How to Mitigate and Minimize VMware Renewal Cost Increases

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Since Broadcom’s acquisition of VMware, renewal costs for enterprise customers have surged by 5X to 10X. With limited leverage, customers face a choice: either absorb these steep increases or take proactive measures to mitigate the financial impact. Choosing the latter could help them save millions.

Following its acquisition of VMware in November 2023, Broadcom has set ambitious growth targets. The company plans to nearly double VMware’s EBITDA, raising it from $4.7 billion to $8.5 billion within three years. Central to this strategy is shifting customers from perpetual licenses to a subscription-only model.

Broadcom moved swiftly to implement changes aligned with its growth objectives. Shortly after completing the acquisition, the company made sweeping changes to the way customers buy VMware’s offerings, including:

The elimination of perpetual licenses. This also includes support and subscription renewals for perpetual licenses and hybrid purchase program/subscription purchase program (HPP/SPP) credits. Customers can now only buy subscription licenses.

A dramatic “simplification” of VMware’s product portfolio. Standalone Vsphere/VSAN products will now be sold as part of two high-level bundles only: VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF).

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