VMware licensing change since acquisition by Broadcom: Difference between revisions
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==Background== | ==Background== | ||
===Acquisition timeline & strategy=== | ===Acquisition timeline & strategy=== | ||
Broadcom announced its intent to acquire VMware on May 26, 2022, for approximately $61 billion in cash and stock.<ref>{{cite web |url=https://www.channelfutures.com/channel-business/the-broadcom-vmware-acquisition-a-complete-timeline |title=The Broadcom VMware Acquisition: A Complete Timeline |website=Channel Futures |date=2024-12-12 |access-date=2025-09-08}}</ref> The acquisition completed on November 22, 2023, following regulatory approvals from multiple jurisdictions. | Broadcom announced its intent to acquire VMware on May 26, 2022, for approximately $61 billion in cash and stock.<ref>{{cite web |url=https://www.channelfutures.com/channel-business/the-broadcom-vmware-acquisition-a-complete-timeline |title=The Broadcom VMware Acquisition: A Complete Timeline |website=Channel Futures |date=2024-12-12 |access-date=2025-09-08 |archive-url=http://web.archive.org/web/20251030145200/https://www.channelfutures.com/channel-business/the-broadcom-vmware-acquisition-a-complete-timeline |archive-date=30 Oct 2025}}</ref> The acquisition completed on November 22, 2023, following regulatory approvals from multiple jurisdictions. | ||
In 2025, Broadcom initiated the second phase of its VMware consolidation.<ref name=":2">{{cite web |url=https://www.ciodive.com/news/broadcom-vmware-vcf-adoption-second-phase/759406/ |title=Broadcom enters 'second phase' of VMware consolidation |website=CIO Dive |date=2025-09-05 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251015042818/https://www.ciodive.com/news/broadcom-vmware-vcf-adoption-second-phase/759406/ |archive-date=15 Oct 2025}}</ref> The CEO stated that "more than 90% of VMware's largest 10,000 customers have shifted from perpetual licenses to the subscription-based" model, though he clarified that purchasing licenses does not mean full deployment.<ref name=":2" /> | In 2025, Broadcom initiated the second phase of its VMware consolidation.<ref name=":2">{{cite web |url=https://www.ciodive.com/news/broadcom-vmware-vcf-adoption-second-phase/759406/ |title=Broadcom enters 'second phase' of VMware consolidation |website=CIO Dive |date=2025-09-05 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251015042818/https://www.ciodive.com/news/broadcom-vmware-vcf-adoption-second-phase/759406/ |archive-date=15 Oct 2025}}</ref> The CEO stated that "more than 90% of VMware's largest 10,000 customers have shifted from perpetual licenses to the subscription-based" model, though he clarified that purchasing licenses does not mean full deployment.<ref name=":2" /> | ||
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==End of perpetual licenses== | ==End of perpetual licenses== | ||
===Implementation and enforcement=== | ===Implementation and enforcement=== | ||
Beginning in May 2025, Broadcom began sending cease-and-desist letters to customers using perpetual licenses without active support contracts.<ref>{{cite web |url=https://www.channelfutures.com/cloud/broadcom-to-perpetual-vmware-users-cease-and-desist |title=Broadcom to Perpetual VMware Users: Cease and Desist |website=Channel Futures |date=2025-05-07 |access-date=2025-09-08}}</ref> Customers were informed they must immediately discontinue use of VMware products unless they transition to subscription licensing.<ref>{{cite web |url=https://yro.slashdot.org/story/25/05/07/1856255/vmware-perpetual-license-holders-receive-cease-and-desist-letters-from-broadcom |title=VMware Perpetual License Holders Receive Cease-And-Desist Letters From Broadcom |website=Slashdot |date=2025-05-07 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20250509082419/https://yro.slashdot.org/story/25/05/07/1856255/vmware-perpetual-license-holders-receive-cease-and-desist-letters-from-broadcom |archive-date=9 May 2025}}</ref> | Beginning in May 2025, Broadcom began sending cease-and-desist letters to customers using perpetual licenses without active support contracts.<ref>{{cite web |url=https://www.channelfutures.com/cloud/broadcom-to-perpetual-vmware-users-cease-and-desist |title=Broadcom to Perpetual VMware Users: Cease and Desist |website=Channel Futures |date=2025-05-07 |access-date=2025-09-08 |archive-url=http://web.archive.org/web/20250527183435/https://www.channelfutures.com/cloud/broadcom-to-perpetual-vmware-users-cease-and-desist |archive-date=27 May 2025}}</ref> Customers were informed they must immediately discontinue use of VMware products unless they transition to subscription licensing.<ref>{{cite web |url=https://yro.slashdot.org/story/25/05/07/1856255/vmware-perpetual-license-holders-receive-cease-and-desist-letters-from-broadcom |title=VMware Perpetual License Holders Receive Cease-And-Desist Letters From Broadcom |website=Slashdot |date=2025-05-07 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20250509082419/https://yro.slashdot.org/story/25/05/07/1856255/vmware-perpetual-license-holders-receive-cease-and-desist-letters-from-broadcom |archive-date=9 May 2025}}</ref> | ||
VMware customers must now commit to three-year subscription terms for license renewals, a requirement that has generated significant customer resistance.<ref>{{cite web |url=https://www.theregister.com/2025/01/23/customers_gripe_at_threeyear_commitment/ |title=VMware users unhappy at 3-year commitment to renew licenses |website=The Register |date=2025-01-23 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251114090333/https://www.theregister.com/2025/01/23/customers_gripe_at_threeyear_commitment/ |archive-date=14 Nov 2025}}</ref> | VMware customers must now commit to three-year subscription terms for license renewals, a requirement that has generated significant customer resistance.<ref>{{cite web |url=https://www.theregister.com/2025/01/23/customers_gripe_at_threeyear_commitment/ |title=VMware users unhappy at 3-year commitment to renew licenses |website=The Register |date=2025-01-23 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251114090333/https://www.theregister.com/2025/01/23/customers_gripe_at_threeyear_commitment/ |archive-date=14 Nov 2025}}</ref> | ||
===Broadcom's response=== | ===Broadcom's response=== | ||
Broadcom argues that they have listened to their customers. In an April 2024 blog post, CEO Hock Tan stated that subscription licensing ''"eliminates incentives"'' for confusing pricing practices common in the software industry.<ref>{{cite web |url=https://www.broadcom.com/blog/a-changing-market-landscape-requires-constant-evolution-our-mission-for-vmware-customers |title=A changing market landscape requires constant evolution: our mission for VMware customers |website=Broadcom |date=2024-04-15 |access-date=2025-09-08}}</ref> He also announced that customers needing additional time for migration could receive support extensions, though specific terms were not disclosed.<ref>{{cite web |url=https://www.constellationr.com/blog-news/insights/broadcom-ceo-tan-says-vmware-customers-can-get-support-extensions-amid |title=Broadcom CEO Tan says VMware customers can get support extensions amid subscription transition |website=Constellation Research |date=2024-04-15 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251107031713/https://www.constellationr.com/blog-news/insights/broadcom-ceo-tan-says-vmware-customers-can-get-support-extensions-amid |archive-date=7 Nov 2025}}</ref> | Broadcom argues that they have listened to their customers. In an April 2024 blog post, CEO Hock Tan stated that subscription licensing ''"eliminates incentives"'' for confusing pricing practices common in the software industry.<ref>{{cite web |url=https://www.broadcom.com/blog/a-changing-market-landscape-requires-constant-evolution-our-mission-for-vmware-customers |title=A changing market landscape requires constant evolution: our mission for VMware customers |website=Broadcom |date=2024-04-15 |access-date=2025-09-08 |archive-url=http://web.archive.org/web/20251219224332/https://www.broadcom.com/blog/a-changing-market-landscape-requires-constant-evolution-our-mission-for-vmware-customers |archive-date=19 Dec 2025}}</ref> He also announced that customers needing additional time for migration could receive support extensions, though specific terms were not disclosed.<ref>{{cite web |url=https://www.constellationr.com/blog-news/insights/broadcom-ceo-tan-says-vmware-customers-can-get-support-extensions-amid |title=Broadcom CEO Tan says VMware customers can get support extensions amid subscription transition |website=Constellation Research |date=2024-04-15 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251107031713/https://www.constellationr.com/blog-news/insights/broadcom-ceo-tan-says-vmware-customers-can-get-support-extensions-amid |archive-date=7 Nov 2025}}</ref> | ||
==Lawsuits== | ==Lawsuits== | ||
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===China=== | ===China=== | ||
China's State Administration for Market Regulation (SAMR) granted conditional approval with 10-year monitoring requirements prohibiting unjustifiable bundling and requiring maintained compatibility with third-party hardware.<ref>{{cite web |url=https://digitalpolicyalert.org/event/15828-issued-samr-conditional-approval-of-broadcom-and-vmware-merger |title=China: Issued SAMR conditional approval of Broadcom and VMware merger |website=Digital Policy Alert |date=2023-11-21 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20260105004434/https://digitalpolicyalert.org/event/15828-issued-samr-conditional-approval-of-broadcom-and-vmware-merger |archive-date=5 Jan 2026}}</ref> Multiple Chinese companies have since filed new complaints alleging post-acquisition abuse of dominance.<ref>{{cite web |url=https://www.mlex.com/mlex/antitrust/articles/2274786/broadcom-s-vmware-sees-antitrust-complaints-escalated-to-china-s-samr |title=Broadcom's VMware sees antitrust complaints escalated to China's SAMR |website=MLex |date=2024-08-15 |access-date=2025-09-08}}</ref> | China's State Administration for Market Regulation (SAMR) granted conditional approval with 10-year monitoring requirements prohibiting unjustifiable bundling and requiring maintained compatibility with third-party hardware.<ref>{{cite web |url=https://digitalpolicyalert.org/event/15828-issued-samr-conditional-approval-of-broadcom-and-vmware-merger |title=China: Issued SAMR conditional approval of Broadcom and VMware merger |website=Digital Policy Alert |date=2023-11-21 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20260105004434/https://digitalpolicyalert.org/event/15828-issued-samr-conditional-approval-of-broadcom-and-vmware-merger |archive-date=5 Jan 2026}}</ref> Multiple Chinese companies have since filed new complaints alleging post-acquisition abuse of dominance.<ref>{{cite web |url=https://www.mlex.com/mlex/antitrust/articles/2274786/broadcom-s-vmware-sees-antitrust-complaints-escalated-to-china-s-samr |title=Broadcom's VMware sees antitrust complaints escalated to China's SAMR |website=MLex |date=2024-08-15 |access-date=2025-09-08 |archive-url=http://web.archive.org/web/20260105004320/https://www.mlex.com/mlex/antitrust/articles/2274786/broadcom-s-vmware-sees-antitrust-complaints-escalated-to-china-s-samr |archive-date=5 Jan 2026}}</ref> | ||
===Japan=== | ===Japan=== | ||
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==Financial impact== | ==Financial impact== | ||
Despite widespread customer dissatisfaction, Broadcom reports strong financial performance from the VMware acquisition. Infrastructure software segment revenues reached $6.8 billion in Q3 2025, up 17% year-over-year, with VMware contributing $3.8 billion quarterly.<ref>{{cite web |url=https://www.theregister.com/2024/12/13/broadcom_q4_fy_2024_vmware/ |title=Broadcom turns VMware into a prolific money-making machine |website=The Register |date=2024-12-13 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251117224645/https://www.theregister.com/2024/12/13/broadcom_q4_fy_2024_vmware/ |archive-date=17 Nov 2025}}</ref> The company achieved $2.7 billion in annualized booking value and aims to grow VMware's revenue from $4.7 billion to $8.5 billion within three years.<ref>{{cite web |url=https://www.sdxcentral.com/analysis/broadcom-bounces-vmware-operating-concerns/ |title=Broadcom bounces VMware operating concerns |website=SDxCentral |date=2024-12-12 |access-date=2025-09-08}}</ref> | Despite widespread customer dissatisfaction, Broadcom reports strong financial performance from the VMware acquisition. Infrastructure software segment revenues reached $6.8 billion in Q3 2025, up 17% year-over-year, with VMware contributing $3.8 billion quarterly.<ref>{{cite web |url=https://www.theregister.com/2024/12/13/broadcom_q4_fy_2024_vmware/ |title=Broadcom turns VMware into a prolific money-making machine |website=The Register |date=2024-12-13 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251117224645/https://www.theregister.com/2024/12/13/broadcom_q4_fy_2024_vmware/ |archive-date=17 Nov 2025}}</ref> The company achieved $2.7 billion in annualized booking value and aims to grow VMware's revenue from $4.7 billion to $8.5 billion within three years.<ref>{{cite web |url=https://www.sdxcentral.com/analysis/broadcom-bounces-vmware-operating-concerns/ |title=Broadcom bounces VMware operating concerns |website=SDxCentral |date=2024-12-12 |access-date=2025-09-08 |archive-url=http://web.archive.org/web/20250723200533/https://www.sdxcentral.com/analysis/broadcom-bounces-vmware-operating-concerns/ |archive-date=23 Jul 2025}}</ref> | ||
Broadcom cut VMware's quarterly operating costs from $2.4 billion to $1.2 billion while increasing margins from below 30% to 70%.<ref>{{cite web |url=https://thecuberesearch.com/243-breaking-analysis-assessing-broadcom-vmware-eight-months-on/ |title=Assessing Broadcom VMware Eight Months On |website=theCUBE Research |date=2024-07-20 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251221223646/https://thecuberesearch.com/243-breaking-analysis-assessing-broadcom-vmware-eight-months-on/ |archive-date=21 Dec 2025}}</ref> | Broadcom cut VMware's quarterly operating costs from $2.4 billion to $1.2 billion while increasing margins from below 30% to 70%.<ref>{{cite web |url=https://thecuberesearch.com/243-breaking-analysis-assessing-broadcom-vmware-eight-months-on/ |title=Assessing Broadcom VMware Eight Months On |website=theCUBE Research |date=2024-07-20 |access-date=2025-09-08 |archive-url=https://web.archive.org/web/20251221223646/https://thecuberesearch.com/243-breaking-analysis-assessing-broadcom-vmware-eight-months-on/ |archive-date=21 Dec 2025}}</ref> | ||