A backstory: Broadcom’s VMware acquisition
Since its founding in 1998, VMware has been at the forefront of developing software for virtualizing the x86 architecture — a technology that has become one of the foundations of modern cloud computing. In 2001, VMware released key products that enabled multiple operating systems to run on a single physical machine, making server virtualization mainstream and paving the way for modern cloud infrastructure.
Over the following decades, VMware expanded its portfolio and became a dominant platform for enterprise virtualization and hybrid cloud environments. The company developed numerous technologies used by data centers worldwide and became a core infrastructure provider for enterprises running critical workloads.
However, VMware also underwent several ownership changes over its history. EMC first owned the company and later became part of Dell Technologies after Dell acquired EMC in 2016.
The situation changed dramatically with the Broadcom VMware acquisition announcement. In May 2022, Broadcom revealed its intention to acquire VMware in one of the largest deals in enterprise software history. The Broadcom acquisition of VMware was valued at approximately $69 billion, making it one of the largest technology acquisitions ever completed.
The Broadcom completes acquisition of VMware date is November 22, 2023, when the deal officially closed after receiving regulatory approvals from the United States, the European Union, the United Kingdom, and China. Following the closing of the VMware Broadcom acquisition, VMware shares were delisted from the New York Stock Exchange, and the company became part of Broadcom’s enterprise software division under the brand VMware by Broadcom.
The acquisition was closely monitored by regulators and the technology community. Many customers and partners were concerned about potential changes to VMware’s pricing, licensing model, and product strategy. These concerns were partly driven by Broadcom’s past acquisitions of CA Technologies and Symantec’s enterprise division, where similar restructuring and pricing adjustments occurred.
VMware licensing and product line changes
One of the first major shifts after the Broadcom VMware acquisition was a fundamental change to VMware’s licensing model.
VMware stopped offering perpetual licenses and moved almost entirely to a subscription-based model. Previously, organizations could purchase VMware software licenses once and pay for optional support and maintenance contracts. Following Broadcom’s acquisition of VMware, this model was replaced by subscription offerings.
Broadcom also simplified VMware’s product portfolio. Many standalone products were discontinued or merged into bundled solutions. The new strategy focuses primarily on two main offerings:
VMware Cloud Foundation (VCF)
This is VMware’s most comprehensive platform, combining compute, storage, networking, and management tools. It integrates:
- vSphere
- vSAN
- NSX
- Aria management tools
VMware vSphere Foundation (VVF)
This bundle is designed for traditional data center environments running vSphere infrastructure. It includes additional capabilities such as:
- Tanzu Kubernetes Grid
- Aria Operations
In addition to these two core bundles, VMware introduced add-on services covering areas such as storage, security, disaster recovery, and AI infrastructure.
This product consolidation became one of the most noticeable outcomes of the VMware Broadcom acquisition. Customers who previously purchased individual VMware components now must adopt bundled platforms that combine multiple services.
Existing perpetual licenses technically remain valid. However, customers without an active Support and Subscription (SnS) contract no longer receive software updates, technical support, or security patches. As a result, while the licenses themselves still exist, they become difficult to use safely in production environments.
For many organizations, this effectively forces a transition to the new subscription model introduced after the Broadcom acquisition of VMware.
VMware pricing: users’ perspective
Significant pricing adjustments accompanied changes in licensing structure.
For many years, VMware served a wide spectrum of users — from large enterprises to smaller organizations running lightweight virtualization clusters. After the Broadcom VMware acquisition, many customers began reporting noticeable increases in renewal costs.
Numerous discussions across IT forums and communities highlight these changes.
For example, one VMware partner reported that their annual renewal costs increased from $10,000 to $50,000, representing a five-fold increase. Another organization reported that its subscription renewal would cost 25 times more than its previous licensing arrangement.
A widely discussed example involved a British university whose VMware support renewal was expected to rise from approximately £40,000 to £500,000 annually, representing a 1,250% increase.
While individual examples vary, industry analysts note that these cases reflect a broader trend following the VMware Broadcom acquisition: Broadcom is restructuring VMware’s business model to prioritize large enterprise customers and higher-value contracts.
Another significant licensing change introduced after the Broadcom acquisition of VMware involves minimum core licensing requirements. Many VMware offerings now require a minimum of 72 cores per purchase, which can significantly impact smaller clusters and edge deployments that previously operated under more flexible licensing terms.
As a result, many organizations — especially mid-sized companies — are reassessing their infrastructure strategies and exploring alternative virtualization platforms.
Other repercussions
The effects of the Broadcom VMware acquisition extend beyond licensing and pricing.
Broadcom also restructured VMware’s partner ecosystem. The company terminated many existing reseller agreements and introduced a new partner structure called the Broadcom Advantage Partner Program.
This program operates on an invite-only basis, focusing on partners that meet specific revenue and strategic requirements. According to Broadcom, the goal of this new model is to simplify the partner ecosystem and increase opportunities for service revenue.
However, many smaller partners and service providers have raised concerns about the stricter requirements for joining the program. Some organizations that previously sold VMware solutions may no longer qualify for participation.
At the same time, Broadcom is pursuing new strategic partnerships to strengthen VMware’s cloud positioning. One notable example is the growing integration between VMware solutions and Google Cloud. This collaboration includes deeper integration between VMware infrastructure and Google’s analytics and AI services.
Another initiative introduced after the VMware Broadcom acquisition is the ability to use VMware Cloud Foundation license portability across different cloud environments, including Google Cloud. This feature allows customers to deploy VMware infrastructure more flexibly, both on-premises and in public cloud environments.
Whether these initiatives will offset the market disruption caused by licensing changes remains an open question.
Insights and conclusions
To understand Broadcom’s strategy, it is helpful to examine its historical approach to acquisitions.
During Broadcom Software Investor Day presentations, the company outlined its strategy for integrating acquired software businesses, including CA Technologies and Symantec Enterprise Security.
In both cases, Broadcom focused on improving profitability by prioritizing large enterprise customers and reducing operational costs. The strategy included lowering sales and marketing spending and concentrating on key strategic accounts with long-term infrastructure commitments.
After the Broadcom acquisition of VMware, a similar strategy appears to be unfolding. Broadcom is focusing heavily on large enterprises running complex infrastructure environments where switching platforms can be difficult.
For many organizations, however, these changes are prompting a reassessment of virtualization strategies. Rising costs and licensing changes following the Broadcom VMware acquisition are encouraging companies to explore migration options and evaluate alternative infrastructure platforms.
This is where automated migration technologies become increasingly important.
Solutions such as Hystax Acura provide a fully automated approach to migrating workloads from VMware to other platforms or cloud environments. With support for large-scale infrastructure migration and minimal downtime, organizations can transition from VMware environments to alternative platforms while maintaining data integrity, security, and operational continuity.
By leveraging such tools, companies can confidently navigate the changes introduced after the VMware Broadcom acquisition and modernize their infrastructure strategies while optimizing long-term cloud costs.
If you intend to securely and cost-effectively migrate from VMware to any other cloud platform, it’s worth exploring Hystax Acura. For more details, see the Hystax Acura cloud migration demo. Feel free to contact us to learn more about our special VMware migration package.