VMware stops selling perpetual licenses

ITAM News & Analysis

VMware stops selling perpetual licenses

Mere weeks after completing its acquisition of VMware, Broadcom has announced some very significant changes to VMware licensing. Effective immediately, “VMware by Broadcom,” (as it is now affectionately known) will no longer be available on a perpetual license. VMware offerings will solely be available as subscriptions or as term licenses following the end of sale of perpetual licenses and Support and Subscription (SnS) renewals. 

Customers on perpetual licenses with active support contracts will remain supported as defined in their contractual commitments. Broadcom encourages its customers to review their inventory of perpetual VMware licenses, including Support Services renewal and expiration dates, and will work with customers to help them “trade in” their perpetual products in exchange for the new subscription products, with upgrade pricing incentives. 

According to Broadcom, this is the culmination of a two-year journey for VMware to simplify its portfolio and transition from a perpetual to a subscription model to “better serve customers with continuous innovation, faster time to value, and predictable investments.” 

“The simplification of our portfolio and shift to subscription and term offerings are a culmination of our multi-year business transformation efforts. The steps we’re taking today will further enable customer and partner success by delivering the innovation, simplicity and flexibility they need as they undertake their digital transformations.” 

Broadcom announced two specific developments: 

• A dramatic simplification of our product portfolio that allows customers of all sizes to gain more value for their investments in VMware solutions. The portfolio simplification across all VMware by Broadcom divisions stems from customer and partner feedback over the years telling us our offers and go-to-market are too complex. 
• Completed the transition of all VMware by Broadcom solutions to subscription licenses, with the end of sale of perpetual licenses, Support and Subscription (SnS) renewals for perpetual offerings, and hybrid purchase program/subscription purchase program (HPP/SPP) credits beginning today (effective dates will vary). Additionally, we are introducing a bring-your-own-subscription license option, providing license portability to VMware validated hybrid cloud endpoints running VMware Cloud Foundation. 

VMware Cloud Foundation subscription halved in price

There was one silver lining in the announcement. VMware’s hybrid cloud solution, VMware Cloud Foundation, has had its subscription list price reduced by half. Described by VMware as a “Turnkey Platform for Multi-Cloud and Modern Apps,” the price reduction is a little sweetener to incentivise organisations to make the shift to a subscription model. In addition to reducing the previous subscription list price by half, VMware has added higher support service levels including enhanced support for activating the solution and lifecycle management.

Simplification in the name of customers? Or milking the cash cow? 

While Broadcom has positioned this as an opportunity to simplify the VMware portfolio, this ultimately comes down to maximising the amount of revenue it can extract from all those juicy new VMware customers that it just paid $61 billion for. 

The shift to subscription licensing is hardly a surprise. With much of the industry having already embraced subscription as the standard for cloud consumption, it was only a matter of time before Broadcom made this change with VMware. 

AJ Witt commented, “Ooof, this is beyond Adobe-level seismic. It is not uncommon for VMware to be third in importance behind Microsoft and Oracle in many organisations, so the impact of this will be huge. The perpetual licenses plus necessary security updates were one of the big attractions of VMware. VMware is also notoriously poorly-managed by both sides, so there is no time to waste in getting your house in order. 

How lovely to see that Broadcom has finally found the udders of its new cash cow.” 

For more details on how this might affect you, we encourage you to visit the official Q&A which can be found immediately below the announcement. 

Update: 15th April 2024 from Broadcom CEO

In response to some of the criticism / pushback that Broadcom has received to these licensing changes, Broadcom CEO Hock Tan published a blog post to update VMware customers on its vision for VMware going forward. Most notably were the following comments, which should help to soften the impact of the end of perpetual licenses for some customers:

1) Free security updates for perpetual customers:

“To ensure that customers whose maintenance and support contracts have expired and choose to not continue on one of our subscription offerings are able to use perpetual licenses in a safe and secure fashion, we are announcing free access to zero-day security patches for supported versions of vSphere, and we’ll add other VMware products over time.”

2) “We heard that fast-moving change may require more time, so we have given support extensions to many customers who came up for renewal while these changes were rolling out.”

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