Broadcom halves subscription price for VMware's flagship hybrid cloud suite

+COMMENT Broadcom's VMware Cloud Foundation Division has announced what it's described as "a dramatic simplification of our product portfolio," plus the end of perpetual licenses and a move to subscriptions – some at half their previous price.

The Cloud Foundation Division is a Broadcom business unit dedicated to VMware's server virtualization, private and hybrid cloud products – such as vSphere, VSAN, and Cloud Foundation. It's the core of the old VMware.

A Monday announcement reveals the Division has made the following changes:

• The immediate cessation of perpetual license sales and additional support contracts for perpetual licenses;
• A reduction of the Division's product portfolio to two products:
• • The Cloud Foundation hybrid cloud suite, with subscription license list price reduced by half, and with "higher support service levels including enhanced support for activating the solution and lifecycle management." It's unclear exactly what price the Division is using as the basis for its half-price claim;
  • vSphere Foundation, a cut of VMware's core virtualization stack that adds "intelligent operations management" – presumably elements of the Aria suite. VMware vSphere Standard and VMware vSphere Essentials Plus will remain on sale "for deployments with more limited requirements";
• Optional add-ons for the two products mentioned above, including storage, ransomware and disaster recovery service, and application platform services, with "additional advanced services and offerings" including Private AI, available soon;
• A bring-your-own subscription offering that allows customers to use their subs in the VMware-approved cloud of their choice;
• A "trade-in" program that allows holders of perpetual licenses to move to subscription products, with upgrade pricing incentives.

"I expect most VMware customers will be angry at the sudden termination of the way they've bought vSphere for the last two decades, and more so by the forced march to new products if they want support," Gartner VP analyst Michael Warrilow told The Register.

"It's likely to be a nightmare to finalize the conversion of existing VMware perpetual licensees, particularly if there's a corresponding move to per-core (as was the case with vSphere+)" he added.

Cloud Foundation Division general manager Krish Prasad has positioned the changes as the culmination of pre-acquisition efforts to simplify VMware's portfolio.

"This shift is the natural next step in our multi-year strategy to make it easier for customers to consume both our existing offerings and new innovations," he wrote in an FAQ that accompanied the announcement. "VMware believes that a subscription model supports our customers with the innovation and flexibility they need as they undertake their digital transformations."

• Broadcom re-orgs VMware into four divisions – none of which mention end-user compute products
• Broadcom to divest VMware's end-user computing and Carbon Black units
• VMware president Sumit Dhawan out – scores gig as CEO of infosec vendor Proofpoint
• 1 in 5 VMware customers plan to jump off its stack next year

+COMMENT While the immediate cessation of perpetual license sales and accompanying support deals is jarring and will rightly not be appreciated by customers whose procurement plans must now change to fit Broadcom's strategy, VMware long ago signaled its intention to move customers to subscription licenses.

The virty giant did so, in part, because it changed software development practices to prioritize work on new features for subscribers who ran its wares in clouds. Broadcom is therefore continuing VMware's past strategy and argues that it will improve customers' ability to innovate. Which is just what VMware has said for a couple of years now.

The new vSphere Foundation should be understood in the context of VMware's long frustration that many of its customers don't look too far beyond its core private cloud offerings. Adding ops management tools may see some larger vSphere users pay more attention to those products. But The Register has often heard that VMware sold its Aria products in bundled deals, and was not entirely displeased if they ended up as shelfware. Nothing in this announcement will stop customers choosing to ignore whatever tools are bundled with vSphere Foundation.

The price cut to Cloud Foundation subs was unexpected. Broadcom had pledged not to increase prices, but never hinted at cuts – never mind halving the price for subs! Many VMware customers will see that as a pleasant surprise, given Broadcom's past actions to hike prices after acquiring CA and Symantec.

Between the price cuts and retention of smaller vSphere bundles, Broadcom may have dispelled many fears.

But it has still left many users with plenty to do. As Gartner's Warrilow pointed out, negotiating the end of perpetual licenses will neither be welcome nor easy, as it's not value-adding work and will likely require some forced migration for those who hold licenses and support contracts for older software.

The Register has asked Broadcom for a briefing on the changes. We'd like to know more about pricing and the content of the new bundles, how the add-ons will be licensed, and whether those deals are less complex than the way VMware used to sell and license its portfolio.

Broadcom has not responded to our last few emails, so we're not holding our breath. But VMware users probably are – Broadcom is yet to explain publicly how deeply it has cut jobs at VMware, or how that will impact its ability to deliver the innovations promised in today's announcement. ®