VMware customers weigh exit as Broadcom licensing costs surge

How the licensing changed

In November 2023 Broadcom completed its $69 billion acquisition of VMware and moved customers from perpetual, individually priced vSphere licenses to subscription-based VMware Cloud Foundation bundles, Shattered reported in September. On July 31, Insight Enterprises' North America CTO Juan Orlandini told CRN that price increases run from three to five times previous levels and, in rare cases, even higher. Orlandini said the technology "has never been better," but many customers are not using all VCF capabilities, so the higher prices "don't make sense for customers to continue to pay".

How customers and cloud providers responded

On August 21, Petri reported Microsoft will stop selling the license-included Azure VMware Solution to new customers after October 31, 2026. Existing customers on license-included reserved instance SKUs must purchase portable Broadcom VCF licenses and move to a bring-your-own-license SKU or exit by August 30, 2027; otherwise service will be disrupted on August 31, 2027. Microsoft attributed the retirement to "the latest Broadcom VCF licensing change". Petri said the older AVS bundled vSphere, vCenter, vSAN, and NSX into the Azure service, so customers will now have to manage VMware licensing separately.

On August 22, TechGig reported that Oracle made a similar accommodation earlier this year, while AWS does not distribute VMware's cloud service directly and instead offers Elastic VMware Solution for customers to maintain their own VCF licenses. The same report listed Nutanix, Cisco, Caylent, OVHcloud, and Platform9 as alternative virtualization offerings. TechGig also said Siemens and Tesco left VMware because of price increases. It noted a Broadcom-commissioned Forrester Consulting report projecting up to $36.1 million in benefits and a three-year return on investment of 137% for large enterprises using VCF.

Broadcom's response and SMB skepticism

On September 3, Broadcom released VCF 9.1.1 with multi-tenant model sharing and new AI and Kubernetes features, Shattered reported on September 12. Shattered said Broadcom has not published separate pricing for the AI capabilities, which are bundled into the VCF subscription. On September 4, Ars Technica reported that Broadcom is trying to appeal to SMBs with an updated vSphere Standard release, and the publication quoted a source saying Broadcom "has burned all the bridges" and cannot be trusted. Sumit Bhatia, co-author of Navigating VMware Turmoil in the Broadcom Era, said "Trust, not features, is the real deficit," and argued Broadcom must show "stable pricing, reliable renewals, and real investment" before SMBs consider the platform safe again. Ars Technica reported Broadcom's software business, which includes VMware, made $8.75 billion in revenue in fiscal Q3 2026, up 29% year over year.

EU inquiry and current state

European Union officials are now examining how VMware's licensing changes may affect cloud providers, according to a September 11 Yahoo Finance report. The inquiry is looking at whether the new arrangements could reduce customer choice or make it harder for smaller providers to compete, and officials are asking European cloud companies how much they depend on VMware and how easily they could switch. Regulators are also reviewing new certification requirements, and a March 31 deadline could stop smaller European cloud providers from continuing to sell certain VMware subscriptions. The information gathering does not indicate regulators have reached a conclusion.

As of mid-September, EU regulators are gathering information, Microsoft is pushing AVS customers to bring their own VCF licenses, and VMware customers are weighing whether increased costs are justified by capabilities they will use.