Broadcom’s Acquisition Impact on VMware Licensing
Broadcom’s Acquisition of VMware – Timeline & Licensing Shake-Up
Broadcom’s $61 billion acquisition of VMware closed in late 2023, kicking off immediate changes to VMware’s licensing. If you manage IT procurement or IT asset management, it’s crucial to understand how VMware’s licensing has evolved post-acquisition.
This deep dive walks through the timeline of changes, rising costs, new product bundling, and what you should do to prepare for renewals, audits, or negotiations.
Read our ultimate guide to Broadcom ELA & Subscription Models: What Changed After the Acquisition.
Acquisition Timeline – 2023 to 2025
Broadcom announced its intent to acquire VMware in May 2022.
After 18 months of regulatory scrutiny, the deal officially closed on November 22, 2023 – bringing VMware under Broadcom’s ownership.
Broadcom moved quickly once the acquisition closed. By December 2023, it had announced the end of VMware’s old licensing model.
In early 2024, Broadcom rolled out subscription-only licensing and reorganized VMware’s offerings into new bundles.
Throughout 2024, customers were steadily transitioned to Broadcom’s terms (the goal was to convert most VMware clients to subscriptions by year-end).
By 2025, the “new normal” was in place including policies like a 72-core licensing minimum and any remaining legacy contracts would face Broadcom’s model at renewal.
Mini-Scenario: One Fortune 500 company’s VMware ELA expired in early 2024, right after the acquisition closed – and their renewal came back under Broadcom’s new model with higher costs and different terms. They had to scramble to adapt their negotiation strategy.
Immediate Licensing Shifts (Q4 2023 – Q2 2024)
Broadcom wasted no time making immediate licensing changes once it took over VMware:
- End of Perpetual Licenses: Effective Dec 2023, VMware stopped selling perpetual licenses (and stopped renewing support on existing perpetual licenses beyond their term). You can no longer buy VMware software outright – it’s subscription only now.
- Move to Subscription-Only: All new VMware licenses are term-based subscriptions (e.g. 1-year or 3-year “rental” periods). Broadcom is forcing a shift to recurring revenue, aligning VMware with a SaaS-style model.
- Product SKU Consolidation: Broadcom slashed VMware’s product catalog into a few integrated bundles. There is now an enterprise Cloud Foundation stack and a mid-market vSphere bundle. Standalone products were eliminated – those features only come as part of the new bundles.
Pro Tip: If your VMware renewal is after Nov 2023, it falls under Broadcom’s new rules. Don’t assume any legacy pricing or terms will carry over – double-check all details of your renewal under the new model.
Cost & Term Impact – 2024-2025
Broadcom’s changes didn’t just alter how you buy VMware – they also raised the cost. Many enterprises experienced significant price hikes on VMware renewals in 2024. It’s common to see quotes double or triple what you paid before (some customers have reported even larger jumps).
Why are costs climbing so much?
- Bundled Suites = Bigger Bills: Instead of buying a single product, you have to buy an entire suite – paying for features you might not need, which drives up the total cost.
- Multi-Year Commitments: Broadcom is pushing 3–5 year deals. Longer terms lock you in at a high spend; if you insist on a 1-year term, expect a higher price.
- New Licensing Metrics: Broadcom changed how some usage is counted. For example, a 72-core minimum rule (introduced in 2025) means even small deployments are billed for at least 72 CPU cores. Changes like this can make you pay for capacity you don’t fully use.
Mini-Scenario: A global manufacturer’s VMware renewal in 2024 came in almost double their previous contract, even though their usage hadn’t grown. The IT team had to explain the surge to executives and consider cutting back their VMware footprint to control costs.
Pro Tip: Anticipate a budget shock and plan for it.
Before your renewal, model out what a worst-case Broadcom quote might look like. Prepare management for the possibility of a major increase. It’s better to be ready for a 100%+ jump and then negotiate it down than to be caught by surprise.
Bundling & Product Portfolio Realignment
With the Broadcom acquisition, VMware’s product portfolio was overhauled and packaged into a few big bundles:
- Enterprise Bundle (Cloud Foundation): VMware Cloud Foundation is now the flagship for large enterprises. It includes vSphere (compute), vSAN (storage), NSX (networking), and the Aria management suite under one subscription – essentially a full private cloud stack.
- Mid-Market Bundle (vSphere+ Platform): For mid-sized customers, Broadcom offers a bundle centered on vSphere (sometimes called vSphere+ or vSphere Foundation). It provides core virtualization plus a handful of related features in a smaller package than Cloud Foundation.
- No Standalone Modules: VMware’s earlier à la carte approach is gone. You can no longer purchase most products separately. Key components like vSAN, NSX, and VMware’s automation tools are only sold within these bundles.
Pro Tip: You’re buying the whole stack now, even if you only needed one part.
Scrutinize what’s included in your bundle. If there are components you won’t use, highlight that when negotiating. You might not get a custom SKU, but you can push for a better price by pointing out the bundled parts that add no value for you.
Channel & Support Model Changes
Broadcom also shook up how VMware products are sold and supported:
- Channel Consolidation: In early 2024, Broadcom ended VMware’s partner reseller program. Only a limited set of big “Broadcom-approved” partners (and Broadcom’s own sales team) can sell VMware now. Many smaller resellers were cut off, forcing customers to switch to new providers or buy direct – reducing competition.
- Support Policy Changes: Broadcom aligned VMware’s support policies with its own. Notably, support for existing perpetual licenses won’t be extended once those contracts expire – you’ll need to move to a subscription to keep getting updates and fixes. Broadcom is also pushing premium support tiers, so you might be nudged toward higher-cost plans as part of your subscription.
Mini-Scenario: A mid-market retailer’s long-time VMware reseller was suddenly not authorized after the acquisition. Scrambling to find a new partner before renewal, they lost negotiation leverage and ended up with a higher renewal cost than expected.
Pro Tip: Stay on top of who your VMware vendor is now. If your reseller changed or you’re dealing directly with Broadcom, engage them well before renewal time.
Also, know when your legacy support contracts expire – have a support plan (via Broadcom or third parties) so you’re not caught off guard if they lapse.
Buyer Risk Points & What to Check
With so many licensing elements in flux, enterprise buyers should double-check key contract terms.
Use this checklist to spot potential risk areas in your VMware agreements under Broadcom:
- Uplift Caps: Is there any limit on how much prices can rise at renewal? If not, you could face steep hikes later. Try to negotiate a cap on year-over-year or renewal price increases.
- True-Down Rights: Can you reduce your license count if your usage drops? Ensure you’re not locked into paying for unused licenses for years. Seek flexibility to scale down at renewal if needed.
- Renewal Notice: Check if the contract auto-renews and what notice period is required to cancel. Broadcom might require notice (e.g. 90 days) before term end if you plan not to renew. Missing that window could lock you in for another term.
- Audit & Compliance: Broadcom may be more aggressive with license audits. Review what audit rights they have and make sure you have internal compliance checks to avoid surprises.
Pro Tip: Don’t rely on old VMware contract assumptions. Broadcom’s agreements may have stricter terms and fewer customer-friendly clauses.
Read the fine print. If something important is missing (like price protections or flexibility), raise it during negotiations – not after signing.
Strategic Moves for Clients Under New Model
If you’re facing VMware renewals under Broadcom’s new regime, consider these strategic moves:
- Reassess Your VMware Footprint: Decide which workloads truly need to stay on VMware. If Broadcom’s pricing is too high, plan to reduce your VMware footprint by moving less-critical workloads to cheaper platforms (other hypervisors or cloud).
- Start Renewal Talks Early: Engage Broadcom well before your renewal date. Early discussions give you time to negotiate and budget (and you might discover limited-time offers, or at least you won’t be rushed at the last minute).
- Negotiate a Bridge Term: Not ready for a long commitment? See if Broadcom will do a short renewal (like 1 year) instead of a 3-year lock-in. A shorter term might cost more per year, but it buys you time to strategize or wait for better conditions.
- Leverage Third-Party Support: For older VMware systems you can’t upgrade yet, consider third-party support to maintain them temporarily. This can delay a costly Broadcom subscription for a year or two while you plan (just remember you won’t get official updates during that time).
- Explore Alternatives: Evaluate other platforms for some of your workloads. A credible Plan B (another virtualization stack or more cloud usage) gives you leverage – Broadcom is more likely to negotiate if they know you’re prepared to migrate away.
Pro Tip: Don’t act like you’re stuck with no options. Broadcom expects customers to feel they have no choice – show them that you do. By doing your homework and being ready to pivot, you’ll have a much stronger negotiating position.
Read our extended FAQ, FAQ: Broadcom ELA Transition for Existing Customers.
5 Key Steps for Your Next Renewal
When your next VMware renewal approaches, be sure to:
- Inventory Your Usage: Gather a detailed inventory of your VMware environment – what products you have, how many licenses or cores, and how they’re used. This ensures you know exactly what you need (and what you don’t).
- Benchmark the Costs: Compare Broadcom’s quote with your previous VMware spend and with alternative solutions. Knowing the price difference (e.g. “this renewal is 150% more than last time”) gives you context for budget discussions and negotiation.
- Understand Your Bundle: Get a clear breakdown of everything included in the proposed bundle. Identify which components are actually relevant to your operations. If there are features you won’t use, note that – it can be a point for negotiation or a reason to consider a different package.
- Align with Actual Needs: Cross-check the bundle against what your team really uses day-to-day. Don’t pay for extras no one utilizes. In some cases, you might even choose not to deploy certain components of the bundle, to keep things simpler and avoid unnecessary costs.
- Negotiate Flexibility: Push for any contract flexibility. For example, ask for the right to reduce license counts if your usage drops, or a cap on price increases at the next renewal. You may not get everything, but even a small concession (like a longer price lock or the option to drop some licenses) can help down the road.
Read about our Broadcom Audit Defense Service
