Thought Leadership
Broadcom is significantly increasing the minimum requirements for VMware licenses. According to VMware distributor Arrow, the minimum number of cores required will increase from 16 to 72 from April 10.
As the French branch of the distributor Arrow has informed its partners (via TheRegister), Broadcom is taking a further step in its consistent move away from the midmarket business. The new licensing policy effectively means a massive price increase for many companies, as in future they will have to pay for considerably more CPU cores than they have actually installed.
The impact of this decision will mainly affect users of vSphere Foundation and vSphere Enterprise Plus, while customers of the more comprehensive VMware Cloud Foundation (VCF) will be less affected as they are already running larger installations.
Penalties for late payment
In addition to this tightening, Broadcom is introducing a penalty payment system. Anyone who does not renew their subscription on time by the deadline will automatically pay a 20 percent surcharge on top of the regular renewal fee. VMware has not yet issued an official statement on these changes.
Consistent implementation of the key account strategy
Since the 69 billion dollar takeover, Broadcom has radically restructured the VMware portfolio. Under CEO Hock Tan, the company has consolidated numerous individual products into a small number of complete offerings that are available exclusively on a subscription model. The change of direction seems to be paying off financially: Internally, VMware is expected to exceed profit expectations.
The reorientation towards large customers and enterprise business follows a clear pattern: although the individual prices within the bundles are lower in some cases, the total costs for most customers increase due to the obligation to purchase complete packages. The strategy seems to be working – albeit at the expense of smaller and medium-sized customers, who are increasingly having to look for alternatives.
