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.”
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.
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.