VMware Announces Crucial Licensing Changes Post-Broadcom Acquisition

Broadcom is implementing significant changes in VMware’s product portfolio including the move away from perpetual software licensing contracts towards a subscription-based model.

Following the completion of Broadcom’s successful $61 billion acquisition of VMware in November, it has recently been announced that there will be some comprehensive changes in VMware’s licensing model.

The End of VMware Perpetual Licenses

As of December 11, Broadcom has halted the sale of perpetually licensed products and suspended Support and Subscription renewals for perpetual license products. This affects a range of VMware products, including VMware Cloud Foundation, VMware vSphere, VMware vSAN, and others, as detailed in the official VMware announcement. Existing perpetual licenses with active support contracts can still be utilised, with support continuing until the end of support and subscription terms.

These changes, effective immediately, mark a significant shift from perpetual licensing to a subscription-based approach. In essence, all VMware offerings will now be available only as subscriptions.

Additionally, Broadcom is restructuring its approach to VMware’s product offerings, intending to focus more on bundled products like Cloud Foundation, which includes compute, storage, and network virtualisation, along with multi-cloud management and automation.

Divestment of VMware End-User Computing Division

Broadcom has also announced its intent to divest VMware’s End-User Computing (EUC) Division, which includes products like VMware Horizon and Workspace ONE. This divestment is being cited as a way to optimise the business and better support customers in delivering secure experiences to employees. It’s important to note that these changes are part of Broadcom’s broader strategy following its acquisition of VMware, and they reflect a comprehensive shift in the company’s approach to its product portfolio and customer engagement.

This shift in strategy is geared towards increasing revenue and aligning with Broadcom’s broader financial goals. It is reported that Broadcom aims to grow VMware’s EBITDA from approximately $4.7 billion to about $8.5 billion in three years through a strategic shift to a subscription-based business model. This transition aligns with a broader industry trend towards subscription and Software as a Service (SaaS) models.

The abrupt nature of these changes raises concerns amongst its customers, and further reports indicate uncertainty stemming from layoffs at VMware and potential price raises, underscoring the need for careful consideration.

VMware Licensing Changes and Dates:

• Effective December 11th 2023, Broadcom ceased the sale of perpetually licensed products and halted Support and Subscription renewals for perpetual license products.
• Existing perpetual licenses with active support contracts can still be used. However, support will be discontinued when support and subscription terms end.

Affected VMware Products

Perpetual licenses for the following products will no longer be available for purchase:

• VMware Cloud Foundation
• VMware vSphere
• VMware vSAN
• VMware NSX
• VMware HCX
• VMware Site Recovery Manager
• VMware vCloud Suite
• VMware Aria Suite (and its variations*)

*The full list is detailed in the official VMware announcement, and it’s important to review it to understand the changes affecting your specific products.

Support for Existing Perpetual Licenses:

• Customers with perpetual licenses and active support contracts can continue using them, and Broadcom will honour support commitments as defined in contractual agreements.
• However, when support and subscription terms end, support will no longer be available.

Transition Assistance and Upgrade Pricing:

• Broadcom is offering “upgrade pricing incentives” for customers transitioning from perpetual licensing to a subscription model. Details on these incentives are expected to be provided directly by Broadcom.
• A “trade-in” program has been introduced to facilitate the transition, allowing customers to exchange perpetual products for new subscription offerings.

“Broadcom will work with customers to help them ‘trade in’ their perpetual products in exchange for the new subscription products, with upgrade pricing incentives,” the announcement said.

VMware Consultancy Partner

If you are a VMware licensing customer, it’s essential to assess how these changes may impact your organisation. You should review your current inventory of VMware perpetual licenses, including refresh cycles and renewal dates, if you require any assistance with this process, please contact us and we can advise you further.

While this transition presents challenges, it may present an opportunity for you to review your choice of solution if that is an appropriate option. As a VMware consultancy partner, we are committed to supporting clients through this process, ensuring a smooth transition to either the updated subscription model or an alternative solution.

Our team is here to assist you in navigating these transitions effectively. If you have any specific concerns or questions related to your VMware environment and how these changes may affect you, please do not hesitate to contact us, or request a callback by completing the form below.