VMware Licensing Under Broadcom: A Guide for IT Pros

Your organization may have heard about the new licensing options announced by VMware under Broadcom’s leadership on December 11, 2023. This article outlines how the new licensing options affect new and existing VMware customers and how CDW can help your organization navigate these changes.

There is excellent news for customers who are new to VMware or previously considered VMware but found it didn’t fit within their budget. Broadcom culled 9000 SKUs down to 1100 and simplified their licensing dramatically. 

There are now only four subscriptions centered around vSphere. All companion products to the vSphere software-defined data center ecosystem are now add-ons to some of those four subscription packages. This means that customers will have only one subscription term/due date, and all other add-ons will co-term to the underlying vSphere subscription. 

The top two of four vSphere subscriptions offer tremendous capability at a dramatically and surprisingly lower price tag than if your organization were to purchase all the same products à la carte under previous VMware pricing/licensing options. 

The top-tier package is the most highly discounted. It offers a full suite of capabilities, including vSphere Enterprise Plus, vSAN Enterprise (1 TiB/core), Aria Suite Enterprise, NSX Networking, HCX Enterprise, Aria Operations for Networks Enterprise, SDDC Manager, and Select Support — including Site Reliability Engineering (SRE), unlimited vCenter Standard instances, and Tanzu Kubernetes Grid.

All existing perpetual licenses purchased from an original equipment manufacturer (OEM) or VMware directly that are under paid/active Support and Subscription (SNS) will be supported at the level they were at, and the software will remain updateable/upgradeable to a higher version through the expiration date on those licenses.

When that expiration date arrives, the customer will have to choose one of four subscription options related to vSphere that best matches the edition of vSphere needed and any companion products now sold as add-ons to the base subscription. 

Rest assured that the word “subscription” under VMware by Broadcom is functionally identical to what VMware previously called “term” license subscriptions — they are key-based, priced per core, and come with unlimited vCenter Standard instances.

The only technical difference is that these keys expire at the end of the term, and customers receive a new set of license keys every time they renew. The admin must swap keys, and then these new subscriptions will be fully compatible with legacy perpetual licenses and VxRail hardware — all of which one vCenter instance can manage.

All the software running in existing data centers stays the same — there is no cloud component or external network connection to these subscriptions. In the future, they may become optional; however, previously offered cloud features are not part of these subscriptions. All that is needed to deploy these new licenses is the email containing the new license keys to add to your active environment.  

Comparing the total cost of ownership (TCO) between legacy perpetual and newer subscriptions is challenging because you have to compare the two models over a fixed period and how you paid for them (annually or three or five years all at once). Also, core density and now vSAN capacity can influence the costs of the newer licensing simply because legacy licenses were a fixed, one-time up-front cost for the licenses. And, aside from customers’ annual price increases, the costs didn’t scale with hardware changes since vSphere licenses covered any CPU up to 32 physical cores and vSAN wasn’t priced based on the size of the data store.

Subscription licensing is priced per physical CPU core and scales in cost as you add cores, so one 16-core CPU is 50 percent of the cost of one 32-core CPU, but in the legacy model, both would have been the exact same cost.

VMware by Broadcom is currently offering universal discounts off MSRP pricing that bring the cost of the new subscriptions down. Customers may find themselves in a position where they have to incur costs over budget if they don’t optimize their platforms to respond to Broadcom’s software options/bundles. This is because renewing your SNS only covers technical support and software/version upgrades and the newer pricing also includes licensing costs in addition to the technical support and software/version upgrades. 

Organizations using these products may be disappointed to learn that they have been discontinued. When the current subscription expires, these products will not be renewable. You will have to move into one of the four key-based, disconnected subscriptions now offered and, for the time being, lose the cloud-based features.

While many of these changes may change in the coming month(s), navigating these changes can be challenging. CDW has a team of subject matter experts (SMEs) dedicated to specific brands, including VMware. Our VMware SMEs are available to assist you in understanding the new licensing options and determining which solution will best meet your technical requirements and budget. 

CDW is committed to helping you find the right data center virtualization solution, regardless of the brand or products you choose. So, if your organization is considering purchasing a data center solution and wants to validate that the product will satisfy your technical requirements and fit your budget, we’ve got you covered.