Broadcom drops VMware perpetual licences and support

Broadcom’s completion of its $61bn acquisition of VMware has led to major changes to the existing VMware product portfolio, which will see an end to perpetual software licensing contracts.

“The portfolio simplification across all VMware by Broadcom divisions stems from customer and partner feedback over the years telling us our offers and go-to-market are too complex,” Broadcom said.

Along with the end of sale of perpetual licences, the company has also announced it will no longer offer support and subscription (SnS) renewals for perpetual offerings. The company said it’s also introducing a bring-your-own-subscription licence option, providing licence portability to VMware validated hybrid cloud endpoints running VMware Cloud Foundation.

“As part of our transition to subscription and a simplified portfolio, beginning today, we will no longer sell perpetual licences,” it said. “All offerings will continue to be available as subscriptions going forward. Additionally, we are ending the sale of support and subscription renewals for perpetual offerings beginning today.”

During the company’s fourth quarter earnings call earlier this month, CEO Hock Tan confirmed that Broadcom officially intends to divest itself of end-user computing, which will mean it will no longer offer virtual desktop infrastructure products such as VMware Horizon.

Broadcom has cut the price of VMware Cloud Foundation, in a bid to entice customers onto an annual software subscription. VMware Cloud Foundation is positioned as Broadcom’s flagship enterprise-class hybrid cloud offering for customers to run their business critical and modern applications – in a secure, resilient and cost efficient manner.

“To allow more customers to benefit from this solution, we’ve reduced the previous subscription list price by half and added higher support service levels including enhanced support for activating the solution and lifecycle management,” the company said.

It has also introduced a new VMware vSphere Foundation, which, according to Broadcom, delivers a more simplified enterprise-grade workload platform for mid-sized to smaller customers. VMware vSphere Foundation integrates vSphere with what the company describes as “intelligent operations management”. This, according to Broadcom, offers a way for customers to get the best performance, availability and efficiency with greater visibility and insights.

Broadcom said both VMware Cloud Foundation and VMware vSphere Foundation will have optional advanced add-ons. These add-ons, available for both products, cover storage, ransomware and disaster recovery, and application platform services. Application Network and Security offerings are available as add-ons for VMware Cloud Foundation, and the company plans to add more services such as private AI.

In a Computer Weekly blog post discussing Broadcom’s strategy for VMware, Bryan Betts, principal analyst at Freeform Dynamics, said: “Subscriptions rarely cost less than purchases over time, and require buyers to account for them differently.”

In the post, Betts quoted Nutanix CEO Rajiv Ramaswami, who shared his thoughts on previous Broadcom acquisitions: “If you look at its history, Broadcom’s whole business model has been to maximise acquired assets in two to three years,” he said. “That means cutting costs and boosting revenues.”