1. Overview of the Broadcom–VMware Acquisition
Broadcom completed its acquisition of VMware on November 22, 2023, in a deal worth about $61 billion. The acquisition combines Broadcom’s hardware and semiconductor portfolio with VMware’s virtualization and cloud management technologies. Broadcom’s objective is to streamline offerings, reduce operational complexity, and increase predictable recurring revenue.
2. Why Broadcom Changed VMware Licensing
Broadcom has implemented a major overhaul with three overarching goals:
a. Increased Recurring Revenue
Broadcom discontinued perpetual licenses and moved VMware to full subscription licensing, aiming to grow VMware’s revenue increase within three years.
b. Simplification of Portfolio
VMware’s massive catalog (formerly 160–8,000 SKUs depending on category) has been reduced to just a few bundles. This is meant to simplify procurement and accelerate deployment.
c. Streamlined Partner Ecosystem
Broadcom sharply reduced the number of authorized cloud partners and introduced an invitation‑only Cloud Service Provider program. Smaller service providers and white‑label partners are being phased out.
3. The End of Perpetual Licenses
Broadcom officially ended sales of perpetual VMware licenses and ceased support renewals for them unless covered by an existing contract. All new VMware purchases now require subscription models.
Key Points
- No new perpetual licenses can be purchased.
- Perpetual licenses receive no updates, patches, or new support renewals.
- Customers must migrate to subscriptions for continued support.
4. New VMware Licensing Structure (2024–2025)
Broadcom has consolidated the VMware portfolio into four primary bundles (plus add‑ons):
Primary Bundles
- VMware Cloud Foundation (VCF)
- Flagship hybrid cloud solution integrating compute, storage, network, and cloud management.
- vSphere Foundation (VVF)
- Enterprise‑grade workload platform for datacenters of all sizes.
- vSphere Standard (VVS) (discontinued July 31, 2025)
- vSphere Enterprise Plus (VSEP)
- Reintroduced in 2024 as a replacement for Essentials Plus.
Advanced Add‑Ons
Includes vSAN, Live Recovery, Private AI Foundation, Tanzu Platform, vDefend Firewall, AVI Load Balancer, etc.
5. New Licensing Rules That Affect VMware Cloud Users
a. Core‑Based Licensing With Huge Minimums
Broadcom dramatically raised the minimum CPU cores per license from 16 cores to 72 cores per CPU (effective April 10, 2025).
This severely raises costs for SMBs, labs, and lightly‑utilized servers.
b. Subscription‑Only Licensing
All products require subscription terms (1-, 3-, or 5‑year).
c. Bring‑Your‑Own‑License (BYOL) for Hyperscalers
Starting November 1, 2025, customers using Azure VMware Solution, Google Cloud VMware Engine, or other hyperscalers must bring their own VCF subscription—Broadcom will no longer allow bundled hyperscaler licensing.
d. Late Renewal Penalties
Broadcom introduced 20–25% penalties for renewing subscription licenses after contract anniversary dates.
e. Installed Products Removed or Consolidated
Many classic VMware offerings have been discontinued:
- vSphere Essentials
- vSphere Essentials Plus
- vSphere Free Hypervisor
- ROBO editions
- Acceleration Kits
6. Impact on Pricing
Pricing has increased dramatically for many customers.
Reported Industry-Wide Increases
- Typical renewal increases: 150%–1000%
- Extreme cases: 1050% (e.g., AT&T)
Reasons for Price Increases
- Higher subscription pricing
- Mandatory bundle purchases (VCF)
- Minimum 72‑core licensing
- Removal of low‑cost SKUs
- Consolidation forcing customers into larger bundles
7. Changes to VMware Cloud Service Provider (VCSP) Program
Broadcom is restructuring the entire VCSP ecosystem.
What’s Changing?
- Only select partners will remain in the program (invitation‑only).
- Smaller cloud providers and white‑label programs end on October 31, 2025.
- Customers may need to migrate from discontinued VCSPs to new ones.
8. Implications for VMware Cloud Users
a. Budget Impact
Costs become predictable annually but significantly higher due to subscription and core‑minimum requirements.
b. Operational & Compliance Risks
- Expired licenses may render environments unmanageable.
- Non‑renewal can cause loss of support and even operational downtime.
c. Migration Pressure
Organizations reconsider whether to remain with VMware or migrate to alternatives.
9. What Alternatives Are Organizations Considering?
As pricing and licensing complexity rises, companies are evaluating:
- Nutanix AHV
- Microsoft Hyper‑V
- Proxmox VE
- HPE Morpheus VM Essentials
- Scale Computing HyperCore