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In November 2023 Broadcom finally completed its takeover of the cloud and virtualisation specialist VMware. A move that left VMware customers holding their breath as to what would happen next.

Since then, Broadcom has announced a number of changes to VMware products and licensing.

As Broadcom’s strategy for VMware unfolds, many companies will be scratching their heads about the future of VMware in their business and whether it’s time to explore some alternatives.

Let’s take a look at some of the key changes Broadcom has already introduced.

Portfolio simplification

Broadcom has dramatically simplified and reduced the VMware product portfolio, streamlining 168 products to just two key offerings:

  • VMware Cloud Foundation – an enterprise-scale hybrid cloud solution for enterprises and mid-sized businesses
  • VMware vSphere Foundation – a platform designed for businesses running small and midsize data centres.

VMware Broadcom customers will also have the option of bolting on additional services to these foundational products to meet any advanced storage, security, disaster recovery or application platform needs.

For the moment at least, Broadcom says that companies with lighter requirements (basic server consolidation or virtualisation on a small number of servers) will be able to purchase subscriptions to vSphere Standard and vSphere Essentials Plus.

Subscription licenses

Broadcom announced it is ending perpetual licensing. From this point on VMware Cloud Foundation and VMware vSphere Foundation can only be purchased on a subscription model. It has also axed the free version of vSphere Hypervisor ESXi, a move industry pundits predict will result over time in a VMware skills gap as tech enthusiasts lose this low cost route into learning the technology.

Changes to the VMware partnership model

In February 2024, Broadcom announced a major rationalisation of the VMware partnership programme and terminated all active agreements with VMware resellers and service providers. Instead, selected ‘large’ VMware partners are being invited to join Broadcom’s Advantage Program. Something that has prompted concerns about how smaller businesses will access VMware products going forward.

Currently, industry insiders have speculated as to whether this means that smaller CSPs will be forced to buy from larger partners if they wish to continue to sell VMware based cloud services to customers.

What does this mean for my business going forward?

In the face of all these changes, determining the best way forward can feel a bit of a challenge.

Going forward, industry observers have stated that customers should expect to experience higher bills, longer payback periods, and reduced channel partner and hardware vendor investment (such as system providers such as Dell, HPE and Lenovo) in VMware solutions over the next three years.

Something that may drive smaller and mid-sized companies to undertake some major infrastructure changes and ultimately move off VMware altogether.

On a positive note, Broadcom says it plans to continue investing in the VMware Cloud Foundation software stack and VMware Cloud on AWS is built on this capability. Meanwhile, Broadcom and Google have announced a license portability scheme that enables business customers to run VMware workloads on Google Cloud. All of which could prove positive for businesses of all sizes.

That said, mid-market and smaller firms- who are most likely to be impacted by Broadcom’s recently announced changes – may decide to transition to alternative virtualisation platforms such as that offered by the hyperconverged infrastructure (HCI) provider Nutanix.

Next steps

VMware has been a key player in driving the transformation of IT infrastructure, enabling customers to adopt hybrid cloud, multi-cloud, edge computing and other emerging technologies. It also provided a major market catalyst for collaboration and competition among partners such as Dell, IBM, AWS and Microsoft – the result of which was a vibrant and diverse ecosystem.

However, the recent takeover of VMware by Broadcom may reduce choice and flexibility for many non-enterprise scale customers. Similarly, customers could see support coverage for their VMware investments reduce and erode as channel support reduces.

If you’re wondering what to do next, our specialist teams are on hand to help evaluate your current environment, get to grips with other alternatives, and determine whether it will be best to ‘stick or switch’.

According to Broadcom, customers can continue to use existing perpetual licenses if they have an active support contract in place. However, when these support service contracts expire, they will be unable to renew their perpetual license and will have to shift to a subscription product.

In a blog on its website, Broadcom has made a commitment to help customers ‘trade in’ their perpetual products in exchange for subscription products with upgrade pricing incentives.