The announcement of Broadcom’s acquisition of VMware rocked the tech industry.
This transaction has financial and operational implications for current customers, who are forced to adapt in order to continue their operations.
As a result, adequate budget planning is now absolutely crucial, and making informed decisions requires understanding how the new model differs from the old one.
New model affects four major aspects
Reorganizing VMware products into four divisions
The VMware acquisition led to a significant decrease in it’s product range. The new version of the model is now limited to 4 major products rather than the initial 56. The first product, VMware Cloud Foundation (VCF), is VMware’s recommended flagship product for major customers. The other three products, VMware vSphere Foundation (VVF), vSphere Standard and vSphere Essentials Plus Kit are intended mainly for small and medium-size businesses, and will be sold primarily by VMware’s partners.
End of perpetual licences
Another major change is the end of perpetual licences. It is no longer possible to purchase a perpetual licence or to renew the maintenance contract for an existing licence. Each new licence now requires a subscription; there are no longer any free licences.
Transition to subscription licences
This radical change requires a rigorous assessment of your service and contract needs in order to adapt. It is therefore important to optimize the use of your VMware infrastructures. Incentives are available for customers who wish to exchange their perpetual licences for subscription products in order to transition to VCF.
Limited cloud portability of licences
The last marked change to the VMware model is that existing perpetual licences are not cloud portable. Only VMware Cloud Foundation subscription licences are portable to Google Cloud VMware Engine services (as of April 2024, with the potential for other suppliers to follow), which can influence the strategy of existing customers who plan to migrate to VMware solutions in the public cloud.
Operational and financial challenges for dissatisfied partners and customers
The end of perpetual licences and the forced transition to more expensive VCF licences at VMware are a source of dissatisfaction for some partners and distributors, as well as for many customers. Among other things, current users will have to get used to more stringent licence management protocols. They will also have to compensate for the loss of certain products, and some customers’ upgrading and support services will be affected.
The end of service and support contracts for perpetual licences means that users must now turn to subscription models to benefit from support services. In addition, Bill 25 requires that any system that hosts data be subject to a contract.
At the same time, the transformation of the VMware model will have a major budget impact because of the OpEx vs. CapEx allocation and the absorption of the cost of recently acquired perpetual licences. The return on investment for future projects will also be affected, and it will be more difficult to do long-term product testing on a free version, since the trial version will be offered for only 60 days.
The new VMware licences themselves could cost three times what they did in the previous model.
An end of VMware on AWS for AWS?
Rumors have been circulating recently about the possible end of VMware Cloud on AWS. However, the latest information indicates that this will not be the case: support will continue with an established roadmap. Nevertheless, a major change occurred on May 1, 2024. As of this date, AWS is no longer authorized to sell the offering, including its add-on modules. Only Broadcom is now in charge. This opens new perspectives in terms of negotiation.
Customers who purchased the service from AWS will now have to work with Broadcom or a Broadcom-authorized reseller to renew their subscriptions and extend their environments. Those with active one- or three-year subscriptions with monthly payments purchased from AWS will continue to be billed by AWS until the end of their contract.
Four key steps for adapting to the new reality
Existing customers can take four key steps to adapt and successfully navigate the new landscape:
- Perform an audit and optimize all their licences: It is crucial that you thoroughly examine your existing VMware licences to understand their current uses, contractual terms, and support and upgrade requirements.
- Develop a roadmap for the transition: Based on the licence audit, it is essential that you prepare a clear and detailed roadmap for the transition to the new VMware products or other cloud solutions such as Azure or AWS.
- Take advantage of financial incentives: VMware and other suppliers are offering financial incentives to facilitate the transition, including rebates on licences, subsidized migration programs, and preferential rates for support services. These incentives may help you adapt more easily.
- Remain informed and consult experts: It is important to keep up to date on the latest VMware products and to regularly consult experts in the field. Obtaining advice and recommendations on the best approach to adopt can help you make better decisions when it comes to upgrading your infrastructure and business objectives.
This major transformation will have a significant operational and financial impact on users and will require quick adaptation to maintain a fluid transition to the cloud and to an AWS, Azure or Google environment.
What are the alternatives?
This new reality at VMware is a boon for its competitors, who are encouraging businesses to abandon ship before their contracts expire or their products and services disappear. Several alternatives are available for customers and partners given this change of course:
- Azure: Microsoft’s cloud platform offers a full range of services compatible with VMware workloads.
- AWS: Amazon Web Services proposes robust solutions for the migration and hosting of VMware applications. AWS also offers incentives for migrating from VMC to native AWS.
- Google Cloud: Google also proposes migration and hosting solutions for VMware users who wish to diversify their cloud options.
- On site: Although not cloud oriented, the website solution remains an option for those who want to retain full control of their infrastructure. You could consider an alternative such as Microsoft Hyper-v, Nutanix or open source software such as Proxmox to get away from VMware.
Some businesses, however, are reluctant to follow the recommendations of VMware’s competitors.
Let Cofomo help you implement an optimal
cloud migration strategy
In conclusion, Broadcom’s acquisition of VMware marks a significant shift in the tech landscape. By following the key steps for adapting to the new model, exploring alternative cloud options and remaining informed, users can successfully navigate this transition and take advantage of the opportunities provided to optimize their operations and their IT strategy.
“Broadcom’s recent acquisitions raise questions concerning a strongly profit-oriented strategy, potentially to the detriment of the customer experience. By devoting the time needed to analyze your needs and the solutions offered, you can find the optimal balance between functionality, cost and technological freedom.”
Allan Trambouze – Infrastructure manager and VMware expert at Cofomo
Change is always unsettling, but Cofomo’s experts are aware of this and can mitigate risks. Whether for the design or upgrading of infrastructures, migration to the cloud, modernization of assets, improvement of operations or management of data centres, they can guide you through a cloud migration that meets your needs.