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How will Broadcom’s VMware Acquisition Impact You?

On November 22, 2023, Broadcom acquired VMware – a move that will impact VMware’s 5,000,000+ customers. The question is, how will Broadcom’s VMware acquisition impact you?

Broadcom has already announced changes to the VMware Cloud Foundation division portfolio. Moving forward there will be two offerings: VMware Cloud Foundation and VMware vSphere Foundation (VVF). This consolidation may ultimately lead to increased software spend for many customers, as they will be compelled to purchase products that they would otherwise not need. Some of Anglepoint’s customers have already reported up to 200% price increases. Broadcom has also announced plans to divest select VMware products at some point in 2024.

Broadcom has also shifted from a perpetual with maintenance licensing model to a subscription licensing model, which takes effect immediately for all customers at their next renewal. Put simply, this will affect your forecasted ongoing spend.

One major change with the transition of license models is the move from CPU/processor to Core. Additionally, VMware has also imposed a minimum requirement of 16 core licenses for each CPU in each ESXi host, regardless of actual cores or usage.

Effective February 5th, 2024, Broadcom has transitioned the VMware Partner Program to the Broadcom Advantage Partner Program. The VMware Partner Program rewarded its partners for business growth, achieving solution competencies, progressing to higher levels within the program, and supported them through the entire technology lifecycle. The new Broadcom Advantage Partner Program is by invitation only, requires a substantial commitment, and doesn’t offer the same discounts. The intention is that they will be able to help their customers simplify their IT environments and make them more resilient and secure. This is going to be a critical change for some reseller organizations because some that were previously part of the partner program may not get an invite so may not be able to resell the software. If they have incorporated the VMware software with a product they sell, and can’t sell it now, they could lose their largest revenue stream. It has been suggested that those resellers that do not deliver over £500K in revenue will not be invited.

Responding Strategically to the VMware Acquisition

As with any acquisition, audit risk is heightened. The acquisitor will want to take stock of what they have purchased and establish clear visibility of the lines of revenue in their customer base.
You will have to be sure you know what you own and that it is aligned with your current software consumption as well as your future licensing needs once these changes take effect for your organization. You will need to understand what your core requirement is, how many vCenters and/or stand-alone EXSi hosts you have, and which VMware products are installed. If you wish to keep your previous perpetual licenses, you will need to ensure you have set up your VMware environment in a specific way to keep compliance. Seeking expert support backed with accurate data ensures you are managing your IT environment effectively to mitigate potential compliance risk and realize opportunities to reduce spend. VMware experts will have a deeper knowledge and expertise to prepare for the Broadcom company culture and what this means for you.

How can Anglepoint help?

Anglepoint’s experts can help you assess your current VMware environment ahead of these changes and also help you understand your future core requirements so you can make the best choices for your organization. If you would like to discuss your organization’s unique requirements and define an action plan to ensure the best commercial and contraction outcome for your VMware renewal, get in touch here to arrange a no-obligation call with our experts.

We will be hosting a webinar that will explore the VMware acquisition and its impacts in more detail on April 25th. You can register to attend here.

You can also download a copy of our eBook: Managing a Software License Compliance Audit which will provide insights and recommendations to help drive best practices and prepare you for your next software audit notification.

Let’s start a conversation.