Last December, VMware announced a major shift in its licensing model that is already having impacts on businesses of all sizes. The most substantial change is a move from perpetual licenses to a subscription-based model. As a result, IT organizations will likely see significant impacts on operating costs and how they continue to use VMware solutions.
In this article, we’ll go through all the latest changes with VMware licenses, the impacts your customers could see, and how you can help them move forward with an assessment-led approach.
What’s Changed with How VMware Licensing?
This latest wave of pricing updates comes after Broadcom acquired VMware for $69 billion last November – making it one of the most substantial technology deals to date. Broadcom has decided to streamline product offerings significantly at VMware, one of the leading providers of virtualization and cloud computing software.
Major changes to how VMware solutions are packaged and sold include:
- End of Perpetual Licenses: The sale of new perpetual licenses has ceased and now VMware software will be exclusively purchased through subscription models. Customers can continue to use their perpetual licenses and the related support service included in the contractual terms. But they can no longer renew Support and Subscription (SNS) contracts for perpetual licenses.
- Offerings Consolidated into Two Basic Bundles: VMware will now be available in two primary offers, these include:
- VMware Cloud Foundation: This is VMware’s enterprise-class hybrid cloud solution for customers looking to capture the value of full-stack infrastructure. This platform offers vSphere, vSAN and NSX with the full Aria management and orchestration suite.
- VMware vSphere Foundation: This solution aims to provide a more simplified workload platform for smaller to mid-sized customers. This is VMware’s solution for data center optimization in traditional vSphere environments. vSphere Foundation includes Tanzu Kubernetes Grid in addition to Aria Operations and Aria Operations for Logs.
- Stopping the Sale of Individual Products: Many VMware solutions will no longer be available for standalone purchase, these include products like Aria Suite, NSX Networking, and vSAN. Some of these solutions are now available only to purchase as part of a bundle. While other tools have been discontinued, like the free ESI hypervisor. The full list of standalone and replacement products can be found here.
- Major Changes to the Partner Network: Broadcom has ended partner agreements with VMware resellers and service providers and the partner program and sales incentives. Existing partners must reapply for their roles, which could change how customers negotiate their licenses.
Customers Looking for Alternatives to VMware
The move to a subscription-based model is increasingly being adopted by software companies but has been met with disappointment among VMware customers. While VMware announced a 50 percent reduction in prices for Cloud Foundation, these new bundles will likely increase costs for existing vSphere Foundation customers. Many customers are already seeing price hikes of 100%.
Additionally, customers are frustrated by which products will be included in which bundles. For example, the free ESXI hypervisor has been discontinued which allowed customers to test projects with a free version before moving into production.
Forrester Research predicted that 1 in 5 VMware customers will leave this year, saying that Broadcom has “cast a shadow on an already beleaguered VMware customer base.” The principal analysts at Forrester say on their website that “many are exhausted by significant price hikes, degrading support, and mandatory subscription to software bundles in which some modules such as NSX and Aria Suite/vRealize Suite end up as shelfware.”
Despite VMware’s dominance, many customers are now looking at alternatives at lower costs with the same performance. Alternatives include vendors such as Nutanix, Scale Computing, and Vittozzo, plus larger solutions like Microsoft’s Hyper-V/Azure Stack and Red Hat’s OpenShift Virtualization. Switching vendors is not an easy task though, as new systems will have to be implemented and then verified.
Recommendations: What should you do now?
With all these changes, you’ll likely be asked by your customers what their next moves should be. These are our recommendations for best practices moving forward with VMware:
Conduct an Assessment: Now is the time for customers to evaluate their VMware estate and assess for potential risks. Customers will need to audit the inventory of perpetual and other current licenses and make note of renewal dates and refresh cycles. They’ll need to evaluate how the shift from perpetual to subscription models will impact operations and budgets going forward. As part of this audit, look for any gaps in licensing that need to be addressed.
Create a Transition Roadmap: Once customers have audited their licenses, they’ll need to decide their way forward with VMware or alternatives. VMware customers will need to plan for the transition from perpetual to subscription licenses while considering factors like expiration dates, budget cycles, and operational requirements. Customers will need to assess whether new support contracts are needed and what future business requirements look like.
Explore Financial Incentives: Broadcom is offering incentives to try to ease VMware customers into this new licensing model. Customers can trade-in their perpetual products for new subscriptions with a special license trade-in program, for example. There will also be a cost-benefit analysis needed of the benefits of transitioning earlier than required, while aligning with long-term strategies and business goals.
Stay Updated: Stay informed on regular updates from VMware, including their website releases, webinars, and workshops. Seek expert advice for assistance with navigating these changes and making sound operational and financial decisions – or reach out to Block 64 for quick and professional advice.
How Block 64 Can Help
Times like these require clear understanding and actionable advice. What should your customers do? Where should they begin?
Block 64 is designed to answer these questions, and so much more, with automated IT inventory and assessments.
Our IT Discovery and Insights platform gives clear visibility into IT environments and makes planning your cloud and virtualization roadmap simpler. Business leaders can assess their use of VMware products and complete audits effortless inventory tools and automated reporting and executive summaries.
Contact Block 64 to learn about how our solutions can help you navigate changes to VMware licenses and plan your best way forward.
