Changes in VMware licensing are forcing companies to seek relief in the secondary licence market

Broadcom’s acquisition of VMware has significantly changed its licensing policy, leading to higher virtualization costs for many companies. The move to subscriptions and large software bundles is forcing businesses to look for alternative solutions. Secondary software licences can help companies optimize costs while maintaining the infrastructure they need.

The acquisition of VMware by tech giant Broadcom shook the IT world. Changes to the licensing policy, the sale of software in large bundles, and the shift to a subscription-based model have led to a drastic increase in virtualization costs for many companies. Filip Šuľák, a specialist in VMware licensing, explains what these changes mean in practice and why secondary software licences are becoming a viable solution for many businesses.

Starting right from the beginning – what actually changed for customers after VMware was acquired and ownership changed? How are companies feeling the impact in their day-to-day operations, apart from higher invoices?

In everyday technical practice, not that much has changed. The software still serves the same purpose: it is a virtualization platform. If we compared it to building a house, virtualization would be the foundations on which everything else stands – the entire server infrastructure that runs all the company’s software.

What has changed, however, is the way companies pay for these foundations. Perpetual licences no longer exist. Customers can no longer own the software indefinitely; instead, they have to pay for it on a monthly or annual basis as part of a subscription. Another issue is product bundling. Until recently, individual tools could be purchased separately, but today they are tied together in large bundles. These bundles do not make sense for every customer, and this is one of the main drivers behind the rising costs.

In day-to-day operations, an ordinary employee may not notice any difference. The real impact is felt at the strategic and financial level – typically when planning IT budgets for the following year or deciding which virtualization platform to use in the future. Once existing contracts expire, companies are faced with significantly higher payments, which they must make regularly, while also paying for products included in the new bundles that they may not use at all. Company management and IT teams now have to have serious discussions about whether to leave the platform because of the price increase. However, replacing the “foundations of the entire house” and moving to a different virtualization solution is a process that takes months, if not years.

As for the products themselves – does this mean that, in the past, purchases were tailored to a company’s specific needs, whereas today users are being forced into a bundle of things they largely do not need? To use an analogy: is it like buying a car and, even though I do not cycle or ski, being forced to buy a bike rack and a roof box with it?

Exactly, that is a very good analogy. In the past, the offering genuinely reflected customers’ real needs. But when Broadcom acquired VMware, it effectively turned it into a “money-making machine”. It took advantage of the fact that VMware holds an absolutely dominant position in the virtualization platform market and that its software is used by a vast number of companies. The purchasing process became more complicated, and many customers suddenly found themselves victims of this abrupt change. And I want to emphasize this again – we are not talking about an office suite like Office or an operating system for standard PCs. We are talking about the foundations of an entire corporate IT infrastructure.

Broadcom opted for a modern form of “optimization”. It capitalized on the fact that, for the largest companies, moving away from VMware is practically impossible. They are too deeply rooted in this environment, and a complete IT overhaul would most likely be extremely disruptive, if not damaging to the business. Broadcom knows that these major players will not leave, so it radically increased prices and secured its financial interests that way. Smaller and medium-sized companies do have the option to migrate elsewhere, but before they can build a “new house” and gradually move their operations out of the old one, they still have to tolerate these unfavorable conditions for some time.

Whereas VMware used to offer a very broad portfolio, Broadcom now essentially provides only two expensive bundles. What does this look like in practice?

Whereas there used to be dozens of separate tools, today customers can effectively choose from only two large bundles: VMware vSphere Foundation (VVF) and VMware Cloud Foundation (VCF).

Let me show what this means in practice. vSphere is used for virtualization itself, while vCenter provides centralized management of multiple servers. In the past, customers could buy these separately. Today, that is no longer possible. A smaller company that does not need centralized management at all still has to purchase it as part of the bundle. Because of this forced product combination alone, its costs can increase by as much as 500%.

Broadcom’s new approach clearly shows that it is now focusing primarily on the largest corporate customers, where it sees the highest profits. Smaller companies have essentially been pushed aside. To give an example: in the past, a vSphere Standard licence could be purchased for the equivalent of around USD 50 per core. Today, this basic Standard edition is no longer available. Customers can only buy the higher Enterprise Plus edition, either as part of VMware vSphere Foundation at USD 135 per core or VMware Cloud Foundation at USD 350 per core.

That brings me to the question of who is currently most often looking for secondary licences. Is it mainly these medium-sized companies?

In most cases, these are medium-sized to large companies that are not fully dependent on the cloud features available only in the new subscription bundles, and for whom more basic products such as vSphere, vCenter, or vSAN are more than sufficient. We are also seeing strong demand from cloud service providers. Overall, the range of customers is very diverse.

It is important to add that the secondary market for VMware products saw a huge increase in demand once Broadcom effectively withdrew from the perpetual licence market by stopping their sale altogether. As a result, the secondary market is now the only way to obtain perpetual VMware licences.

What is the main reason why a company today would choose to purchase a secondary perpetual licence? I do not mean the financial aspect, but the broader context. I imagine a situation where a company is running on older products and, for example, needs to add more servers...

Yes, exactly. That is one of the typical scenarios. There are several main reasons.

The first is hardware expansion. If a company purchases new servers and needs to license them in a way that remains compatible with its existing environment, it does not want to commit to an expensive Broadcom subscription or buy huge software bundles it will not use. In such cases, perpetual vSphere and vCenter licences can significantly reduce costs.

Another factor is the change in licensing metrics. In the past, the software was licensed based on the number of processors. Today, licensing is based on the number of cores. Since modern processors have a very high number of cores, purchasing new licences can become dramatically more expensive.

A further reason is End of Life and the expiry of old contracts. If support for a company’s older VMware products ends, or if its contract under the previous terms expires and it would otherwise have to move to the new subscription-based licensing model, purchasing secondary perpetual licences – for example vSphere 8 or vCenter 8 – is often the only reasonable alternative to expensive subscriptions and unnecessarily large bundles.

Last but not least, companies are buying time for migration, which is probably the most important reason. The increase in VMware software costs is so significant that, for many companies, moving away from Broadcom is the only viable long-term option. Replacing the platform, however, is extremely complex. By purchasing secondary licences, companies are effectively buying themselves time. They gain a stable and functional environment for the months or even years they need to migrate to another, lower-cost platform, without having to accept the overpriced terms of the new owner.

The key moment will come in autumn 2027, when support for products based on perpetual licences is expected to end. What will this actually mean for companies in practice?

Exactly. In October 2027, support for vSphere 8 and vCenter 8 products will officially end. This means that, until that date, VMware will continue to release standard security and other updates. After October 2027, however, no regular patches will be issued, and customers will have to manage the security of their environment on their own.

Will this be a problem?

For some companies, this will not be an issue at all. In practice, it does not represent a major problem for companies that have experience with VMware products and are able to handle deployment and management on their own. A lot depends on where exactly the software is running. Even today, many companies commonly and safely use older, unsupported versions such as vSphere 6 or 7.

Security risks can be effectively reduced in other ways, for example by deploying firewalls, following strict internal security policies, or isolating sensitive environments from the public internet. For other companies, however, it is crucial to have the system fully covered at least until the end of 2027. By purchasing a perpetual licence, the customer is effectively “buying time” until the end of support, and in many cases this is significantly cheaper than paying for a new subscription for the same period of roughly a year and a half. It is important to emphasize that once support ends, the software will not stop working; it will simply no longer receive regular updates.

Does Forscope offer companies any tool to support their decision-making? Is there a way for an IT manager to objectively assess whether it makes sense to purchase older perpetual licences, or whether switching to the new subscription model would be the better option?

Yes. For exactly this purpose, we recently developed and launched a cost calculator on our website. Customers can simply set their time horizon and server parameters, such as the number of processors and cores. The application then calculates and compares the cost of perpetual licences from Forscope with Broadcom’s subscription model.

The result is clearly visualized in a graph. Customers can see the rising cost curve of the subscription model, which inevitably increases with each additional year, compared with the horizontal line of perpetual software, where the cost is a one-off expense at the beginning. The calculation can easily be exported as a PDF file, or the customer can request a real offer from Forscope directly.

What other decision-making factors, apart from price, should a company consider when thinking about purchasing a perpetual VMware licence?

There are several, and we always discuss them transparently with customers. I would highlight three main areas.

The first is the absence of user support. A customer with a secondary perpetual licence, without an active subscription, cannot submit a technical support request to Broadcom. They cannot call Broadcom and ask for assistance with installation, deployment, or software management. It is therefore expected that the company’s IT team already has experience with VMware and is able to manage the environment on its own. In practice, this is usually not a problem, because VMware has been around for a long time and many companies have internal teams that know how to work with it very well.

The second point is that only the most critical updates are available. Even without a subscription, the customer is still entitled to the most critical security patches – specifically those with a CVSS (Common Vulnerability Scoring System) score higher than 9. However, regular updates, such as minor bug fixes or patches for less sophisticated threats, are no longer provided.

And third, technical compatibility needs to be checked carefully. For example, if a customer has already moved part of their infrastructure to a VMware subscription, it may not be technically possible to simply add an original perpetual vSphere 8 licence to that environment. That is why we always address these situations with customers through an individual consultation, to make sure the solution will work in their specific environment.

What are customers most often concerned about? Are there also any misconceptions or outright myths among them when they inquire about perpetual licences on the secondary market?

I do not handle direct sales myself, but I am in close contact with the colleagues who sell these products to customers. Based on their immediate feedback, I know that in most cases customers do not have an excessive number of questions or uncertainties regarding support and security. From this, I conclude that corporate IT teams know very well what they are getting into. The mere fact that perpetual VMware licences are still available on the secondary market is, in itself, a strong enough reason for them to seriously consider this option and arrange meetings to discuss it.

Let us look at this from a business perspective as well. How can this highly technical topic be explained to people who are not IT professionals, but who control the company budget – typically CFOs or CEOs? How can we explain, in simple terms, what is actually at stake? For me personally, the biggest surprise was the sudden price increase by hundreds of percent.

The shift from perpetual licences to a subscription model, together with the bundling of products into packages, is nothing new in the IT market. We have already seen this with companies such as Microsoft, Adobe, and Autodesk. The key difference, however, lies in the approach. Other vendors were more considerate towards their existing customers: they offered transitional discounts, recognized previous investments, and tried to make the move to subscriptions less painful. Broadcom did nothing of the sort. Its move was highly uncompromising and focused purely on maximizing profit.

If I were to explain this situation to a CFO, I would put it simply: it is a fundamental difference between owning and renting. When you own a perpetual licence, the system continues to work even if the company runs out of money or technical support ends. But if you have a subscription – especially one whose price is rising very steeply – and you stop paying, you are left with nothing. You lose the right to use the software in any way.

To compare it to the real estate market: imagine that it suddenly became impossible to buy an apartment or a house. All properties could only be rented. At Forscope, we are entering this market and offering companies the opportunity to still “buy the apartment” permanently. It is an extreme analogy, but it captures the situation on the VMware market well.

Does this mean there is a real security risk? To put it very simply: if I do not pay the current invoice, will my servers stop running?

Your computers will not stop overnight. However, once you stop paying for the subscription, you start using the software illegally. And that represents a major legal, economic and, ultimately, security risk.

If a company receives an offer from Broadcom today to abandon its perpetual licences and move to a subscription model, what should its next step be? How should it evaluate the decision properly?

There is no universal approach, as everything depends on the size of the company and how deeply it is tied to its current VMware environment. The key is to carefully calculate the total cost of ownership (TCO) over a longer time horizon. The subscription model can be predicted to some extent – although companies should expect further price increases – and then compared with the cost of purchasing perpetual licences from the secondary market.

And if a company is considering other alternatives to moving away from VMware products, it must not forget to add the considerable cost of the migration itself to the price of the new software, as well as the cost of running two infrastructures in parallel during the transition. In simple terms, the customer needs to ask: Will it be cheaper to move the entire virtualization platform elsewhere, or to accept Broadcom’s terms and agree to an extreme price increase of several hundred percent?

Secondary licences can serve very well as a temporary solution in this process, giving the company time to migrate. Again, I would refer to our calculator, which allows customers to quickly get a basic idea of the numbers.