Change is never easy. The Broadcom acquisition of VMWare, particularly, has led to much uncertainty and risk among enterprises—and they are not happy.
One of the most concerning changes that followed the acquisition was the shift from perpetual licenses to subscription-based pricing. According to some reports, this has led to price increases for some businesses, ranging from 400% to 700%!
Another disruptive change is the shift in how VMware-based cloud solutions are procured and supported. Instead of going through traditional VMware reseller channels, organizations must now work with Broadcom-authorized partners or directly with cloud providers like Azure.
Given how deeply VMware’s technology is embedded in enterprise environments, these changes are even more impactful. IT leaders are now reevaluating their cloud strategies and infrastructure roadmaps, particularly in light of Broadcom’s history with prior acquisitions.
This blog post unpacks the changes brought about by the Broadcom‑VMware acquisition, explores their impact on different types of VMware users, and provides a framework to navigate the changes. We also explore Microsoft’s alternative solutions as a strategic path to reduce dependency and mitigate risks in the long term.
A little backstory
In November 2023, Broadcom completed its $69 billion acquisition of VMware, which now operates as VMware by Broadcom. The acquisition raised several concerns among VMware customers about how VMware would develop software and the changes in business practices.
VMware has been the gold standard for virtualization, but Broadcom dramatically simplified its pricing structure, product bundling, and go-to-market strategy for the entire portfolio. A month later, Broadcom laid off employees, ended perpetual licenses, and terminated all its partner agreements with VMware resellers and service providers, forcing them to reapply.
Understanding the changes for VMware users
- End of perpetual licenses
VMware has discontinued the sale of perpetual licenses and will no longer offer support and subscription (SnS) renewals for perpetual offerings.
You can still use your current perpetual licenses with active support contracts but will not have access to support and upgrades. Customers will need to buy the SnS contract on a subscription basis to receive support, updates, and new software versions.
- Transition to subscription licenses
VMware offerings will now solely be available as subscriptions or as term licenses. To encourage customers to take up an annual software subscription, Broadcom has cut the price of VMware Cloud Foundation (VCF).
Additionally, it introduced a “bring-your-own-subscription license” option, allowing customers to move their VCF subscriptions between on-premises and VMware-validated hybrid cloud endpoints (such as Azure VMware Solution). This encourages customers to take advantage of VCF’s pricing and flexibility while ensuring their investment is protected as they expand to Azure.
- Product line changes
As an outcome of portfolio simplification, many VMware solutions will only be offered as part of VCF or VMware vSphere Foundation (VVF) and will not be sold as standalone solutions. However, VMware offers optional advanced add-ons that can be used with these solutions. Some VMware products and services have been discontinued or consolidated.
- Discontinuation of the free ESXi hypervisor
The VMware vSphere Hypervisor (Free Edition) has been marked as EOGA (End of General Availability). There is currently no equivalent replacement product available.
VMware’s hypervisor is deeply ingrained in most organizations’ tech stacks and has been instrumental in cloud adoption and hybrid cloud.
- Change in pricing structure
The new model simplifies licensing to a single SKU—the VCF—marking a significant departure from previously available cafeteria-style options. Furthermore, the pricing structure is shifting from a multifaceted calculation method to a more straightforward, SKU-based pricing model. This simplification aims to reduce complexity in how services are priced and consumed and the licensing process.
- VMware Partner Program overhaul
Broadcom has overhauled its partnership structure with VMware resellers and service providers, terminating all existing agreements and moving to an invite-only model called the Broadcom Advantage Partner Program. For instance, VMware Cloud on AWS is no longer directly sold by AWS or its channel partners. Customers will have to work directly with Broadcom or a Broadcom-authorized reseller to renew their subscriptions and expand environments.
While the changes are significant for traditional VMware users, organizations running VMware on cloud platforms like Azure or Google Cloud may find the transition somewhat smoother. Let’s delve deeper into how it affects these two main user groups.
Impact on users of traditional VMware services
For organizations using traditional on-premises VMware services, the acquisition brings several concerns.
- Potential cost increases
The shift to consumption-based licensing aligns with cloud-based consumption models, but it could increase costs for some organizations, especially those with high-performance computing requirements. The OpEx vs. CapEx allocations have a major impact on budgets.
Furthermore, the transition to consolidated product packages could highly impact businesses using lightweight VMware deployments. The shift to consumption-based licensing could lead to higher costs for some users, especially those accustomed to perpetual licenses.
- Bundled products not aligning with needs
The simplified product bundles might reduce costs for customers deeply integrated into VMware’s ecosystem, but they dramatically raise expenses for users buying single products. Even if you use one product, you must pay for the bundle.
- Focus on enterprise customers
Broadcom has indicated a focus on VMware’s largest customers, potentially impacting smaller organizations’ access to certain products or support levels.
- Uncertainty about product roadmaps
There’s concern about the future development and support of certain VMware products, particularly those not aligned with Broadcom’s enterprise focus. Broadcom is following a familiar strategy from its past acquisitions– seeking to capitalize on its investment by increasing revenues and cutting costs. Organizations want to be better prepared for the road ahead if these decisions impact their critical workloads.
With these challenges in mind, what steps can traditional VMware users take to adapt?
What should you do: Planning the next steps
To navigate these changes, traditional VMware users can consider the following options:
1. Evaluating current VMware usage and licensing
Understand how the new licensing model will affect your costs and operations. Review your inventory of perpetual licenses, noting refresh cycles, renewal dates, support services renewal and expiration dates, and familiarize with VMware’s available subscription offers.
For customers waiting for their renewal to come up, now is still a great time to focus on validating the current state and exploring options for a future state.
2. Exploring alternative virtualization solutions
Customers should reassess their VMware strategies to determine whether alternative vendors to the existing VMware stack can alleviate cost increases stemming from the new subscription model.
Research other options in the market that might better suit your needs under the new circumstances. For instance, if you want to remain on-premise, consider switching to an alternate hypervisor like Nutanix.
3. Negotiating with Broadcom
If you’re a large enterprise customer, you may have leverage to negotiate favorable terms with Broadcom. You should seek clarifications on product bundling and renewal terms, understand the new model’s impact on the VMware product suite, and understand the total cost of ownership (TCO).
In addition, customers can seek information on Broadcom’s discounts and leverage it to strike a deal that gives them maximum cost savings. Broadcom will work with customers to facilitate “trading in” their perpetual products for the new subscription products, with upgrade pricing incentives.
4. Developing a long-term strategy
Consider how these changes align with your overall IT and cloud strategy, and plan accordingly. You must consider a long-term virtualization strategy when moving to an alternate product, given a transition will require considerable time and effort.
5. Staying agile and informed
Most customers struggle to navigate these unprecedented changes in their virtualization journey. To form effective virtualization product strategies, you must stay agile and informed about the Broadcom changes.
For some traditional users, migrating VMware workloads to a cloud platform like Azure can offer greater simplicity and operational efficiency. Others may prioritize control, compliance, or existing investments and choose to remain on-premise.
Should you migrate off VMware?
VMware’s position as an incumbent has somewhat sheltered it. However, in this era of Kubernetes, hybrid cloud, and serverless, there are fewer excuses for software being tied to a specific infrastructure. Not all applications require the complexity of a virtualized environment.
Historically, virtualization was a tool to simplify application support, but next-gen applications are less reliant on the underlying infrastructure. In its 2024 Predictions, Forrester stated that 20% of VMware enterprise customers would start to move away from the platform.
However, the fundamental principle remains unchanged: an “application first” approach over an “infrastructure first” approach. Focus on the right infrastructure platform to best support your applications, combined with backups, business continuity, and disaster recovery. With recent developments, this means evaluating alternatives that better align with long-term goals around agility, scale, and modernization.
VMware users on cloud: Better positioned for the changes
If you are currently using VMware-based offerings on the cloud, such as Azure VMware Solution (AVS), the impact of recent changes may be less immediate. These managed services abstract much of the infrastructure and licensing complexity, as the cloud provider owns the license and handles platform management.
Moreover, VMware’s established partnership with hyperscalers and license portability agreements enables you to move VCF subscriptions seamlessly between on-premises environments and the cloud.
However, for organizations looking beyond the immediate impact or seeking alternative cloud strategies, Microsoft emerges as a key partner, offering stable, reliable, and growth-oriented solutions in evolving IT landscapes.
Migration to Azure: A stable, strategic alternative
With an extensive portfolio of cloud services and hybrid tools, Microsoft Azure enables organizations to mitigate risks related to the VMware acquisition–whether by lifting and shifting VMware workloads to Azure, embracing hybrid strategies, or modernizing with Azure-native services.
1. Azure VMware Solution (AVS): Minimize disruption, maximize continuity
For organizations looking for a low-risk migration, AVS allows you to maintain existing VMware investments while gaining Azure benefits. AVS provides a fully managed VMware environment—operated and supported by Microsoft—on dedicated Azure bare metal. It supports the latest VMware Cloud Foundation (VCF) bundle and enables:
- Lift-and-shift migration with minimal to no refactoring
- Continued use of vSphere, vSAN, NSX, and HCX
- Centralized billing and unified support through Microsoft
- Scalability and high availability, with built-in backup, performance monitoring, and threat protection
In addition to the VCF license portability on Azure, Mircosoft also introduced the VMware Rapid Migration Plan with benefits and migration incentives:
- Azure Hybrid Benefit for Windows Server and SQL Server
- Free Extended Security Updates for EOL versions
- Price protection with Reserved Instances (1, 3, or 5 years)
- Azure credits when purchasing Reserved Instances for AVS or other Azure services
- Migration support through Azure Migrate & Modernize and Microsoft’s partner ecosystem
2. Hybrid with Azure Stack HCI: Keep workloads on-premise, extend to cloud
For scenarios requiring on-premises infrastructure, Azure Stack HCI offers a hyperconverged infrastructure solution with tight Azure integration. It’s ideal for:
- Workloads requiring data residency or low-latency access
- Keeping sensitive workloads on‑premise while bursting to Azure for capacity
- Edge computing or “disconnected” scenarios
- Organizations looking to modernize without leaving the data center
Key benefits include:
- Centralized management via Azure Arc
- Built-in backup, security, and policy management
- Unified operations across on-prem and cloud environments
3. Modernization with Azure: Long-term scalability, cost-efficiency, and flexibility
For organizations looking for a more radical modernization, Azure offers comprehensive infrastructure and platform services that eliminate the need for VMware licenses altogether. Azure IaaS and PaaS enable:
- Reliable cloud-native architectures with a focus on security and compliance
- Improved scalability, agility, and cost efficiency
- Rich toolsets for application development across environments
This is especially relevant in the wake of Broadcom’s licensing changes. Azure’s flexible pricing options—including Pay-As-You-Go, Savings Plans, and Reserved Instances—make cost optimization easier. You can also explore Azure Kubernetes Service (AKS) for containerized workloads, Azure Functions for serverless deployment, managed databases, and more.
However, this strategy involves migrating, restructuring, and rewriting applications, leveraging modern architectural models. This is where Simform’s Azure expertise and extensive experience come in.
Our VMware specialists and Azure solutions architects analyze your current environment thoroughly to identify dependencies and potential migration challenges unique to your IT infrastructure. We then provide a detailed assessment report that answers all the questions of what, how, and in what order to migrate the components. This assessment helps minimize risks and downtime, optimize costs, and ensure a successful transition to Azure.
Here’s what you can expect when migrating with Simform:
1. Initial assessment: We begin by understanding your current environment, including your vSphere platform, vCenter Server, and vSAN setup, to identify potential challenges/opportunities. We deploy the Azure Migrate appliance in your VMware environment to inventory servers and capture performance metadata (CPU, memory, disk).
2. Application dependency mapping: Leveraging Azure Migrate’s dependency visualization, we map inter‑VM dependencies and workload performance over a representative period, ensuring no mission‑critical connections are overlooked.
3. Cost analysis: Our team performs a comprehensive Total Cost of Ownership (TCO) analysis using Azure TCO Calculator, comparing your current costs with projected Azure costs to demonstrate potential savings. We also provide recommendations for how to best take advantage of and use the various incentives and funding options offered by Azure for customers migrating from VMware to Azure.
4. Migration strategy development: Guided by the Azure Cloud Adoption Framework, we outline rehost (lift‑and‑shift), replatform, and refactor approaches for your workloads–aligning with your business goals, risk appetite, and modernization roadmap.
5. Risk mitigation: We identify potential risks (such as compatibility issues with VMware tools) and develop strategies to mitigate them, ensuring a smooth transition with minimal disruption to your operations.
6. Execution and support: Our team assists with the migration process and provides ongoing support to ensure your new Azure environment operates optimally. Before full-scale migration, we can also set up a proof of concept (POC) to demonstrate the benefits and address any concerns.
Our comprehensive approach helps you not just migrate but also modernize your infrastructure, setting you up for long-term success in the cloud.
Strategize for long-term success with Simform
The future of VMware post-acquisition is a topic of much speculation. Hopefully, this article will help set a framework for navigating what could be a daunting task. While challenges lie ahead, opportunities also exist for those prepared to adapt and evolve their IT strategies.
Whether you decide to stay with VMware or migrate to Azure, our team of experts can help you navigate the complexities of this changing landscape, ensuring your strategy is tailored to your specific needs. To learn more about how Simform can assist you, contact us today!
