When Broadcom finalised its $69 billion acquisition of VMware in late 2023, it marked one of the largest tech deals in history. The move was pitched as a strategic pivot by Broadcom—traditionally known for its semiconductor business—into enterprise software. By absorbing VMware, an undisputed leader in virtualisation and cloud infrastructure, Broadcom aimed to create a streamlined, high-margin cloud software division to rival competitors like Microsoft and Amazon Web Services.
And judging by its recently announced Q2 2025 results, the strategy appears to be working, with revenue growth at 20 percent year over year reaching $15 billion. The company’s infrastructure software business unit, which includes VMware along with Computer Associates and Symantec’s enterprise business, earned $6.6 billion of revenue, up 25 percent year over year. Before the VMware deal, Broadcom’s quarterly infrastructure software revenue was not quite $2 billion.
But the acquisition has had mixed results. On one hand, Broadcom has managed to simplify VMware’s diverse (sprawling?) product portfolio and concentrate on core offerings like vSphere, vSAN, and NSX, which continue to be dominant in enterprise environments. On the other hand, this aggressive streamlining came at a cost: thousands of layoffs, disrupted partner ecosystems, and a sharp decline in customer satisfaction. Perhaps the most controversial move, however, has been Broadcom’s decision to eliminate VMware’s perpetual licensing model and no longer sell standalone VMware products.
Under VMware’s long-standing model, customers could purchase perpetual licenses—essentially paying once to use the software indefinitely—along with optional annual support. This system was popular with IT departments that preferred capital expenditures (CapEx), and it offered long-term budget flexibility. Broadcom abruptly discontinued this model, replacing it with a subscription-only software/support bundle structure as evidenced with the promotion of its flagship VCF private cloud platform, which the company claims has attracted 87% of VMware’s top 10,000 customers.
However, the move has left many customers angered, with many being forced to pay the recurring fees to access VMware products, or risk losing access altogether, even to previously installed versions, if they allow the subscription to lapse. This shift has blindsided many long-time customers—especially public sector organisations and SMEs—who suddenly face steep cost increases and rigid renewal cycles. In addition, the transition was rolled out with very little warning, leaving many scrambling to rework procurement processes and budgets that were not designed for this kind of ongoing expense.
This fundamental change had led to many large organisations considering all options including legal recourse. With one recent case in the Netherlands setting a powerful precedent, signaling that courts may intervene when aggressive licensing shifts endanger mission-critical operations. The ruling in the Hague, stated that Broadcom had breached its “duty of care”, and must continue providing exit support for up to two years or risk huge penalties (capped at €25 million) to Rijkswaterstaat—the Dutch Ministry of Infrastructure and Water Management—as it migrates away from VMware’s subscription model. The agency had faced an 85 % price hike, with annual costs rising from about €2.1 million to €4 million under the new licensing model.
Critics argue that this licensing move prioritises predictable revenue over customer loyalty. It also introduces a form of vendor lock-in that forces customers into ongoing contracts with limited flexibility. As a result, some are already exploring alternative platforms that offer more transparent pricing and licensing terms.
Broadcom’s strategy may yield short-term financial gains, but it risks alienating a loyal user base built by VMware over the decades since it was founded in 1998. The shift away from perpetual licensing is more than a technical change, it’s a cultural and economic one that could redefine VMware’s role in the modern IT landscape.
If you’re concerned, or want to understand more about how these changes might affect your IT infrastructure and budget – or if you’re ready to explore a different approach to VMware – we’re here to help.
Get in touch with us today to discuss how different cloud stack options from vXtream can meet your business requirements – both technically and financially – whilst guaranteeing you the peace of mind that you’ve come to expect.
Image by Aymane Jdidi from Pixabay
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