As some VMware products come to an end some customers face 1200% price rises

30 January 2024
11 minute read

As some VMware products come to an end some customers face 1200% price rises

30 January 2024
11 minute read

As you may have seen, following the completion of the Broadcom acquisition, “VMware by Broadcom” are no longer offering perpetual licenses for their products as they move to a subscription model. They have also moved to drastically reduce the breadth of their portfolio. In the meantime some customers are already reporting 1200% price rises…

To that end, many products are being killed off completely* and for those that remain, many will no longer be available as standalone SKUs. Instead, they will be available only via two primary bundles being offered by VMware; either as part of VMware Cloud Foundation (VCF) or VMware vSphere Foundation (VVF). They will not be available for purchase as standalone point solutions. 

* The full list of these products is here and includes many flavours of vSphere as well as desktop focused products. The Aria SaaS product lineup is also being discontinued other than within the below bundles.

VMware Cloud Foundation

This is VMware’s solution for customers looking to “capture the value of full stack infrastructure” and includes:

  • vSphere
  • vSAN
  • NSX
  • Aria management and orchestration suite

VMware vSphere Foundation

This is for “datacentre optimization in traditional vSphere environments” and includes:

  • Tanzu Kubernetes Grid
  • Aria Operations
  • Aria Operations for Logs

A range of “add-on services” will be available on top of these bundles to add further functionality around “storage, security, disaster recovery, Generative AI” and more.

It seems that “vSphere Standard” and “vSphere Essentials Plus Kit” will be available as standalone subscriptions for smaller organisations.

Bring Your Own License

This new capability will allow customers to deploy their VMware Cloud Foundation subscriptions on-premises and in “VMware validated hybrid cloud endpoints”. This will be a new set of rules and metrics for ITAM managers to learn!

Trouble with VMware renewals? Delays in pricing?

At the time of VMware making this announcement, the VMware Reddit forum has been heating up with complaints from customers having issues with their licensing, as it appeared the OEM Portals were down. Quoting from a post by Michael Leonard, a former Senior Product Marketing Manager at VMware, “People can’t get pricing, they can’t get support, they can’t renewals, they can’t activate licenses. I’ve never seen anything like this in 15 years of working in IT and 25 working for 8 vendors.”

Here are some of the comments that Michael quoted from the (unofficial) VMware subreddit (as with all Reddit posts, note we are unable to independently verify these comments):

As of earlier today however, one of our customers got the following response when they followed the exact process VMware told us to use barely a week ago: As of now all the OEM Portals are not operational and we are unable to assist with redeeming the PACs at this time. We are expecting more updates to come very soon” So VMware is now not even honoring licenses sold in 2023 and just telling Customers “Sorry, you need to just wait until we figure our s*** out”

It is actually insane that they have gone this long without releasing pricing. They’ve cut off OEM licenses, stopped new deals and renewals globally, and the only guidance they’ve provided is a list of products that are dead. So now you have people that have their deals and businesses stuck in limbo for months while Broadcom fiddles around. This isn’t how a customer focused business behaves.

It is really hard to stay positive when our licensing cost is going up ~1200%+ and my leadership team is looking for someone to blame. Many people have already lost their jobs as part of this merger, and many more people will potentially lose their jobs as companies and partners struggle with the licensing cost increase and rug pulling.

Renewals uplifts at staggering levels – one UK university is facing a 1250% uplift in support? Could be cheaper if you go direct to Broadcom

According to one particularly disgruntled Reddit poster at a UK university (whose account was left anonymous for obvious reasons), they are facing a whopping 1250% uplift in VMware support in their upcoming renewal in the next few weeks.

“We were quoted very recently to renew our support contract for another year, which was in the region of £40k. After being told this would be need to be requoted, we’ve been given an “indicative” figure now of approx £500k/year, or just over £1.1m for 3 years. We’ve been told we could have some reduction as we “trade-in” the perpetuals so we’re waiting a full and final quote, but again we’re told the prices should be “indicative”.

On questioning where on earth such an uplift has come from, we’ve been told that because we’re education, we’re being forcibly classified as a “strategic” customer and so are only allowed to be sold the full cost VMware Cloud Foundation product and nothing else.”

If this is indeed VMware/Broadcom’s new policy – with education now being classified as strategic and thus not subject to discounts – it is unlikely this case will be isolated. However, it may not be as bad as the poster suggests. We’ve seen that partners can no longer get deal registration on deals for “strategic customers,” – we believe this is because Broadcom now wants to deal with them direct. So, in this instance their partner can no longer get the deal registration discount but, if/when the customer goes direct to Broadcom, the discount should hopefully be there again. Fingers crossed for this poster.

If you have any other insights or tips you can share to help this particular poster, I’m sure they’ll be grateful! You can access the original Reddit post here

In the meantime Is-Not-El summed up the collective response rather well “Welcome VMware to the Oracle club of amazing companies to work with. Should I expect the mobsters, excuse me, the license audit team this year or that pleasure is reserved for 2025?”

Next steps and advice from VMware expert, Barry Pilling

These changes won’t impact existing customers until renewal but there’s plenty to do in the lead up to that point – especially if your renewal is coming up soon (see above)! Get a clear view of your VMware portfolio – both what’s been purchased and what’s in use – and work with stakeholders to map out how these changes impact you. If you are finding your historical discount appears to have disappeared, it will also be worth speaking with Broadcom directly.

To provide additional context we reached out to Barry Pilling, the Founder and Principal ITAM Consultant at Cortex Consulting and lead trainer on the newly-launched LISA VMware Licensing Training course. His comments are as follows:

  • What’s going on currently is a concerted effort by Broadcom to maximise revenue from the VMware product stack without making too much effort on sales, by “simplifying” the available product list and trying to push customers into product bundles wherever possible.
  • Between now and the end of their existing agreements, customers should make sure they understand their estates and make efforts to map what they are using across to the new bundles.  The sooner the better, so intelligent, data-driven, decisions can be made over the future of their virtualisation.
  • Expect a request for an installed base report (IBR) at renewal time, when you are offered subscription licences at discount prices for your perpetual licences. VMware has been requesting IBRs for years at ELA renewals and it is nothing new. It’s also a good way for Broadcom to quietly audit customers without them really thinking about it – make sure your estate is squared away.
  • No confirmations on the process at the end of agreements for changing perpetual to subscription licensing, however I would expect it to be the same as VMware’s Subscription Upgrade Program, introduced in 2022.  Options will most likely be (1) keep the perpetual licences with support for 90 days, after which you can never get support / upgrades / patches on them again but can continue to use them or (2) commit to a software destruction whereby you will surrender the perpetual licences for an additional discount. This is the SUP approach and there is a section about it in the VMware Essentials course.

A couple of things that are worthy of mention:

  • As our very own Rich Gibbons has been talking about at our Wisdom events – Broadcom’s CEO, Hock Tan, has already talked about divesting EUC products, including Horizon and Carbon Black, so they can focus on VMware’s core product stack.
  • Broadcom is discontinuing VMware’s partner program and integrating it into theirs which is invite only.  Customers should check with their VMware partner, if they have one, that they are in the program.
  • We’ve been expecting the move to subscription licensing ever since Broadcom announced their intent to acquire VMware (May 2022).  I personally think VMware’s introduction of the Subscription Upgrade Program 3 months later was a move to lessen the impact when Broadcom closed the deal.
  • The first Product Guide with the additional terms in was released the weekend of 13th / 14th January.  It’s actually dated December because they want to capture everything right back to when they made the announcements.  The main changes are that it includes transitory note about VMware Cloud Foundation in the “Terms Applicable to All Products” and has now inserted the Cloud Foundation Division group of product terms right at the top of the Product-Specific Terms section.

VMware training now available on LISA

For more detailed and practical advice from Barry on what to do to maximise your VMware investments, as well as the latest insights into VMware’s audit practices from someone who is actively involved in defending them, consider the new course VMware Licensing Training, on LISA, the on-demand training service from the ITAM Review.

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