VMware price hikes of hundreds of percent are forcing companies to look for alternatives

Discover how Broadcom’s shift to subscription models and bundled licensing is impacting IT budgets worldwide. In this expert breakdown, Forscope’s Filip Sulak explains the practical consequences of the VMware acquisition and why savvy businesses are turning to secondary software licenses as a strategic solution to slash virtualization costs. Learn how to navigate the new licensing landscape and protect your bottom line.

Broadcom’s takeover of VMware has shaken the IT world. A change in licensing policy, software being sold in massive bundles, and the shift to a subscription model have dramatically increased virtualization costs for many companies. Filip Sulak, who specializes in VMware at Forscope, explains what this means in practice and why secondary software licenses are becoming the solution for many businesses.

If we start from the very beginning – what actually changed for customers with the VMware acquisition and the change of ownership? How do they feel it in day-to-day operations, leaving aside the higher figures on invoices?

In everyday technical practice, not that much has changed. The software still serves the same function – it is a virtualization platform. If we compare it to building a house, virtualization represents the very foundations on which everything else stands – in other words, the entire server infrastructure that runs all company software.

What has changed is the way these foundations are paid for. Perpetual licenses no longer exist. Customers can no longer own the software forever, they now have to pay for it monthly or annually as part of a subscription. Another problem is product bundling. Until recently, individual tools could be purchased separately. Today, they are tied into large packages. These packages do not make sense for all customers, and that is the main driver of rising costs.

So in day-to-day operations, the average employee will not notice it, but the key difference appears at the strategic and economic level – typically when planning IT budgets for the next year or choosing the virtualization platform for the future. When current contracts expire, companies must start paying significantly larger sums, on a recurring basis, and within the new bundles they will also pay for products they do not use at all. Company management and IT teams now have to seriously discuss whether to leave the platform because of the price increase. Replacing the “foundations of the whole house” and moving to a different virtualization solution is, however, a process that takes months, if not years.

Going back to the products – is it really the case that previously purchases were tailored to a company’s specific needs, while today users are being forced into bundles containing many things they largely do not need? To use an analogy: is it like buying a car and being forced to take a bike rack and roof box even though you do not cycle or ski?

Exactly. That is a very good analogy. In the past, the offering really did reflect customers’ actual needs. But when Broadcom bought VMware, it essentially turned it into a “money machine.” It took advantage of the fact that VMware has an absolutely dominant position in the virtualization platform market and that the software is used by a huge number of companies. The purchasing process became more complicated, and many customers suddenly became victims of this abrupt change. I want to stress 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 the company’s entire IT infrastructure.

Broadcom applied a modern form of “optimization.” It took advantage of the fact that for the largest companies, leaving VMware is practically impossible. They are too deeply rooted in this environment, and a complete IT rebuild would likely be devastating for them. Broadcom knows these major players will not leave, so it radically increased prices to secure its own financial interests. Smaller and mid-sized companies do have the option to migrate elsewhere, but before they can build a “new house” and gradually move operations from the old one, they still have to endure these unfavorable conditions for some time.

If VMware’s offering used to be very broad and today Broadcom basically offers only two expensive bundles, what does that look like in practice?

Where there used to be dozens of standalone tools, today there are effectively only two huge bundles to choose from: VMware vSphere Foundation (VVF) and VMware Cloud Foundation (VCF). What that means in practice can be shown with an example. The vSphere tool is used for virtualization itself, while vCenter is used for the centralized management of multiple servers. Previously, customers could buy them separately. Today, that is no longer possible. A smaller company that does not need centralized management at all must still buy it as part of the bundle. This forced bundling alone can increase its costs by as much as 500%. Broadcom’s new approach clearly shows that it is now focusing only on the largest corporate customers, from whom it makes the highest profit. It has essentially stopped taking smaller companies into account. To illustrate: previously, a vSphere Standard license could be purchased for the equivalent of around 50 dollars per core. Today, this basic software can no longer be purchased in the Standard version, only in the higher Enterprise Plus edition, specifically either in the VMware vSphere Foundation bundle at 135 dollars per core or the VMware Cloud Foundation bundle at 350 dollars per core.

That brings me to the question of who is currently most often asking for secondary licenses. Is it mainly these mid-sized companies?

In most cases, they are mid-sized to large companies that are not entirely dependent on the cloud functions included exclusively in the new subscription bundles, and for whom more basic products such as vSphere, vCenter, or vSAN are more than sufficient. We also see high demand from cloud service providers. The customer spectrum is very diverse.

It must also be said that the secondary market for VMware products experienced enormous growth the moment Broadcom effectively withdrew from the perpetual license market by stopping their sale entirely. Today, the only way to obtain perpetual licenses is through the secondary market.

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

Yes, exactly – that is one of the typical scenarios. There are several main reasons. One is hardware expansion. If a company purchases new servers and needs to license them so they remain compatible with the existing environment, it does not want to commit to Broadcom’s expensive subscription model or buy huge software bundles it will not use. In that case, perpetual vSphere and vCenter licenses can significantly reduce costs.

Another reason is the change in the licensing metric. Previously, the software was licensed by the number of processors. Today, it is licensed by the number of computing cores. Since modern processors have a very high number of cores, purchasing new licenses becomes drastically more expensive.

Another reason is end of support and the expiration of old contracts. If support for older VMware products ends or a contract under the old terms expires, forcing the company to switch to the new subscription model, purchasing secondary perpetual licenses such as vSphere 8 or vCenter 8 is often the only reasonable alternative to expensive subscriptions and unnecessarily large bundles.

Last but not least, there is the need to buy time for migration, which is probably the most important reason of all. VMware software price increases are so substantial that for many companies, leaving Broadcom is the only long-term option. But replacing the platform is extremely complex, so by purchasing secondary licenses, companies are effectively buying time. They gain a stable and functioning environment for months or years, which they need in order to migrate to a different platform with lower costs, without having to accept the overpriced conditions imposed by the new owner.

Autumn 2027 will be a key milestone, as support for perpetual-license-based products is expected to end. What does that actually mean for companies?

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

Will that be a problem?

For some companies, not at all. In reality, it presents no issue for companies with sufficient VMware experience that know how to handle deployment and management on their own. Much depends on where exactly the software is running. Even today, many companies quite normally and safely use older, unsupported versions such as vSphere 6 or 7. Security risks can also be effectively reduced in other ways, for example through firewalls, 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 license, the customer is effectively “buying time” until support ends, and it often costs significantly less than paying for a new subscription for the same year-and-a-half period. It is important to emphasize that once support ends, the software does not stop working – it simply no longer receives regular updates.

Does Forscope offer companies any decision-making aid? Is there a tool where an IT manager can objectively assess whether it makes sense to purchase additional older perpetual licenses or whether it is better to switch to the new subscription model?

Yes. For exactly these purposes, we recently developed and launched a cost calculator on our website. Customers can easily set their time horizon and the parameters of their servers – that is, the number of processors and cores. The application then precisely calculates and compares the cost of perpetual licenses from Forscope versus subscriptions from Broadcom. The result is visualized very clearly in a graph. Customers can see a rising curve of subscription costs that inevitably increases with each passing year, compared with the horizontal line of perpetual software, where the cost is only a one-time investment at the start. The result of the calculation can easily be exported into a PDF file, or the customer can directly request a real offer from Forscope.

Besides price, what other decision-making factors should a company consider when thinking about purchasing a VMware perpetual license?

There are several, and we always discuss them transparently with customers. I would mention three main areas. The first is the absence of vendor support. A customer with a secondary perpetual license, without an active subscription, cannot submit a request for technical support to Broadcom. They cannot call and ask for assistance with installation, deployment, or software management. It is therefore expected that the company’s IT team already has VMware experience and can handle things on its own. In practice, this is usually not a problem, because VMware has been around for a long time and companies have internal teams that know it very well.

Second, it is important to keep in mind that only the most critical updates remain available. Even though the customer does not have a subscription, they are still entitled to absolutely critical security patches – specifically those with a score higher than 9 in the global CVSS (Common Vulnerability Scoring System) vulnerability rating. Regular updates, such as fixes for minor bugs or patches for less sophisticated threats, are no longer available.

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

What are customers most concerned about? Are there any misunderstandings or myths among them when they ask about perpetual licenses on the secondary market?

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

Let’s also look at this from a business angle. How would you explain this highly technical issue to people who are not IT professionals but who control the company budget – typically CFOs or CEOs? How can you simply explain what is really at stake? For me personally, the biggest surprise was that sudden increase of hundreds of percent.

The transition from perpetual licenses to the subscription model and the bundling of products is nothing new in the IT market. We have already seen it with companies such as Microsoft, Adobe, or Autodesk. The key difference is in the approach. Other vendors were more considerate toward their existing customers – they offered transition discounts, acknowledged previous investments, and tried to make the move to subscriptions less painful. Broadcom did nothing of the sort. On its side, it was a very uncompromising move focused purely on profit maximization.

If I had to explain the situation to a CFO, I would put it simply: it is the fundamental difference between ownership and renting. When you own a perpetual license, the system keeps running even if the company runs out of money or technical support ends. But if you have a subscription – whose price is also rising very steeply – and you stop paying, you are left with nothing at all. You lose the right to use the software in any way.

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

So does this mean a real security risk? To simplify it completely: if I do not pay the current invoice, will my servers stop running?

Your computers will not stop overnight, but as soon as you stop paying the subscription, you begin using the software illegally. And that represents an enormous legal, economic, and ultimately also security risk.

If a company today receives an offer from Broadcom to leave its perpetual licenses behind and move to subscriptions, what should its next step be? How should it evaluate that properly?

There is no universal procedure. It all depends on the size of the company and how deeply tied it is to the current VMware environment. The key is to carefully calculate total cost of ownership over a longer time horizon. The subscription model can be predicted to some extent – although it is necessary to factor in further price increases – and compared with the cost of purchasing perpetual licenses on the secondary market.

And if the company is considering other alternatives for leaving VMware products behind, it must not forget to add not only the price of the new software, but also the considerable costs of migration itself and the fact that during the transition two infrastructures will run in parallel. The customer simply has to ask the question: will it be cheaper to move the entire virtualization platform elsewhere, or just accept Broadcom’s terms and absorb price increases in the hundreds of percent?

In this process, secondary licenses can serve very well as a temporary solution that gives the company time to migrate. Again, I would point to our calculator, with which it is possible to get a very quick initial picture.