News

Broadcom Kills Off VMware Perpetual Licenses

• By Gladys Rama
• December 13, 2023

Broadcom is ending more than a dozen VMware perpetual licenses and steering those customers to subscriptions, per an announcement this week.

The move comes less than a month after the completion of Broadcom's acquisition of the virtualization giant VMware for a reported $69 billion. With this change, new VMware customers will have to purchase software through subscriptions.

Shifting perpetual licensees to subscriptions had been the plan since before the Broadcom deal was announced, it was explained.

"Over the past two years, VMware has been on a journey to simplify its portfolio and transition to a subscription model, the industry standard for cloud consumption, and to better serve customers with continuous innovation, faster time to value, and predictable investments," Broadcom said in a FAQ explaining the change.

A perpetual license refers to a software purchasing model in which the customer pays a one-time fee to use the software indefinitely. Additional services, such as customer support and access to software updates, require an additional charge; VMware sells these services through its Support and Subscription (SnS) contracts.

As of this week, Broadcom is no longer selling new VMware perpetual licenses or SnS renewals. Affected products, per the announcement, include:

• VMware Cloud Foundation
• VMware vSphere
• VMware vSAN
• VMware NSX
• VMware HCX
• VMware Site Recovery Manager
• VMware vCloud Suite
• VMware Aria Suite
• VMware Aria Universal
• VMware Aria Automation
• VMware Aria Operations
• VMware Aria Operations for Logs
• VMware Aria Operations for Networks

Customers who have purchased perpetual licenses can still use their products, but once their current SnS contracts end, they will not be eligible to access VMware support or update to newer versions. The only recourse is to move to a subscription-based version of that product. For customers who make that move, Broadcom is offering its help in choosing a migration path and, apparently, some favorable pricing.

"Broadcom will work with customers to help them 'trade in' their perpetual products in exchange for the new subscription products, with upgrade pricing incentives," the announcement said. "Customers can contact their VMware account or partner representative to learn more."

Broadcom argues that the move to subscription-only licensing will have a threefold benefit for VMware customers -- namely, "continuous innovation, faster time to value and predictable investments." For partners, also, the change is being positioned as a benefit.

"The industry has already widely embraced subscription and SaaS, and many partners in our ecosystem have already developed success practices in this area," Broadcom said. "Subscription and SaaS models provide an opportunity for partners to engage more strategically with customers and deliver higher-value services that drive customer success. It also helps accelerate their own transition to a business model focused on annual recurring revenue."

Broadcom is urging VMware customers to start bracing for the end of perpetual licensing now, and to "review their inventory of perpetual licenses, including refresh cycles and renewal dates, and become more familiar with VMware's available subscription offers."