Why Broadcom Killed Perpetual VMware Licenses (and What It Means for You)
Broadcom’s recent VMware licensing changes, specifically the end of perpetual license sales in favor of a subscription-only model, mark a major shift that enterprise IT, procurement, and finance teams must address now.
This move is happening globally and immediately, driving up costs for many organizations and introducing new compliance pressures.
In this advisory, we explain why Broadcom has discontinued perpetual VMware licenses, what this subscription shift means for your organization, and how to navigate the transition with effective budgeting, stakeholder communication, and negotiation strategies.
Broadcom’s Subscription-Only Era Begins (No More Perpetual Licenses)
Insight:
In late 2023, right after acquiring VMware, Broadcom stopped selling perpetual VMware licenses entirely.
All VMware products are now sold exclusively as subscriptions or fixed-term licenses. In other words, owning VMware software outright is no longer an option; you now “rent” it via subscription. This is a uniform policy change affecting every customer and product line.
Scenario:
Consider a global bank that planned to expand its data center using VMware vSphere in 2024. Under VMware’s old model, they would purchase perpetual vSphere licenses (a one-time capital expenditure) and pay annual support.
Now, when they approach Broadcom for more licenses, they find they can only purchase a subscription bundle (e.g., VMware Cloud Foundation or vSphere+).
There’s no perpetual option – even renewing support on existing licenses eventually requires moving to a subscription version. The bank’s IT procurement team is caught off guard and must quickly adjust to this new reality.
Takeaway:
If your enterprise relied on buying VMware licenses upfront, update your plans immediately. All new VMware licensing will be subscription-based. You should identify any projects or expansions assuming perpetual licensing and rework them.
Engage your VMware/Broadcom account manager to understand the subscription bundles that replace your current products. Planning will prevent last-minute surprises when you need additional capacity or renew support.
Negotiating VMware ELAs & Subscriptions Under Broadcom: Tactics That Work
Why Did Broadcom Make This Change? (Drivers for the Subscription Shift)
Insight: Broadcom’s decision to eliminate perpetual licenses is driven by strategic and financial goals, as well as industry trends.
First, Broadcom has ambitious revenue growth objectives for VMware, aiming to nearly double VMware’s revenue (e.g., from approximately $4.7 billion to $8.5 billion in a few years).
Subscription models provide recurring revenue, which supports these growth targets. Second, the broader software industry has been gravitating toward subscriptions (think Microsoft, Adobe, etc.), which offer vendors more predictable income and investors higher valuations.
Broadcom is aligning VMware with this industry trend, favoring subscriptions. Finally, Broadcom argues that having all customers on subscriptions simplifies license management and product offerings.
By bundling products into a few subscription suites, they reduce a complex catalog and (in theory) make it easier to deliver updates and support.
Scenario:
A CIO at a manufacturing firm recalls how other vendors transitioned from perpetual to subscription-based models – for example, Adobe’s move from Creative Suite to Creative Cloud subscriptions. Those moves were initially controversial but eventually became standard. Broadcom’s leadership similarly believes customers will accept VMware’s subscription shift as the “new normal.”
Broadcom’s CEO even emphasized that the industry had already embraced cloud subscription models, suggesting VMware was simply catching up. Meanwhile, internal finance teams at Broadcom calculated that recurring subscription fees could significantly boost cash flow compared to one-time license sales. This dual pressure – market trend and revenue opportunity – created a perfect storm for ending perpetual licenses.
Takeaway:
Broadcom’s licensing changes are not arbitrary; they serve a clear vendor agenda: increase revenue and streamline the portfolio.
Enterprises should recognize this context. When negotiating, understand that Broadcom is pushing subscriptions to meet its financial goals – but also be prepared to ask for value in return (e.g., better discounts or added services), as you are aware that this shift benefits the vendor.
Accept that subscription models are becoming standard, but ensure your organization leverages this change to also simplify its licensing management where possible.
Broadcom Simplified VMware Product Portfolio: What’s Included and What’s Missing
One Global Policy, No Exceptions (Global Uniformity of the Change)
Insight:
Broadcom’s new licensing model is being rolled out globally with no regional exceptions or grace periods.
Whether your operations are in North America, Europe, or Asia, the rules are the same: no new perpetual VMware licenses anywhere.
Even customer segments that once enjoyed special terms (like government, education, or nonprofits) are seeing those legacy discounts and options disappear. The transition to subscription is uniform for enterprises of all sizes and in all geographies.
Scenario: A multinational retail corporation with offices across 30+ countries usually encountered slight differences in licensing programs by region. (For instance, VMware in the past offered different discount programs in emerging markets or academic institutions that had campus agreements.)
After Broadcom’s takeover, the retail company’s regional IT managers all reported the same message from VMware reps: the old programs are gone. One EMEA subsidiary tried to secure an exception to buy a perpetual vSphere license for a smaller environment, but Broadcom’s policy was firm – subscription only, globally.
Even a university that had previously used VMware’s academic licensing program now must budget for the new subscription bundles without the deep discounts it previously received.
Takeaway:
Global uniformity necessitates that enterprises approach VMware licensing changes at an organizational level, rather than implementing region-by-region workarounds.
Ensure all your international teams are aware of the new Broadcom policy.
Centralize your strategy for VMware under this one-size-fits-all model – this might be an opportunity to consolidate contracts or co-term renewals globally since the playing field is the same.
Also, anticipate that any VMware licensing changes will hit all divisions equally, so communicate early with all stakeholders worldwide to prepare a coordinated response.
Immediate Implications for Customers: Higher Costs and Compliance Risks
Insight:
Broadcom’s licensing changes have some immediate, albeit painful, implications for VMware customers.
The most notable are significantly higher costs for equivalent capabilities and a much stricter compliance and audit environment.
Enterprises that transition from perpetual licenses (with annual support) to subscriptions often experience “sticker shock” – the new subscriptions can cost more over a few years than the old model did over the entire license lifespan.
At the same time, Broadcom is taking a hard line on compliance: if you try to delay moving to subscription or let support lapse, you may face aggressive audits or even legal notices.
Scenario:
A large tech company recently came off a VMware Enterprise License Agreement (ELA) that had locked pricing for years.
When they received Broadcom’s quote to renew under the subscription model, costs were nearly double what they had budgeted a price hike in the range of 50–100% over three years. In some cases, companies are seeing even steeper increases (reports of 3x or higher for certain VMware bundles vs. the old perpetual plus support combo).
Separately, a mid-sized firm that decided to run on existing perpetual licenses without renewing support received a shock in the mail: a cease-and-desist letter from Broadcom’s legal team.
The letter reminded them that without an active subscription or support contract, they had no rights to apply updates or patches, and threatened audits and penalties if they continued using any post-contract software fixes.
This heavy-handed approach is far more intense than what VMware users experienced in the past.
Takeaway:
Prepare for higher IT spending on VMware and tighten your license compliance processes. Update your budget forecasts to reflect subscription costs, which will be recurring and likely higher over time than the old maintenance fees.
Additionally, educate your teams that running VMware software without an active subscription/support isn’t a viable long-term plan; Broadcom is actively enforcing compliance.
Avoid the temptation to “coast” on perpetual licenses with expired support. If you do, have a contingency plan in place for support (such as third-party support providers) and be prepared for potential audits.
It’s safer to engage with Broadcom proactively for a subscription migration (or document your decision to decommission VMware) than to ignore the issue and risk compliance disputes.
Pricing Model Comparison: Perpetual vs. Subscription
To understand the cost implications, compare the old perpetual license model to the new subscription model:
| Aspect | Traditional Perpetual License Model | New Subscription License Model |
|---|---|---|
| Ownership & Term | Buy once, own indefinite rights to use a specific version. Term is perpetual (no expiry). | Rent the software for a fixed period (e.g. 1 or 3 years). License expires if not renewed. |
| Payment Structure | Large one-time upfront purchase (CapEx), plus optional annual support (SnS) fees. | Ongoing periodic payments (OpEx) – e.g. annual or quarterly subscription fee (includes support). |
| Upgrades & Updates | Only available with active support contract (or by buying new versions). Major version updates often cost extra or require new licenses. | All upgrades and updates included as part of the subscription. Continuous access to the latest features during the term. |
| Support & Maintenance | Purchased separately as Support and Subscription (maintenance) contract, typically 20%–25% of license cost per year. If support lapses, no new patches or help. | Included in the subscription fee. Support is bundled, and you receive patches/fixes as long as you subscribe. No separate maintenance renewal needed. |
| Cost Profile Over Time | Lower cost if used over many years (after initial payoff, only maintenance cost). However, unpredictable large expenses when upgrading to new versions. | Higher long-term cost if perpetually renewed, but costs are spread out predictably. Budgeting is easier year-to-year, though total spend can exceed perpetual model after a few years. |
| Scalability & Flexibility | Scaling up requires new license purchases; scaling down yields unused licenses (sunk cost). License transfers/true-ups can be complex. | Can often adjust subscription quantities at renewal (scale up or down). Easier to start small or use more temporarily. Little to no value if you stop using the software (since no owned asset). |
| Post-Contract Use Rights | You can continue running the last licensed version indefinitely (unsupported if maintenance ended). Useful for stable environments that don’t need new features. | You have no rights to run the software once your subscription term ends (if you don’t renew). Software may deactivate or violate terms if used without renewal. |
Practical Takeaway: The end of perpetual license sales means customers will no longer have the option to “buy once, use forever.”
Broadcom’s subscription shift offers benefits such as continuous updates and simplified all-in-one pricing, but at the expense of ongoing payments and potential vendor lock-in.
Enterprises must re-evaluate the total cost of ownership: a subscription might look cheaper initially (sometimes marketed with lower year-one costs), but if you run workloads for 5–10 years, be mindful that subscriptions could end up costing more overall.
Use the table above to communicate these trade-offs to finance stakeholders, and to justify budget increases or explore cost-saving measures (like consolidating workloads to need fewer licenses under subscription).
Budgeting and Communication Strategies for the New Model
Insight:
With higher costs on the horizon and new licensing rules, CIOs and procurement leads need to revise budgeting plans and communicate proactively.
The switch to subscriptions will likely convert some capital expenditures into operating expenses, resulting in an increase in your annual spend on VMware.
This requires updated financial models and upfront discussions with executives about the cost implications. Additionally, internal communication is key – IT teams, procurement, and business units all need to understand why these changes are happening and how the organization will address them.
Scenario:
A CIO preparing the IT budget for next year finds that, due to Broadcom’s changes, the line item for “VMware maintenance” is now insufficient. Instead of a modest maintenance renewal, they must budget for a new multi-year subscription contract at perhaps 30% higher annual cost.
The CIO collaborates with the procurement manager to draft a briefing for the CFO, outlining that Broadcom’s licensing changes are an industry-driven shift, not a result of poor vendor management. They explain that while costs will rise, the company will also get certain benefits (like broader product functionality in the bundles and more predictable expenses).
Meanwhile, the IT procurement lead schedules meetings with each business unit that relies on VMware to explain the upcoming change, ensuring no one is caught off guard when allocations or chargebacks increase. By communicating early, they secure leadership understanding (if not enthusiasm) and even get approval to seek additional savings elsewhere to offset the VMware cost hike.
Takeaway:
Adjust your budget forecasts and inform stakeholders now. Don’t wait until a renewal quote arrives to raise alarms – start the conversation in finance meetings that VMware costs will be trending upward due to external vendor policy.
Work closely with your CFO or finance team to categorize these subscription fees appropriately (they might prefer the OpEx model, but only if informed ahead of time).
At the same time, craft a clear narrative for non-IT executives, emphasizing that this is a market shift affecting all VMware customers and highlighting the value the new model brings (e.g., “we’ll always be on the latest version, which helps our cloud integration strategy”).
By setting expectations internally, you build support for necessary funding and avoid surprises that could erode trust in IT procurement.
Navigating the Transition: Adaptation and Negotiation
Insight: Enterprises aren’t powerless in the face of Broadcom’s changes – you can adapt and negotiate to mitigate risks.
Key strategies include optimizing what you have, exploring alternatives, and negotiating contracts to your advantage.
Before committing to a new subscription, audit your current VMware usage: eliminate or downgrade any unused licenses or features to avoid paying for excess in the subscription era.
Concurrently, evaluate third-party support options and competitor products as leverage – even if you plan to stick with VMware, knowing your Plan B increases your bargaining power.
When engaging with Broadcom, negotiate like any major enterprise agreement: seek multi-year commitments with price protections, insist on clarity in terms (especially around audits and usage rights), and push for transitional discounts or incentives, as you are being forced to change your model.
Scenario: A large healthcare company takes a two-pronged approach upon learning of the new model. First, the IT asset management team conducts an internal audit of VMware deployments. They discover 15% of their licensed capacity is tied up in powered-off or unused virtual machines.
Knowing this, they right-size their renewal needs (dropping some licenses) before entering talks with Broadcom – this avoids paying subscriptions on shelfware. Second, the CIO quietly engages a third-party support provider to support their older VMware environment for an interim year.
The pricing from the third-party support is high but still less than Broadcom’s subscription quote, and it would allow the healthcare company to defer the subscription decision if needed. Armed with this information, the procurement lead goes into negotiations with Broadcom.
They let Broadcom know the company is prepared to maintain critical systems on existing versions with outside support or potentially pilot a competitor’s virtualization solution if the subscription offer isn’t reasonable.
As a result, Broadcom’s team, keen not to lose the customer, offers a sweeter deal: a three-year subscription at a discounted rate, with a provision for extra training and migration support included.
Takeaway: Be strategic in navigating this forced transition.
Inventory your VMware usage and eliminate any unnecessary waste – you want to enter the subscription model using only what you truly need. Investigate third-party VMware support providers (and check their viability) as a short-term option; they can either serve as a temporary bridge or simply as negotiating leverage.
When it’s time to engage Broadcom, treat it like any major vendor negotiation: bundle your needs, get quotes from partners, and push for concessions.
Broadcom does have revenue targets, but it also wants to retain customers – especially large ones – in the fold. Use that to negotiate for things like locked-in pricing for multiple years, better discount tiers based on volume, and contractual guardrails on audits or renewal increases.
The goal is to turn this difficult change into an opportunity to optimize and possibly save, or at least get more value for the money you will spend.
Recommendations
Here are expert-level tips for IT, procurement, and finance leaders at global enterprises dealing with Broadcom’s VMware licensing changes:
- Audit Your VMware Estate Now: Conduct a thorough internal audit of your VMware licenses and usage. Know exactly what you have, where it’s deployed, and when support contracts expire. This data is critical for planning your move to subscriptions and negotiating from a position of knowledge.
- Engage Early with Broadcom (and Partners): Don’t wait for your support to lapse. Reach out to your VMware/Broadcom account representative well in advance of renewal dates to discuss subscription options. Early engagement may give you access to transition promotions or at least clarity on pricing, helping you budget accordingly. Similarly, talk to your reseller or channel partner – they may have valuable insights or influence that can help you secure a better deal or navigate the process.
- Negotiate an Enterprise Agreement: Treat the switch as an opportunity to negotiate a broader Enterprise License Agreement (ELA) or a multi-year deal. By consolidating your VMware needs (vSphere, vSAN, NSX, etc.) into one negotiation, you can often secure higher discounts and more favorable terms. Insist on multi-year price caps or locked pricing to protect against future hikes.
- Evaluate Third-Party Support and Alternatives: Even if you intend to stay with VMware, research third-party support providers for VMware (like independent support firms) and alternative hypervisors or cloud solutions. Having a “Plan B” – such as running on existing versions with third-party support, or migrating some workloads to Hyper-V or cloud – gives you leverage. It might also uncover cost savings if Broadcom’s terms remain too unfavorable.
- Optimize and Right-Size Before Transition: Use this moment to optimize your environment. Decommission unused VMs, reclaim licenses, and consider consolidating workloads. The fewer licenses or lower tier of subscription you need, the more you can contain the cost increase. It’s better to clean the house now than to pay for capacity you don’t use under a pricey subscription.
- Secure Executive Buy-In and Budget Approval: Proactively brief your C-level executives (CIO, CFO) and the finance committee about the expected cost implications and the reasons behind them. Present a plan that includes the required budget along with the steps you’re taking to mitigate costs (negotiations, optimizations, exploring alternatives). Early executive alignment will make the procurement and approval process smoother when a new contract is presented.
- Document Everything: Keep a clear record of your current entitlements (proof of your perpetual licenses, support agreements) and any communications from Broadcom. If there are any disputes or audits, having documentation will be invaluable. Also, ensure any new subscription contract is thoroughly reviewed – check for tricky clauses on true-ups, audits, or automatic renewals, and get legal/procurement teams to negotiate those if needed.
- Train IT Staff on Compliance: Ensure your IT administrators are aware of the new regulations. They should avoid applying any VMware patches or version upgrades beyond what their license terms allow (e.g., after support expiry). Establish an internal policy to stay compliant, because Broadcom is watching. A bit of staff training now can prevent accidental non-compliance that triggers audits or penalties.
- Leverage Transition Benefits: Broadcom has mentioned upgrade pricing incentives and new bundle features as carrots for customers. When negotiating, ask about any trade-in credits for your existing licenses or additional value-added benefits. For example, if you’re being forced into a more comprehensive bundle, see if you can get some services (such as migration assistance, training, or additional products) included at a low or no extra cost. Don’t accept the list price blindly – inquire about the incentives available for early adopters of the new model.
- Monitor and Reassess Regularly: The first subscription term you sign is just the beginning. Set reminders well in advance to reassess whether the subscription still meets your needs. Use the subscription period to track usage closely – are you utilizing all components of that bundle, or can you adjust down? Treat VMware like a continually managed vendor relationship, where you periodically seek improvements or cost reductions, rather than passively renewing. This proactive stance will serve you well under a recurring revenue model.
Checklist: 5 Actions to Take
For a quick reference, here’s a tactical checklist of steps to implement now:
- Inventory All VMware Licenses & Contracts: Compile a list of your VMware products, license quantities, and support end dates. Identify which licenses are perpetual and when their support expires.
- Calculate the Budget Impact: Estimate the cost of switching those licenses to a subscription over the next 1–3 years. Use quotes from Broadcom or rough pricing to forecast the increase. Flag this in your IT budget and get initial buy-in from finance.
- Engage Stakeholders & Form a Plan: Convene a meeting with IT operations, procurement, finance, and key business unit reps to discuss Broadcom’s changes. Assign roles – who will speak to the vendor, who will explore third-party support or alternatives, and who will handle internal communications. Ensure everyone understands the plan and timeline.
- Contact Broadcom/VMware Representatives (or Resellers) to learn about your migration options. Request a detailed outline of subscription offerings that align with your current deployments. Also, request any transition assistance or special offers. This will set the stage for formal negotiations later.
- Strengthen Compliance and Documentation: Before any support lapse, save all relevant license keys, installation media, and documentation proving your entitlements. Implement internal checks to prevent VMware updates from being applied after support expiration. If you plan to use third-party support for an extended period, coordinate the handover of support tasks and ensure your systems remain secure and stable without relying on vendor patches.
(Bonus step: If feasible, run a license compliance simulation or third-party audit readiness assessment. Catch and resolve any compliance gaps now, so Broadcom audits find nothing amiss.)
By executing these actions, you’ll be much better prepared to handle the VMware licensing transition on your terms, rather than scrambling in a reactive mode.
FAQ
Q1: Can we continue using our existing VMware perpetual licenses?
A: Yes – any perpetual licenses you already own are still valid for the version you have. Broadcom isn’t “turning off” your software. You can run your installed VMware products indefinitely on those perpetual licenses. The catch is that once your support contract expires, you won’t receive updates, patches, or official assistance. You also cannot purchase new perpetual licenses or extend support beyond its current term. So, you can keep using what you have, but over time, this becomes risky (no fixes or upgrades). Eventually, to stay supported and up-to-date, you’ll need to migrate to a subscription or seek other support solutions.
Q2: What happens when our VMware support contract expires under this new policy?
A: Upon support expiration, Broadcom will likely reach out, urging you to convert to a subscription license. After expiry, you are not entitled to any new patches, upgrades, or technical support from VMware. Broadcom has also warned that using any updates released after your support end date is a breach of contract. In practical terms, when support ends, you face three choices: 1) transition to a subscription for continued support and updates, 2) go without support (and risk running unpatched software, plus possible compliance issues), or 3) contract a third-party support provider to service your VMware environment. It’s wise to decide before expiration which path you’ll take – and communicate that plan to Broadcom if needed.
Q3: How much more will the subscription model cost compared to our current spending?
A: It depends on your situation, but many enterprises should brace for a notable increase. Broadcom’s subscription pricing bundles more components (which can raise the price), and the company is seeking higher overall revenue from VMware. Some organizations report that their VMware costs could double over the next few years; others have seen quotes several times higher than previous maintenance renewals for the same environment. Your actual impact will vary based on the products you use and any discount you negotiate. To get a ballpark estimate, compare your current annual VMware support payment to the subscription quote for an equivalent setup. Often, the subscription will include support and additional features, but at a higher price point. The key is to run a multi-year cost comparison. Over a 3-5 year horizon, subscriptions often end up being more expensive than owning and maintaining the equipment, even if the initial year appears similar. Use this analysis to inform your budget and negotiation strategy.
Q4: Is there any way to still buy perpetual VMware licenses or get an exception?
A: As of now, Broadcom has made no public exceptions – new perpetual license sales are off the table globally. There is no alternate VMware licensing program for standard customers that offers perpetual terms. In very specialized cases (like some OEM deals or possibly government security agreements), there might be unique arrangements, but these are not advertised and would require high-level negotiation. For nearly all enterprises, it is assumed that subscription is the only path forward for meeting new needs. If retaining a perpetual model is critical for some reason, your alternatives would be to either keep using older VMware versions without upgrading (not ideal long-term), or evaluate other virtualization platforms that still offer perpetual or open-source models. However, those routes have their challenges. Broadcom’s stance is clearly to move everyone to subscriptions, without carve-outs.
Q5: What should we do to prepare for a potential VMware audit by Broadcom?
A: Given Broadcom’s more aggressive posture, preparation is wise. First, ensure you have a current inventory of all VMware deployments (which products, which versions, installed on how many hosts/cores, etc.) and that you can prove they are properly licensed. Clean up any usage that might be out of compliance (for example, test environments accidentally connected to production license keys, or running extra instances beyond your entitlements). Next, review your VMware license agreements for the audit clause – understand what you’re contractually required to provide if audited, as well as the typical timeframe. It’s also a good idea to implement internal auditing as if Broadcom were coming: simulate an audit by checking licenses versus actual usage. If you find discrepancies (like more VMs running than you have licenses), resolve them immediately (either reduce usage or purchase subscriptions for them). Have records of your communications with VMware/Broadcom and any purchase documentation ready to show. Finally, train your IT staff to report any communications from Broadcom that suggest compliance checks or to forward any audit notices to your license management team promptly. By being organized and responsive, you can get through an audit with minimal disruption. And if you’ve done the homework, the outcome should simply confirm your compliance or, at worst, require a straightforward true-up purchase – rather than penalties.
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