Why buyers lose
Why Broadcom's VMware transition requires specialist advisory.
When Broadcom completed its $61 billion acquisition of VMware in November 2023, it initiated one of the most aggressive commercial transformations in enterprise software history. Broadcom's strategy, applied successfully to CA Technologies and Symantec before VMware, focuses on eliminating perpetual licensing, moving all customers to subscription agreements, consolidating the product portfolio into a smaller set of high-priced bundles, and dramatically increasing prices for the installed base whose switching costs make them commercially captive.
For enterprise VMware customers, the implications are severe. Perpetual licence purchases are no longer available. The previous VMware product catalogue, vSphere, vSAN, NSX, vCenter, HCX, Aria, and dozens of additional products, has been collapsed into three VMware Cloud Foundation (VCF) editions and a limited vSphere Foundation offering. Customers who previously purchased individual products are now being required to purchase bundles that include capabilities they do not use and need. Renewal quotes for existing enterprise customers have increased by 200 to 500% in numerous cases.
Our former VMware executives understand exactly how Broadcom is structuring its commercial approach: which elements of the new pricing model are negotiable, which migration pathways preserve the most value, and when the business case for alternative hypervisor platforms, Nutanix AHV, Microsoft Hyper-V, Red Hat OpenShift Virtualisation, is strong enough to use as genuine commercial use.
