Broadcom Reshapes VMware Licensing

February 08, 2024 7 min Read

Your Guide to Adapting Effectively

Broadcom’s acquisition of VMware comes at a staggering cost of $69 billion ($61B in cash and stock for VMware and $8B in debt). This transaction positions itself as the largest enterprise software acquisition ahead of Dell’s $67 billion purchase of EMC in 2015, followed by IBM’s $34 billion takeover of Red Hat in 2019. What is the common thread among these deals? Each one has significant implications for the essential infrastructure that forms the technological core and supports the operations of virtually every company across the globe.

Whether the event in question was the acquisition of EMC by a tech behemoth in 2015, or the purchase of Red Hat in 2019, such takeovers of established technology cornerstones by industry titans have historically served as triggers for organizations to reassess what had previously been considered a constant. Organizations would often think of themselves as an EMC shop or a Red Hat shop. And now that same self-reflection is coming to all VMware customers. The Broadcom acquisition is an opportunity to reflect on the role that VMware currently plays within an organization’s tech stack and what role it will play into the future, while also offering every organization an opportunity to assess how best to move forward.

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In the words of Epictetus, the Greek Stoic philosopher, “We cannot choose our external circumstances, but we can always choose how we respond to them.” And formulating that response is what many organizations of various sizes are grappling with today.

Moving forward, Expedient remains a top tier, closely-connected partner of VMware in the new Broadcom landscape, as we have been for the previous two decades. We are here to help organizations understand and navigate the coming changes.

The Shift to a Subscription Model:
A New Era for VMware Users

The most significant change brought about by the Broadcom acquisition is the transition from perpetual VMware licenses to a subscription-based model. This marks a material departure from the traditional way of purchasing and using VMware products, and it’s a shift that has far-reaching consequences. Additionally, the termination of existing OEM and channel agreements and the promise of new partnerships signal Broadcom’s intention to reshape the VMware ecosystem. For customers, this means that the familiar landscape of virtualization is being redrawn, and the rules of engagement are forever changed.

What does all of this mean for VMware customers? According to VMware, “As an outcome of this portfolio simplification, many VMware software solutions will only be offered as part of VMware Cloud Foundation (VCF) or VMware vSphere Foundation (VVF). They will not be available for purchase as standalone point solutions.”1

The Impact: Cost Concerns
and Strategic Decisions

For many organizations, these changes could lead to substantial increases in infrastructure costs, with some estimates suggesting hikes of more than 100%. Such figures are alarming and have understandably led to a scramble for options. Some organizations may opt to seek alternatives to VMware. Forrester analyst Naveen Chhabra boldly predicts that “20% of organizations will take steps to migrate off VMware in 2024.”2

Yet, the challenge of migrating to a new hypervisor or virtualization platform is daunting, and for those in the midst of their digital transformation journey, the timing couldn’t be more inconvenient. And although competitors view the acquisition as fertile ground to tout a wholesale move to an alternative hypervisor, we recommend a more thoughtful approach grounded in strategic, technical, and business considerations.

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Amid this uncertainty, Expedient emerges with unrivaled experience and expertise. We have provided VMware-based infrastructure services to clients since the early 2000s, previously been recognized by VMware with their prestigious VMware North American Partner of the Year award, and most recently, we were named by Broadcom as one of their few top-tier Pinnacle cloud services providers. With decades of cloud experience and expertise, and access to volume discount pricing, Expedient is expertly equipped to help clients navigate these turbulent waters.

Whether you’re considering doubling down on VMware Cloud Foundation (VCF) or exploring alternative options, Expedient offers the expertise, experience, and insights necessary to help you make informed decisions aligned to the business outcomes you seek.

Cloud DifferentTM
A Methodical Approach

For years, Expedient has championed a Cloud Different approach. Instead of taking a hyperscale-cloud only approach to digital transformation, we have guided our clients through a thoughtful assessment of their IT estate, analyzing the level of technical debt amassed, along with their technology and business needs, and demands going forward. Clients who adopted a Cloud Different strategy generally witnessed a swifter transition to a cloud-based operating model, achieving the associated business advantages much more quickly than those who prioritized a hyperscale-cloud-first strategy. As we navigate an era characterized by a proliferation of choice and complexity within a multi-cloud and hybrid-cloud environment, Expedient’s proprietary Cloud Different™ methodology equips organizations with unparalleled adaptability to withstand the inevitable shifts in technology and business trends.

With the VMware acquisition, this approach is invaluable to charting the optimal course for organizations to follow.

Expedient: The Preeminent VMware by Broadcom Trusted Pinnacle Partner

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As the premier Full-Stack Cloud Services Provider, Expedient offers an expansive array of assessment, migration and managed services designed to support clients regardless of the direction they choose. With a multi-faceted approach that includes discovery, assessment, development, testing, migration, and on-going management with US-based support, Expedient ensures a comprehensive and minimally disruptive transition.

Embracing Flexibility: The Key to Future Success

As organizations face the new licensing reality, the ability to manage technology stacks locally will be challenged. Flexibility will be crucial in adapting to these changes. Solutions offering the greatest adaptability while also addressing network, security, cyber resilience, data protection, disaster recovery, and compliance, will be required.

VMware three ways

Expedient is well positioned to provide a range of cloud options to ensure successful strategies, from self-service to fully managed solutions, from private cloud to multi-tenant VMware cloud, to edge, and even managed services with hyperscale providers like AWS and Azure. The goal is to ensure that security, cost and performance needs are met without compromise.

Looking Ahead: Multi-Cloud and Hybrid Cloud Strategies

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As organizations adjust to VMware by Broadcom’s changes, many will accelerate their multi-cloud and hybrid cloud strategies. With Expedient, businesses can turn this period of change into an opportunity to accelerate growth and innovation.

While the changes to VMware by Broadcom licensing may seem daunting, they present an opportunity to reassess and strengthen your organization’s IT strategy and assure alignment with desired business outcomes. With Expedient, you can navigate these changes with confidence, ensuring that your infrastructure remains robust, cost-effective, and aligned with your long-term goals. Change is inevitable, but with careful planning and expert guidance provided by Expedient, it can also be the catalyst for a positive and very rewarding transformation.

Trying to navigate the new landscape? We can help.

Tim Kounadis Tim Kounadis

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