Since Broadcom’s acquisition of VMware on November 22, 2023, significant changes have been implemented, which have direct implications for customers. One of the most significant changes is the shift from perpetual licenses to subscription models.
As of December 13, 2023, VMware ceased the sale of perpetual licenses, meaning customers are now required to switch to subscription licenses for new purchases. Existing perpetual licenses with active support contracts will remain supported until the end of their contract period.
In addition to these licensing changes, Broadcom has significantly simplified VMware’s product portfolio. The number of available products has been reduced from thousands to four bundles, with the goal of making the offering clearer for customers. This reduction initially faced resistance, leading Broadcom to add an additional option to address customer concerns.
Another important development concerns changes to OEM agreements. Initially, Broadcom ended many of these agreements in preparation for new negotiations with partners. However, in limited cases, OEM agreements are now possible again, allowing customers to continue obtaining VMware licenses and support through certain partners. While this is a step in the right direction, the uncertainty surrounding these contracts still presents challenges for customers who rely on partners for their infrastructure.
Licensing rules: From per processor to per core
A specific example of the impact of these changes is the modification of licensing rules from per processor to per core. Previously, VMware licenses were calculated based on the number of processors in a server. With the new rules, however, licenses are now based on the number of cores within each processor. While this adjustment helps Broadcom align better with other industry practices, it negatively impacts customers, especially those with powerful servers featuring a large number of cores per processor.
Why this change can be challenging to customers:
- Cost Increases: Servers with modern processors that have high core density now require multiple licenses per processor, significantly raising the overall licensing costs. For customers with large data centers, this can result in much higher licensing expenses.
- Increased complexity in management: The shift to core-based licenses introduces more administrative complexity, as organizations need to closely monitor and report the number of cores in use.
- Limited flexibility: Companies that have invested in powerful hardware are effectively “penalized” with higher costs, discouraging them from upgrading to newer, higher-performing technologies.
- Unexpected costs for existing infrastructure: Customers who had planned their hardware based on the old licensing terms now face unexpected additional costs, even without expanding their infrastructure.
Concerns and legal action
These developments have led to concerns among customers about potential price hikes and the complexity of the new licensing models. Some organizations, such as AT&T, have taken legal action against Broadcom for allegedly attempting to force them into expensive subscription agreements. Although this case was ultimately settled, it highlights the tensions that have arisen due to Broadcom’s new strategies.
What can customers do?
It is essential for customers to proactively respond to these changes. It is advisable to thoroughly evaluate current licensing agreements and support contracts and assess the impact of transitioning to subscription models. Furthermore, it is important to stay informed about further announcements from Broadcom and VMware to make strategic decisions that align with the new reality.
While Broadcom claims that these changes are designed to simplify the product offering and provide more value to customers, it is crucial for organizations to carefully assess the financial and operational implications and, if necessary, consider alternative solutions to ensure continuity and cost-efficiency.
How BeSharp Experts can help
BeSharp Experts can assist customers in navigating these complex changes. Whether it’s evaluating existing licensing agreements, optimizing licensing costs, or developing a strategy for transitioning to subscription models, BeSharp Experts offers tailored solutions. In addition, BeSharp Experts help companies understand the technical and financial impact of the shift to core-based licenses, enabling them to make informed decisions for their IT infrastructure.
Take Action Today!
The changes implemented by VMware and Broadcom can have significant consequences for the costs and complexity of your IT infrastructure. It is essential to be prepared for this transition and thoroughly evaluate your licensing agreements.
At BeSharp Experts, we are happy to help you understand these new licensing models and optimize your licensing costs. Contact us today for a free consultation and discover how we can assist you in navigating these changes. Click here to schedule an appointment and take the next step toward a more effective licensing strategy!