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Broadcom will continue to provide free access to zero-day security packages for VMware users with perpetual licenses, but it still wants those users on subscriptions
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European anti-trust regulators have their eyes on VMware
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And Gartner says VMware’s market share faces catastrophe
Broadcom made a concession to VMware users unhappy about licensing changes, even as European regulators circled the vendor and Gartner issued a dire prediction for the virtualization giant's future market share.
In a blog post Monday, Broadcom president and CEO Hock Tan reiterated the company’s commitment to transitioning from lifetime software licenses for its customers to a subscription model.
However, Tan softened the blow by emphasizing that customers will be able to continue using existing perpetual licenses for older vSphere versions and continue to receive maintenance and support by signing up for a subscription.
Tan also announced “free access to zero-day security patches for supported versions of vSphere” and said the company will “add other VMware products over time.”
Damage control
Broadcom has been doing damage control since its $61 billion acquisition of VMware in November 2023, after which it began cutting jobs, terminating products and canceling reseller partnerships.
Prashant Shenoy, VP of cloud platform, infrastructure and solutions marketing for Broadcom VMware Cloud Foundation (VCF) division, told DataCenter Knowledge that the acquisition has “absolutely caused confusion in the market. We could have done a better job communicating.”
In a blog post last month, Tan acknowledged that the first 100 days after Broadcom acquired VMware “has understandably created some unease among our customers and partners.” The phrase “some unease” is like the doctor telling you a procedure might involve “some discomfort”—in plain English, it means excruciating pain that makes you question all your life decisions.
Users expressed their ire on LinkedIn and Reddit.
Analysts and regulators weigh in
And the user hostility isn’t just talk, according to Gartner, which expects Gartner competitors to gobble market share from Broadcom’s flagship VMware Cloud Foundation product, the analysts said in a report on the full-stack hyperconverged infrastructure market published April 8.
“The 30% of the non-VMware full-stack HCI installed base that exists in 2024 will increase to 60% by 2029," Gartner said.
The report doesn’t explain the prediction; we’ve got a query in Gartner asking for details.
Adding to Broadcom’s troubles, European antitrust regulators have requested information from the vendor following receiving information about changed conditions for VMware software licensing and support, according to a European Commission spokesperson.
Complaints came from Beltug, a Belgian association of business users, as well as France’s Cigref, CIO platform Nederland and VOICE Germany, who complained last month to EU antitrust chief Margrethe Vestager, EU industry chief Thierry Breton and Commission President Ursula von der Leyen, Reuters said.
“The groups in a joint letter complained about sudden changes by Broadcom in policy and practices which allegedly resulted in steep price increases, re-bundling of licenses, a ban on the reselling of licenses, and a refusal to maintain security conditions for perpetual licenses,” Reuters said.
Last month, the industry group Cloud Infrastructure Services Providers in Europe (CISPE), which includes Amazon Web Services as a member, complained of price increases as high as 12X and called for European courts and lawmakers to intervene. CISPE said price hikes could drive some cloud providers offline or out of business entirely. Gartner Distinguished VP Andrew Lerner told us last month that enterprises face steep price increases.
We’ve got queries in to VMware, European regulators and Gartner for follow-up.
But wait, there’s more
In Monday’s blog post, Broadcom outlined several measures to change its pricing and licensing.
Broadcom simplified the VMware portfolio to two core solutions: VMware Cloud Foundation (VCF), which includes all compute, storage, networking, management and support for infrastructure and operations across clouds, at half the list price of past pricing, Tan said. VMware vSphere Foundation (VVF) is an alternative, with “enhanced compute, operational and management capabilities for customers who are not yet ready to take the plunge into a full-stack solution but need to manage across VMs and containers.”
Broadcom is also focused on cloud service providers. It’s standardizing pricing on a per-core basis both in the cloud and on-premises. That will enable customers to move workloads freely between clouds and between clouds and on-premises and back again without licensing mismatch. Standardized pricing will make it easier for enterprises to compare pricing across partners, increasing choice and competition, Broadcom says. Broadcom is also standardizing its technology stack for cloud providers on VCF for further workload portability.
“This freedom for customers to move workloads will intensify competition between cloud providers, leading them to deliver greater value to end customers,” Broadcom said. “The license portability feature we have added to VCF is key to this strategy. Google Cloud is the first hyperscaler to support VCF license portability, and we expect other partners and hyperscaler clouds to follow with similar support.”
And Broadcom is expanding its partner program to accommodate smaller service providers, the company said.
It may sound like a lot of changes, but we can't help but wonder if they'll mean very little to disgruntled customers.
This story was updated to include brief comment from the European Commission.