VMware. Meanwhile the CA mainframe portfolio sits underneath a great many banks, insurers, retailers and government departments, renewing quietly on terms that almost nobody outside the systems programming team has read. If that is you, this is the most valuable ten minutes in the series, because the commercial model here is genuinely different from VMware and considerably less discussed. I am Tom, and Claire is with me, because most of this episode is mechanics and she knows them better than I do.
The portfolio is alive and it is broad. Security managers, ACF2 and Top Secret. Databases, Datacom and IDMS. Source and change management, Endevor and Librarian.
Workload automation, CA 7 and ESP. Then monitoring and systems management, SYSVIEW, NetMaster, Vantage. Most estates run somewhere between six and fifteen of these, often bought at different times, under agreements that have been consolidated and re consolidated over twenty years. The first practical problem in any mainframe negotiation is that very few customers can produce a clean list of what they are entitled to, at what capacity, under which contract.
That is not carelessness. It is what two decades of portfolio deals produces.
The commercial model to understand is Mainframe Consumption Licensing, Broadcom's answer to IBM's Tailored Fit Pricing. The headline mechanic matters. Your usage is measured hourly, not on the rolling four hour average that governs your IBM bill. Your baseline is negotiated from three to twelve months of your own capacity reports, so what you submit during the assessment window sets the floor you live with.
There is one overage rate applied across the entire stack rather than per product. You submit a report monthly, and there is an annual true up. It is genuinely simpler than what it replaced. Simpler, though, is not the same as cheaper.
Two clauses decide the outcome, and neither is prominent. The first is that there is no line item pricing at product level. You are quoted one number for the portfolio. That means you cannot see what any individual product costs, which means you cannot drop one and calculate the saving, which means the threat to remove a product has no arithmetic behind it.
That is not an accident of formatting. The second is that there is no renewal price protection whatsoever. Nothing caps what the next term costs. Whatever you negotiate this time governs this term only.
Those two clauses together are why mainframe renewals surprise people who thought their last deal was good.
There is one number Broadcom publishes and very few customers have looked up. It issues an annual worldwide pricing notice with the list increase for the year. Those have run three percent, four, five, five, six, and six percent for 2026. Compound them and list price has risen roughly a third since 2021.
Now, that is list, and almost nobody pays list. But it is the floor the account team argues from, and it is the reference point for what counts as a reasonable ask. The gap between that published escalator and the number that arrives in your renewal letter is, in practice, the entire negotiation.
And the last mechanic is the one that catches people out, because it is not in the Broadcom contract at all. It is in the hardware decision. CA's own filing states that mainframe licences run up to a specified capacity measured in MIPS, and that customers may acquire additional capacity during the term by paying an additional licence fee. So capacity is the meter.
Then look at what a hardware cycle does. On IBM's own disclosure, one billion dollars of additional hardware in the current generation pulled through more than three billion dollars of additional software. A capacity upgrade is a software decision with a hardware invoice attached.
So, three actions. Build the entitlement list you cannot currently produce, because every conversation after this one depends on knowing what you hold. Look up the published escalator and use it as your reference point rather than accepting the ask as a starting position. And most importantly, settle your capacity terms before the hardware is ordered, never afterwards, because once the box is installed the capacity number is a fact and you have no move left.
Next time, Daniel and I look at what happens when the quote arrives six weeks before expiry, why that is so effective, and what the counter actually is.
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