Nearly three years after Broadcom purchased VMware, IT leaders still aren’t convinced they will stick with the leading virtualization technology provider over the long term.
Ninety percent of current VMware customer CIOs are considering alternatives to VMware due to higher licensing costs since the Broadcom acquisition, according to a recent survey, with over half saying that Broadcom’s decision to end perpetual license support is a major reason they are evaluating other options.
The survey, commissioned by third-party support vendor Rimini Street, also finds 60% of VMware customers considering multiple-hypervisor strategies, to create more flexible virtualization environments.
Since taking over VMware in late 2023, Broadcom has revamped its pricing models, often leading to cost increases of 50% to 200%. In some cases, customers have reported quotes that would result in price hikes of 1,500%.
Keith Costello, Rimini Street’s EVP and COO, says his company has heard widespread dissatisfaction about the price increases, including the transition from perpetual licenses to a subscription model, as well as the push to adopt VMware Cloud Foundation, an integrated software platform for deploying and managing private and hybrid cloud environments.
“What I’m hearing is that they’re not dissatisfied with the product at all,” he says. “VMware’s customers love their product, but the terms under which VMware is providing alternatives, in terms of migration for their customers, doesn’t work with their timelines, doesn’t work with their economics.”
A VMware spokesman declined to respond to the survey results.
The long road to cost recovery when switching vendors
Widespread dissatisfaction doesn’t necessarily mean IT leaders will abandon VMware, adds Joe Locandro, Rimini Street’s CIO. Alternatives have emerged, but VMware has long been a market leader for virtualization, he notes, and switching to new vendors can be expensive, even considering VMware’s price hikes.
The cost of switching to a new vendor can take three to five years to recover, even when users factor in the price increases, and many CIOs don’t consider the costs of retraining staff in new products and the lost opportunity costs created by a long-term transition to a new vendor with major upfront costs, Locandro says.
“You don’t want to jump from one frying pan to another,” he says. “At the end of the day switching is not a competitive advantage; it’s a bit of the infrastructure and plumbing, and there’s the opportunity cost of investment to other AI initiatives and other things that require capital and expenditure.”
Still, many CIOs want more vendor flexibility and control over their virtualization spending, Costello says.
“One thing clients don’t like, and it’s not unique to VMware software and virtualization capabilities, is that they don’t like being forced into a corner to make a choice,” he adds. “CIOs feel a lack of control over their estate, when, all of a sudden, the price for this big technology that they’ve been relying on for 15 years goes up 3x.”
The survey also finds about two-thirds of IT leaders are considering third-party support for end-of-support versions of VMware’s vSphere virtualization product, a service Rimini Street specializes in.
Rethinking VMware as the default — before renewal removes leverage
While Rimini Street has a huge interest in VMware customers exploring alternatives such as third-party support, other observers of the virtualization market also see broad dissatisfaction with the price increases.
Many CIOs and CFOs have been reevaluating VMware in the wake of Broadcom’s licensing changes, says Thomas Cloud, founder of Vertex CIO Advisory and 48 Technologies and director of IT for an MSP.
But leaving VMware immediately is rarely the right approach, he adds.
“The right answer is to understand which workloads still justify the platform, quantify the real cost of staying, understand the cost and risk of moving, and make the decision before the renewal deadline removes your leverage,” he says. “A VMware renewal should be treated like any other material technology dependency: Understand it before the deadline, quantify the alternatives, and don’t let the renewal date make the decision for you.”
A good approach is to separate the workloads that justify staying on VMware from workloads that can move to other providers, Cloud says. “The biggest mistake I see is treating it as an all-or-nothing migration question,” he adds.
Third-party VMware support can also be a useful bridge, he says. “It can give the company time to avoid making a rushed infrastructure decision simply because a renewal date is approaching,” he explains. “But it should be part of an intentional transition or support strategy, not just a way to postpone the same decision indefinitely.”
In addition to advising clients on potential migrations, Cloud’s organizations are reevaluating their use of VMware as well, he says.
“We’re not looking at it as, ‘VMware is now bad; therefore everything has to move,’” he adds. “We’re looking at where VMware still makes operational and economic sense versus where other platforms such as Hyper-V or Azure may be a better fit going forward. The Broadcom changes have definitely made us more willing to challenge the assumption that VMware should automatically remain the default.”
A defector’s tale
Over at the Swiss National Supercomputing Center, engineers and IT leaders began exploring alternatives to VMware in 2021, before the Broadcom acquisition. The center’s transition to SUSE Virtualization was driven more by technical needs, but the price changes at VMware have reinforced the center’s decision, says Maria Grazia Giuffreda, associate director at the center.
The center is also a big supporter of open-source software, and that philosophy drove the organization to seek alternatives, she adds. The center is opposed to paying for software licenses, she notes.
“Cost always has an impact, because you want to reduce your cost wherever possible,” she says. “You sometimes start looking at alternative solutions for reducing the amount of money that you invest, and licenses are an eternal discussion.”
The new solution has reduced the time the center manages infrastructure by 70%, says Dino Conciatore, a systems engineer at the center.
“When we saw the licensing change, we thought, ‘Oh, we’re so lucky, we never liked closed products,’” he adds.