Broadcom VMware Acquisition in Major Tech Deal: What’s Next

Change brings questions, both for the short-term and the future. If you’re one of the more than 400,000 VMware customers, or you’ve been considering a VMware solution for your business, you want to know how Broadcom’s recent $61 billion acquisition of VMware will affect you.

With VMware’s market leadership in virtualization, VMware components are common in today’s data centers to run virtualized workloads. Sayers has fielded daily questions from VMware customers who want to know about the future of the platform, and how to navigate the changes announced by Broadcom.

Let’s recap what’s happening, highlight where VMware customers have questions, and look at next steps for your organization.

Broadcom’s VMware Acquisition: Key Changes For Customers And Partners

Since completing the VMware acquisition in November 2023, Broadcom has initiated several changes. Among them, VMware by Broadcom will:

• Transition their business model from a perpetual software license to only subscription model pricing. VMware customers may continue using perpetual licenses with active support contracts, but there will be no more perpetual licenses upon a customer’s next renewal. 

• Simplify the VMware portfolio and pricing to four SKU bundles: VMware Cloud Foundation and VMware vSphere Foundation will be the two main SKU’s to choose from depending on which VMware options are needed (i.e. NSX, Advanced Aria Suite).  For smaller organizations, vSphere Standard and vSphere Essentials Plus subscriptions will also be available with limited VMware capabilities. Also, the free version of VMware vSphere Hypervisor (ESXi 7.x and 8.x) is no longer available.

• Invest in the VMware Cloud Foundation software stack as their main focus. It is clear that Broadcom’s focus with this acquisition is on the enterprise and VMware Cloud Foundation is targeted for enterprise customers.  This subscription will support private and hybrid cloud infrastructure as a virtualized and containerized environment and includes NSX, the complete Aria Suite, Tanzu and the top-level of support.

• Divest VMware’s Carbon Black security software and end-user computing division, including Horizon virtual desktops. Broadcom plans to sell VMware’s end-user computing division to global investment firm KKR later this year for approximately $4 billion.

• Move VMware’s top customers to a direct sales model instead of through partners. Estimates place the number at nearly 2,000 customers globally who will move to a direct sales model.

• Terminate VMware’s existing partner program. Instead, Broadcom has invited more than 18,000 active VMware resell partners, including Sayers, to participate in the Broadcom Advantage Partner Program. 

Mark McCully, Director of Modern Data Center Engineering at Sayers, says:

“For years, VMware has been the de facto enterprise virtualization platform standard and market leader. Customers are wondering what’s the future of this platform. This industry disruption is top of mind for pretty much everyone we’ve talked to.”

What VMware Customers Want To Know

VMware customers have reached out to Sayers in recent weeks with a variety of questions. Many of those calls and meetings have included requests from VMware customers to:

• Help them navigate the new VMware licensing model and SKU bundles.
• Forecast what their licensing costs will be based on a cost analysis of the new Broadcom licensing and SKU options.
• Identify alternative virtualization technologies for virtual machines and virtual desktops, whether on-premise or public cloud-based.
• Provide ways to accelerate their cloud migrations.
• Explore options for modernizing their applications on containers and/or cloud-native services.

What each customer’s plan will look like depends on factors such as organization size, needed capabilities, and budget considerations. Some companies will need to uplift into a larger SKU bundle, while others will downsize to one with fewer features.

McCully says:

“In terms of VMware alternatives, there’s nothing that’s going to check all the boxes that VMware does. But Sayers can help you navigate these changes and identify the right options and strategy for you.”

VMware outlines the products affected by their new licensing policy in their blog as follows: 

• VMware Cloud Foundation
• VMware vSphere
• VMware vSAN
• VMware NSX
• VMware HCX
• VMware Site Recovery Manager
• VMware vCloud Suite
• VMware Aria Suite
• VMware Aria Universal
• VMware Aria Automation
• VMware Aria Operations
• VMware Aria Operations for Logs
• VMware Aria Operations for Networks

Additionally, VMware lists which of their products are no longer available as standalone in this blog.

Virtualization Solutions: Charting Your Next Steps

Not sure where to start in the VMware acquisition’s aftermath? Consider these questions:

• When is your VMware license renewal due? 
• Do you know which of the four SKU bundles you will need?
• Would you like help forecasting your costs based on the new subscription-based licensing? 
• How much do you know about VMware virtualization alternatives in the market, such as Nutanix or Hyper-V?
• If you are currently using Horizon virtual desktops, have you considered Azure Virtual Desktops (AVDs)?

Questions? Contact us at Sayers today to schedule a free 30-minute consultation with our engineering team. Understand what Broadcom’s acquisition of VMware means for you and how Sayers can help with next steps for your business.