In February 2024, VMware posted a blog, one designed to reassure customers and explain the huge changes Broadcom has made to VMware’s products and business since the acquisition in late 2023.

This included moving everything to bundled subscription licensing, summarily dismissing every channel partner, and then re-inviting only some of them later to a Broadcom reseller program, separating and eventually divesting its desktop products division as well as its security unit, Carbon Black. Most of these moves were announced after the fact, with no warning to customers or partners.

VMware subscription conundrum

First, let’s address subscriptions – VMware claims that moving to a subscription-only model is the industry standard. VMware is correct about the trend, but there is a crucial difference between what happened at VMware versus other software companies.

When other software companies transitioned from perpetual licensing to subscription-only, the intention was communicated very early, and the transition lasted for a few years to avoid disrupting customer buying plans and expectations. Further, the move to subscription was also sweetened with discounts and advantages for moving to subscription plans offered instead of further perpetual license purchasing. Customers were gently brought along, not just suddenly told they will no longer be able to purchase subscription licenses. VMware claims that allowing license portability makes up for the abrupt change to subscription services, but it’s a minor concession at best.

Further, when VMware switched to subscription, it also reduced the number of individual offerings it had, reducing it to inclusive bundles. VMware claims that this simplification brings lower prices on the high end more value for the same cost at the low end – essentially, low-end customers get access to things they normally wouldn’t have.

The simplification of the bundles also reduces the number of SKUs offered, making things simpler for VMware and for the customer. But bundle deals are a double-edged sword. Customers get more functionality, but also cannot trim their purchase down to just the functionality that they use. VMware also neglected to say what would happen to customers between the low-end and the high end, and how their licensing looks. There are widespread reports of increased prices and justifiable customer anger.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

An unforced error

For the partner piece of the equation, VMware claims that its changes create standardized pricing and a level playing field, moving the competition between partners to the value-add category. That’s reasonable and fair – but doing it with zero warning and almost no communication with existing partners was and is an unforced error. VMware also was not going to invite all its partners back to this new program Broadcom Advantage Partner Program, leaving some customers without their familiar and relied upon partners.

A reasonable plan to transition partners and create the standardized and level playing field it wants should have been handled with an overabundance of communication and a transition plan. Instead, it was dropped on partners and customers with no warning.

Uncertainty over Broadcom and VMware packages

Lastly, companies that have invested in an all-VMware solution suddenly find that their desktop/remote app and Broadcom Carbon Black investments are also at a very uncertain juncture. The value-add of having these pieces all from VMware has evaporated in an instant. Yes, circumstances have changed with Broadcom buying VMware, but customers remember being reassured about VMware’s commitment to these product groups that will soon no longer be part of the company.

The VMware blog characterizes Broadcom’s changes to VMware as both necessary, quick, and decisive. For the most part, that’s true. But this version of necessary, quick, and decisive isn’t a sign of strength or business acumen, it was a sign of arrogance and lack of customer-centric thinking despite claims to the opposite. Broadcom did this with no regard to customers, partners, or even VMware itself. The only regard that was given was to Broadcom and its profit motives.

Change, handled with appropriate communication, transition, and care, are done by enterprise vendors all the time to ensure that customers and partners are happy and stay on board rather than evaluating competitors. Broadcom’s acquisition of VMware, as well as its last two acquisitions in this space, are marked by none of these normal courtesies and considerations.