VMware Explore Adopting—or increasing use—of a proprietary computing architecture like IBM’s POWER is a niche thing in 2024. But in June, Big Blue proposed doing just that: using its single-supplier stack to replace the VMware stack.
IBM cited changes made by Broadcom at the virtualization giant as the reason for abandoning the VMware-on-x86 agreement that de facto Data center standard since the mid-2000s. Since Broadcom completed its acquisition of VMware in November 2023, the company has moved from perpetual licenses to subscriptions, changed per-socket pricing to per-core licensing, and decided to only sell software packages that include support.
In an advertisement for POWER, IBM highlighted a customer who expects his VMware bills to increase by 500 percent as a result of these changes.
VMware by Broadcom denies the accusation that it has increased prices, suggesting that the market does not understand that the new packages are cheaper than the previous total cost of the products they contain and that support – which previously had to be purchased separately – is included in the subscriptions.
But Gartner vice president and analyst Michael Warrilow disagrees.
It is dishonest to assume that the vast majority of VMware customers would not pay more annually.
“It is dishonest to believe that the vast majority of VMware customers will not pay more per year,” he said The Register.
Warrilow said Broadcom’s packages also mean customers often pay for software they don’t already use – or may not want to use.
Gartner estimates that most VMware customers’ bills will increase by 200 to 500 percent at the next license renewal.
Joseph Sweeney, a consultant to Australian analytics firm IBRS, said companies he had spoken to had reported price increases in the range of 200 to 450 percent.
“From what we’ve observed, it’s the middle of the market that’s being hit hardest, and Broadcom has made no secret of its desire to focus its attention on the lucrative and even more ‘captive’ market of larger enterprises,” Sweeney noted.
“VMware customers are all worried, anxious, looking for clarification and planning alternatives,” said Naveen Chhabra, principal analyst at Forrester, The Reg via email. “They’re concerned about their own future with VMware, they’re concerned about what their renewal will look like when the time comes, and so they’re gathering all the information they can in advance to be clear about that, and they’re looking at alternatives for migration.”
These alternatives are not appealing. Warrilow explained that VMware is so deeply rooted in customers’ data centers that projects that tear everything apart and replace it are an undesirable risk. And migrations to direct alternatives like Nutanix or Microsoft are a trade-off that does not improve users’ IT capabilities.
“What’s the value in switching to something equivalent?” he asked.
A leap into the dark
The value of staying with VMware is also difficult to assess at this point. While Broadcom has pledged an additional $1 billion in R&D funding to develop a more integrated and automated version of VMware’s flagship hybrid cloud suite, Cloud Foundation, the returns on that investment are currently meager.
The chip giant did deliver a solid upgrade of Cloud Foundation in June 2024, but that is the only significant evidence of progress to date.
Broadcom CEO Hock Tan has repeatedly promised to deliver such a suite, saying it is exactly what customers wanted and that it would secure VMware’s long-term future.
So for attendees of this year’s VMware Explore – the annual customer conference that begins tomorrow – there are obvious initial questions: When will they see Broadcom’s strategy in action, and will it be worth paying for?
Warrilow of Gartner said The Reg Broadcom needs to provide answers – and soon – as VMware customers have been looking for alternatives.
“Customers need to see the value in paying between two and five times what they used to,” Warrilow noted, adding that he believes Broadcom has until the August 2025 version of Explore to ship.
Ready to jump
If Broadcom can’t satisfy its customers, VMware’s competitors – and even some friends – will wait.
VMware’s direct competitors like Nutanix and Scale Computing are not shy about offering a migration path to an environment similar to VMware’s, as is a small company called AWS, which is already hosting events to encourage migration from VMware to its cloud – even migrations from the VMware on AWS cloud service.
HPE has developed a virtualization product that looks very similar to a direct competitor to VMware.
Open source virtualization alternatives like XCP-NG and Proxmox also realize they have a chance to shine. Even Citrix has re-entered the server virtualization market with a revamped Xen server and a free tier tailored to the needs of smaller VMware customers.
Storage provider NetApp, a staunch ally of VMware, recently said: The Register The company is currently advising customers on how to reduce VMware licensing costs by optimizing the use of Virtzilla’s VSAN virtual storage software. If that effort involves moving some data to NetApp kits or services, the storage vendor will not mind.
And for those VMware users who want to hold on to their perpetual licenses, third-party support providers like Rimini Street have entered the market.
Whatever is announced at VMware Explore will have the potential to increase or decrease the relevance of these competing offerings.
The Register will be there to bring you the latest news and our take on what this year’s event means to VMware’s loyal fans. ®
