In May 2022, Broadcom announced the acquisition of VMware for $61 billion, which became a new stage in the development of the main vendor in the field of virtualization.
This acquisition was the second most expensive in 2022 – an even higher price was offered only for the gaming giant Activision Blizzard, which was acquired by Microsoft Corporation for $68.7 billion. According to the agreement, VMware shareholders received a premium of about 49% compared to the closing price on 22 May, when reports first began to come in about negotiations and a possible deal.
In November 2023, it was announced that Broadcom completed the acquisition of VMware and fully integrated the solutions of this vendor into its portfolio. At the time, Broadcom said it planned to grow VMware’s customer base of more than 300,000 users.
At the same time, it was announced that in the future there will be a transition to subscription licensing, which will gradually occur over the next few years. By the way, in view of this, many analysts predicted that VMware’s revenue growth could slow down in the short term, but increase in the long term.
Tom Krause, president of Broadcom Software Group, and Hock Tan (CEO of Broadcom) then said that the company will continue to invest on an ongoing basis in VMware core infrastructure products, naming vSphere, vSAN, vRealize and NSX as priorities.
When Dell acquired VMware it resulted in significant earnings growth, so it appears that Broadcom will reap the same benefits. However, there are now slightly different trends on the market – namely AI solutions based on public and private LLMs. Therefore, VMware has recently been doing a lot of innovations in the field of Private AI, which became the main topic of the last Explore 2023 conference.
Recently, Krish Prasad, who holds the position of Senior Vice President and General Manager in the VMware Cloud Foundation Division, spoke about how the VMware product line will change. The main news is that understanding licensing will become much easier, which is what customers have been waiting for for so long. And some things will become 2 times cheaper!
The main new points here are the following:
- From now on, only two main standard offerings will be available: vSphere Foundation and VMware Cloud Foundation (VCF).
- Gradually (as promised) sales of perpetual licenses and Support and Subscriptions (SnS) will be stopped. It will also not be possible to extend such SnS contracts (but the current ones will continue to be valid). At the same time, customers who have already purchased perpetual licenses and support contracts will be offered a “trade-in” program, which will allow them to receive a subscription to products with a corresponding discount.
- There will be a Bring-your-own-subscription license (BYOL) licensing model, which ensures the portability of on-premium licenses to hybrid clouds verified by VMware and powered by the VMware Cloud Foundation.
Available vSphere editions
The main version of vSphere used from now on will be “vSphere Foundation”.
So, the new VMware vSphere Foundation platform offers a more simplified enterprise application experience for midsize and small customers. This solution integrates vSphere with intelligent operations management solutions, delivering better performance, availability and efficiency with greater process visibility and insight.
Also starting in December of this year, vSphere customers will receive Aria Operations (formerly known as vRealize Operations) and Aria Operations for Logs (formerly known as vRealize Log Insight) with the vSphere solution (which also includes vCenter and Tanzu Kubernetes Grid products).
The vSphere Foundation solution will now be available for purchase via subscription in one of three editions:
- vSphere Essentials Plus Kit
- vSphere Standard
- vSphere Foundation
The first two editions are proposals for small and medium-sized businesses, but the third is a full-fledged vSphere platform, which can be expanded using add-ons.
Let’s see what the Essentials Plus Kit includes:
- vSphere Essentials Plus (licenses up to 96 cores in total – 3 ESXi hosts, up to 6 physical CPUs each)
- vCenter Essentials
- Production Support
The vSphere Standard edition will contain the following components:
- vSphere Standard
- vCenter Standard
- Production Support
Well, and most importantly – the vSphere Foundation edition:
- vSphere Enterprise Plus
- vCenter Standard
- Subsidiary Kubernetes Grid (TKG)
- vSAN Enteprise licensed for up to 100 GiB of storage per core licensed
- Aria Suite Standard
- Production Support
- Product expansion using addons
The most interesting thing is, of course, add-ons that not only expand the capabilities of the platform, but also turn it into a complete solution for creating virtual data centers of any scale.
Here are the addons that will be available for purchase to vSphere Foundation users:
- VMware vSAN Enterprise (available for both VCF and vSphere Foundation)
- VMware Cloud Disaster Recovery and Ransomware Recovery (available for both VCF and vSphere Foundation)
- VMware Advanced Load Balancer (formerly Avi)
- Tanzu Intelligence – the following products will be available here: Tanzu Guardrails (Advanced or Enterprise), Aria Operations for Apps (previously called Tanzu Observability, and even earlier Wavefront), Tanzu Application Catalog, Tanzu CloudHealth Enterprise and Tanzu Insights
- Tanzu Mission Control (both SaaS solution and self-managed)
- Tanzu Application Platform (Spring)
Also, an even larger number of add-ons will be available in the future, in particular, products from the VMware Private AI family and other solutions.
VMware Cloud Foundation (VCF)
Existing VCF customers or large vSphere Foundation customers can migrate to the new VMware Cloud Foundation, which can now be considered a complete solution for managing private and hybrid cloud stacks.
VMware Cloud Foundation is a flagship Enterprise hybrid cloud solution that enables customers to securely, reliably and cost-effectively manage mission-critical and modern applications. To enable more customers to take advantage of this solution, subscription costs have been halved and higher levels of support have been added, including extended support for initial solution activation and management life cycle
In addition, the following extensions that are not offered to vSphere Foundation users will be available only to VCF users:
- VMware Firewall, also known as NSX Distributed Firewall
- VMware Firewall with Advanced Threat Protection (ATP)
vSphere Foundation will now only include NSX for Network Virtualization (overlay), without micro-segmentation or distributed firewalling (DFW) capabilities, which will be available only to VCF users. In other words, customers who want the capabilities of DFW NSX (which is an add-on to VMware Firewall) first need a VCF subscription that includes NSX.
Please note that currently all new license packages are provided in “disconnected” mode (that is, without connecting to VMware Cloud), but this situation will be fixed soon.
There are 2 important aspects here:
- VMware Cloud on AWS, VMware Cloud on Azure and others will also be included in the VCF licensing infrastructure.
- VMware vSAN Enterprise will now be licensed per TiB (equivalent to terabytes) per specified number of ESXi host cores.
VMware Cloud Foundation (on-premise)
First of all, we note that any edition of the VCF includes:
- The vSphere Enterprise Plus platform
- Tanzu Kubernetes Grid (TKG) infrastructure
- vCenter Standard management servers
- vSAN Enterprise fault-tolerant storage infrastructure licensed under TiB
- Aria family of solutions: Operations Enterprise (including Operations for Logs), Automation and Operations for Networks Enterprise (previously called vRealize Network Insight)
- Network aggregation and virtualization tool NSX Networking for VCF (in NSX Enterprise Plus edition)
- HCX Enterprise Workload Migration Tool
- Centralized management console SDDC Manager
- VMware Site Reliability Engineering (SRE) Extended Support and Services
Сustomers will have access to various add-ons that VMware will offer, including those from the Private AI family.
VMware Cloud on X
In this infrastructure, all products and add-ons offered within the VMware Cloud Foundation (and even more) will be available in the cloud of the client’s choice.
If the client in the future uses a cloud or hybrid environment VMware Cloud on AWS, Azure or another VMware Cloud cloud platform, then the Bring-your-own-subscription license (BYOL) program will be available to the client, which will allow the use of existing premium VCF licenses for public cloud subscription.
Summary
Broadcom, having completed the acquisition of VMware, decided to take responsible steps to change its licensing policy. In the short term, this may somewhat weaken revenue growth (since the subscription model provides less income at the moment than 1-3 year contracts), but in the long term, this is a more modern model, to which many SaaS products in the Enterprise segment have switched, to which, primarily focused on VMware products. A big plus for customers is a two-fold reduction in the cost of a subscription to VMware Cloud Foundation, as well as a general simplification of the licensing scheme for products, of which VMware has a great variety – and it is not always easy for users to figure out what and how they need to buy.
Of course, there will be some difficulties when converting existing perpetual licenses, especially for customers who are not used to using paid support (SnS) in the long term. However, Broadcom will offer flexible transition terms for such users, trying not to greatly impact procurement budgets.
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