The Impact of the Broadcom Purchase of VMware to Small Businesses

Author: Craig Pollack Date: Mar 07, 2024 Topics: General Business Owner Blogs, Business Continuity

In the time since Broadcom closed its acquisition of VMware, the company has made sweeping changes to VMware’s software licensing, product portfolio, and partner program, and executives admit these changes have confused and concerned customers and partners alike. Broadcom is pushing simplicity and hoping to convince its VMware customers and partners that the changes will result in more value and innovation for customers and more opportunities and profits for its partners.

However, the VMware price increase followed by Broadcom’s acquisition is rocking boats in the tech world, and to no surprise: Broadcom’s shift of focus on larger companies leaves smaller VMware customers in extremely unfavorable situations. Customers that previously used two VMware products, such as vSphere and vSAN together, should see comparable pricing with a new bundled solution. But organizations that only use vSphere in their data centers will face a price increase with the new bundle.

VMware had over 500,000 users spread across the globe. When the acquisition was announced, many people soon to be affected by the purchase waited and hoped that it was not as bad as the rumors suggested. However, after major layoffs, the introduction of the new subscription model, and enormous price increases, it became clear that the predictions were right, and small to medium-sized businesses would be impacted heavily by the outcomes of Broadcom’s acquisition.

How will the acquisition affect VMware customers, and what solutions are there left for those forced to leave because of the extreme VMware price increase? Let's dive in and find out...

The Shift to a Subscription Model

The pivotal point in Broadcom’s acquisition is the VMware price increase, which became a disputed subject because of Broadcom’s decision to switch from perpetual licensing to a subscription model. Essentially, what was once a flat cost has now turned into a subscription model based on the number of cores the cpu of the server has. So, a small business running vSphere could see a 10x increase in their annual renewal fee!

The transition has raised quite some concern, especially on the part of those who already own a license. The transition for them means, that they are being pushed into paying more for the new model or – having to leave.

Smaller Customers Getting Sacrificed for Larger Ones

Many users affected by the VMware price increase expressed their bitterness regarding how big companies with a large user base care more about their investors than their customers. Many are concerned about everything turning subscription-based at some point and that users are, and will be more and more at the mercy of the commercial software market’s decisions. Businesses that have been built on VMware face the harsh truth of having to pony up or leave.

Broadcom made it official that their strategy will be shifting their focus to global enterprises – which unfortunately means that sooner or later, the features supporting smaller customer’s needs will be ended or will become unaffordable.

Ending Software and Cutting Off Learning Opportunities

It’s been acknowledged with disappointment that Broadcom ended the free VMware vSphere hypervisor, which for system administrators means a whole new level of complexity to deal with. vSphere has also been a number one learning opportunity that will not be available from now on.

The Ripple Effect of the VMware Price Increase

The assumption is that in reaction to the VMware price increase, businesses will have to recoup costs by putting a bigger price tag on their own services. For any company that has been using VMware, continuing to use it will become more expensive. You'd think that they'll probably have to charge more to recoup the increased cost. On the other hand, moving from VMware to another platform or a managed service provider will come with migration costs, which might also increase the price of the services offered by ex-VMware users.

Looking for Alternatives for VMware

The bottom line is that many small and medium-sized businesses may be forced to look for alternatives.

Let’s face it: VMware was great, and finding a solution that’s just as good will be hard. Because of the VMware price increase with the new subscription potentially being 10x more expensive, small and medium-sized companies now have a decision to make that used to be a "no-brainer" - what do I replace VMware with and what will this cost? No longer a "slam dunk" renewal.

Navigate Broadcom’s VMware Price Increase

VMware will be hard to replace. But all is not lost. Companies having to reorganize themselves due to the consequences of Broadcom’s acquisition can also bring some positive change. Because of being forced out of VMware, some companies are looking for similar alternatives, considering trying a managed solution, while others are choosing to welcome a different approach and go bare metal.

Is your company affected negatively by the VMware price increase? We can help navigate the situation by migrating you to an alternative for less than what you were paying for your VMware license. Our fast and efficient migration services save you the headaches of moving your assets and guarantee safety and security throughout the process.

If you need help choosing a solution to replace VMware for your business, give us a call or email us to chat with a member of our team to discuss the best solution for your needs.

Just one more big shift in the industry impacting our clients that we're here to help navigate through.

What do you think? Was this info helpful? Please let us know in the Comments box below or shoot me an email if you’d like to discuss this in more detail.

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Craig Pollack

Craig Pollack

Craig is the Founder & CEO of FPA Technology Services, Inc. Craig provides the strategy and direction for FPA, ensuring its clients, business owners, and key decision makers leverage technology as efficiently and effectively as possible. With over 30 years of experience building the preeminent IT Service Provider in the Southern California area, Craig is one of the area’s leading authorities on how small to mid-sized businesses can best leverage and secure their technology to achieve their business objectives.