VMware Price Analysis: Before and After the Broadcom Acquisition.
What companies need to know.
Below you will find a global, comparative analysis, how the pricing models and VMware's licensing structures were developed before, during, and after the acquisition by Broadcom —and what consequences this had for enterprise customers worldwide (especially in the US and the EU). We also examine how this transition affects existing VMware customers, new customers, and IT budgeting and planning.
1 Initial situation: VMware before the Broadcom acquisition
Licensing model & product bundling
- Historically, VMware offered a large selection of standalone SKUs an — Customers could buy exactly the components they needed, e.g. hypervisor (vSphere), storage (vSAN), network (NSX), management, etc.
- Licensing usually took place perpetual (permanent), with optional extensions for "Support & Subscription (SnS)" for updates and support. Many customers kept these licenses indefinitely and only paid for maintenance/support when needed.
- For smaller companies and SMEs, there were more compact/cheaper SKUs (e.g. Essentials, Essentials Plus, vSphere ROBO), which enabled cost-effective virtualization without complete enterprise bundles.
- This modular, à la carte approach offered flexibility: companies could adapt licensing to their actual needs, avoid unnecessary components, or invest as needed.
Cost control and impact on business
- The model of perpetual licensing plus maintenance allowed many customers to cap their license costs after the initial purchase; the annual support renewals often amounted to only ~20–25% of the original costs.
- For companies with stable virtualization infrastructure, this meant predictable, controllable ongoing costs — important for long-term budget planning and CAPEX control.
- VMware's broad product range and flexible licensing made it attractive to companies of all sizes worldwide (USA, EU, international).
Prior to its acquisition by Broadcom, VMware was therefore a flexible, modular and cost-controllable provider — particularly advantageous for customers who did not need the entire stack.
2 During and immediately after the Broadcom acquisition (late 2023 – 2024): The rapid change begins
When Broadcom acquired VMware in November 2023, many analysts and customers expected immediate changes. These changes did indeed occur promptly and accelerated throughout 2024.
Switch to subscriptions, end of perpetual licensing (Broadcom News and Stories)
- In December 2023, Broadcom announced a "drastic simplification" of the VMware portfolio, including a complete migration to Subscription and time-limited licenses.
- The sale of new perpetual licenses has been discontinued. Existing customers with active maintenance contracts were allowed to continue using them, but Broadcom announced the end of SnS renewals.
- For new purchases or contract renewals, customers must switch to subscriptions or fixed-term models.
VMware Product Bundling & SKU Simplification
- Broadcom has the Number of SKUs drastically reduced — away from many individual products, towards a few Bundles.
- Individual products (e.g., vSAN or NSX) have been largely discontinued. Instead, customers must purchase bundles such as:
- VMware Cloud Foundation (VCF) use — a complete private cloud package (hypervisor, storage, network, management, orchestration).
- vSphere Foundation — a basic version for infrastructure customers who do not require the full VCF scope.
- According to Broadcom, this simplification serves "continuous innovation", faster added value and predictable investments.
Initial reactions: Uncertainty & concerns
- The change led to immediate criticism from customers, partners, and analysts.TechTarget)
- Some long-standing VMware customers reported drastically increased renewal offers in the new subscription model.CloudBolt)
- Reports of massive price increases circulated in forums like Reddit — for example, due to a switch from CPU socket-based to core-based billing.Reddit).
- Many smaller companies (especially those with Essential SKUs) began to question whether VMware was still economically viable under Broadcom.IOC).
Analyst firms (IDC, independent analysts) pointed out that this change could prompt customers to look for alternatives. Some smaller VMware resellers or value-added partners feared being squeezed out, as Broadcom began prioritizing only a few strategic large customers instead of a broad reach among SMEs and partners.IOC)
3 After the acquisition until 2025: The new Broadcom licensing model for VMware
By 2025, VMware's new licensing and pricing model under Broadcom had largely stabilized — with sometimes significant consequences for many customers.
Key elements of the Broadcom 2025 licensing model
- Exclusively subscription- and term-based licensesAll new VMware products will now only be offered on a subscription basis (1, 3, or 5 years). The sale of perpetual licenses and SnS renewals has been discontinued.Broadcom News and Stories)
- The offering focuses on VCF and vSphere Foundation, with occasional price adjustments (e.g., per core).ColocationPlus.com)
- Broadcom increased the minimum number of CPU cores per license, which particularly affects small/medium-sized environments.CRN)
- New ones were Penalty fees introduced: e.g. 20% surcharge the subscription fee if the renewal does not take place exactly at the end of the contract.CRN)
- Customers often have to pay more due to bundling, even if not all components are used. Individual products are hardly available anymore.IOC)
Real impacts & cost increases
- Sources report increases in licensing costs from 150% to 500%, in some cases up to 1200%, compared to the previous takeover period.IOC)
- A frequently cited community example (via Reddit) described a pre-acquisition contract extension for, say, $160.000 per year. After a term SKU was enforced following the acquisition, the new offer was roughly ten times that price.CloudBolt)
- Even with the same number of cores, costs increased significantly due to core-based licensing (instead of socket-based) and minimum limits.Reddit)
- Support and maintenance costs are also rising: According to some reports, Broadcom's support fees now amount to 25–30% of the annual License value (compared to approximately 20–25% below the previous VMware). Over a 5-year time horizon, the total support costs could amount to 125–150% of the original license value add up (compared to about 110% under the old model) — which means that the total cost of ownership (TCO) is significantly higher in the long term — (broadcomnegotiations.com)
Further structural changes
- Broadcom changed its partner network: Small resellers were demoted, while strategic large customers were favored.TechTarget)
- Many traditional partners who sold small licenses can no longer operate profitably.CRN)
- Some customers are already migrating to open-source hypervisors or cloud-native alternatives to reduce costs, (novacloud.io)
4 Regional & regulatory impacts: EU vs. USA
EU: Increased regulatory pressure & partner protest
- In the EU, this triggered the changes are meeting with resistance from cloud providers and trading groupsFor example, a consortium including CISPE, a major European association of cloud service providers, as well as other cloud provider associations, publicly criticized the new licensing changes. They argued that price increases, rebundling, and new billing practices threatened the economic viability of many European cloud service providers.Reuters)
- These EU-based providers warned of "vendor lock-in" (vendor dependency), reduced flexibility, and the loss of the option to license only parts of the VMware stack – which poses a particularly heavy burden for smaller EU cloud providers and MSPs.Reuters)
- There are calls for Broadcom's conduct to be investigated for market abuse under the Digital Markets Act (DMA).The Wall Street Journal)
USA & other regions
- In the US, regulatory pressure is lower, but many customers are also reporting cost explosions.TechTarget)
- Analysts are noticing growing demand for alternatives such as Hyper-V, Proxmox, OpenStack, or container platforms for non-critical workloads.TechTarget)
Although EU providers and regulatory authorities have spoken out more publicly, the cost pressures and changes to licensing models are noticeable worldwide – and affect corporate customers regardless of their region.
5 Customer Reviews & Community Feedback
The change has triggered strong reactions – especially from long-time VMware users or smaller organizations.
- In forums like Reddit, customers are reporting price increases ranging from doubling to tenfold.Reddit)
- Many speak of "license shock" or "blackmail" through bundled licensing models, (CloudBolt)
- Educational institutions, non-profit organizations, and SMEs are beginning to migrate to more cost-effective platforms.eryph)
- Analysts see Broadcom's strategy as clearly focused on large customers and revenue maximization.TechTarget)
6. Impact on existing customers vs. new customers
Existing customers with legacy/perpetual licenses
- Holders of perpetual licenses with active maintenance contracts can continue to use their existing licenses, but Broadcom's official stance and market strategy are making the extension or renewal of these contracts increasingly unattractive.Broadcom News and Stories)
- Over time, support costs (under existing perpetual contracts) may increase, and those seeking new features or support beyond their current version may be forced to migrate/switch to subscription packages.broadcomnegotiations.com)
- Companies with mixed environments (some servers with perpetual licenses, others with new ones) face the risk of complexity, compliance risks, or increased licensing costs when expanding.
New customers / Switch to new licensing models
- Due to subscription fees, minimum core counts, and bundled licenses, new customers – or existing customers renewing under the Broadcom model – are expected to incur higher total cost of ownership over time (Total Cost of Ownership) will be recorded.
- While Broadcom presents its packages as "all-in-one" solutions for easier management and faster time to value, many organizations may end up paying for features they don't use. This reduces flexibility and can unnecessarily inflate budgets, especially for smaller teams or specialized workloads.
- Long-term budgeting becomes more difficult: subscription costs are incurred annually (or per term), support fees are substantial, and penalty fees or price increases (e.g., for late renewal) can cause unexpected burdens – complicating financial planning and making cost spikes more likely.
- Companies with gradual scaling can Minimum core thresholds and pure package model a message Oversizing of the license capacity force (which makes them for unused or underutilized cores pay).
7 Strategic Consequences & Signaling Effect for the Virtualization Market
- The aggressive shift to Subscription, bundling and core-based licensing Under Broadcom, this indicates a strategic realignment: VMware will no longer be positioned as a flexible virtualization platform for all company sizes, but as a high-margin enterprise software asset, which is optimized for large customers and long-term recurring revenue.TechTarget)
- For many existing VMware customers (especially smaller organizations), this change undermines one of VMware's biggest advantages: modularity and cost efficiency in smaller or incremental virtualization implementations.
- The disruption has increased interest in alternative virtualization or cloud-native platforms (open-source hypervisors, containerization, hybrid cloud solutions), especially for workloads outside of production, such as test/development environments or edge workloads – areas where cost sensitivity is higher.novacloud.io)
- From a market perspective could that Repricing credentials for Accelerating consolidationLarger companies could absorb the costs or justify the bundles, while smaller players might resort to alternatives. Over time, this could reshape the virtualization ecosystem and the Reducing VMware's dominance in smaller or medium-sized market segments.
8 Relevance for IT decision-makers (2025 and beyond)
As the person responsible for the virtualization infrastructure (specification or renewal), the following should be considered:
- Budget shock & TCO riskEven with stable workloads, licensing, support and renewal penalties under Broadcom's subscription model can dramatically increase the total cost of ownership (TCO) over 3 to 5 years.
- Licensing overhead & oversizingMinimum core requirements (e.g., minimum purchases of 72 cores) can force over-licensing, especially if your infrastructure is modest or you are running many small servers.
- Bundling requirements & licensing burdenYou may end up paying for entire suites (storage, networking, orchestration) even if you only need minimal hypervisor functionality – an inefficient expenditure.
- Loss of flexibilityThe elimination of standalone SKUs and perpetual licenses limits your ability to customize the stack, making incremental growth or modular deployments more difficult.
- Vendor lock-inIf you decide to migrate (to containers, other hypervisors, or the cloud), bundling and subscription commitments can increase the barriers to exit or make the switch more expensive.
- Regulatory risks (EU)Given the control at EU level and the resistance from cloud provider groups, you could face uncertainties regarding licensing practices, partner availability, or future regulatory restrictions.
For many organizations, especially medium-sized businesses or SMEs, VMware's new licensing and pricing model may no longer offer the cost efficiency or agility that originally justified virtualization – making migration planning or the evaluation of alternatives a prudent part of their IT strategy.
Conclusion: The Broadcom era is changing VMware's value proposition
Broadcom's acquisition of VMware triggered a fundamental shift: from modular, flexible virtualization licensing to a consolidated, subscription-centric, and enterprise-oriented model. While this may offer large enterprises long-term planning certainty and simplified license management, it comes at the expense of flexibility, affordability, and choice for many existing and potential customers.
For long-time VMware users, especially those with perpetual licenses, this change undermines one of VMware's core advantages: predictable, controlled capital expenditures (Capex). For new customers—and those renewing their licenses—the increased recurring costs, bundled licensing, and minimum core requirements could lead to significantly higher operating expenses (Opex).
In short: VMware remains a powerful virtualization platform – but under Broadcom, it increasingly resembles a premium enterprise software asset rather than a flexible virtualization toolbox. Decision-makers should carefully weigh current and future infrastructure requirements, factor in higher lifecycle costs, and potentially consider alternative virtualization or hybrid cloud solutions to avoid a “subscription shock.”
Contact the Cristie Data team today for a free VMware cost audit and savings analysis. We offer a range of tools and services to make the transition to an alternative platform as quick and easy as possible.
