VMware’s Strategic Pivot: Navigating the Transition to Subscription Licensing from Perpetual Models

Following its acquisition by Broadcom, VMware licensing changes have begun, and VMware has started “simplifying its portfolio with a transition from perpetual to a subscription-based model to better serve customers with continuous innovation, faster time to value, and predictable investments.” Different Broadcom-VMware changes were made public on December 11, 2023, when VMware announced:

• Product Portfolio Simplification allowing customers of all sizes to gain more value for their investments in VMware solutions.
• Complete transition from perpetual to subscription licenses of all VMware by Broadcom, with the end of the sale of perpetual licenses.
• The introduction of a bring-your-own-subscription license option, providing license portability to VMware validated hybrid cloud endpoints running VMware Cloud Foundation.

How will this change impact your organization?

VMware’s licensing changes announcement does not provide many details around financials other than that to allow more customers to benefit from the solution, they have reduced the previous subscription list price by half and added higher support service levels, including enhanced support for activating the solution and lifecycle management. While Broadcom is reducing the initial list price by half, they are also adding additional support service levels that will increase in cost with each level.

In terms of risk, there is no immediate change if you have existing perpetual licenses in an active contract. However, when your VMware renewal comes up, you will be required to transition from the perpetual to the subscription model if you would like continued support. If support is not required, then you can continue to use your perpetual licenses.

Broadcom will not require you to trade in your perpetual licenses if you transition to the subscription model. However, you will be offered pricing incentives if you choose to trade in those perpetual licenses. This trade-in will be optional, not a requirement.

As it currently stands, for most customers it would be business as usual until one of two things happens. Either their current agreement expires, or Broadcom shares additional information surrounding the changes and divestitures.

What action do you need to take now, and for future renewals?

Necessary action from these Broadcom-VMware changes will vary widely depending on each customer and their business needs going forward (reference our podcast Navigating VMware’s License Changes by Broadcom).

Generally, if you are currently in a multi-year agreement, no action is required until your VMware renewal date. Broadcom will continue to provide support as defined in your contractual commitments. If you are coming up on a VMware renewal, you will need to determine your future business requirements. If you no longer require support, you can continue to use the perpetual licenses without support. However, if support is required, you will need to move from perpetual to subscription licensing.

If you are currently using the products that will be discontinued or divested this will be a factor that will need to be addressed and additional information will be required from Broadcom before decisions can be made. Reference our webinar, Broadcom’s VMware Licensing Changes Decoded, for additional information regarding what’s needed with these changes.

How can Anglepoint support?

If you feel more specific help is needed, Anglepoint has experts who are well versed in VMware and understand the impact that VMware’s licensing changes will have on our client’s software and cloud estates. Over the past year we have helped many of these clients to lock in pricing and enter into long-term agreements ahead of this Broadcom-VMware change. In addition, Anglepoint has helped clients navigate the transition from perpetual to subscription licensing and has helped them understand the nuances involved around changing license metrics.

If you would like to discuss these VMware licensing changes with one of our experts to ensure your organization responds accordingly, get in touch with us today to arrange a call. We will be happy to explore your unique requirements and create an action plan.