Since Broadcom’s “hostile” takeover of VMware, significant changes to the licensing model have taken place, affecting businesses across the spectrum—from SMEs to CSPs and MSPs. These changes aren’t just minor tweaks; they represent a fundamental shift in how VMware’s products are purchased and used. At Instelligence.io, we want to ensure you’re fully informed about these changes, how they might impact your business, and what options you have moving forward.
Small and Medium Enterprises (SMEs) are especially vulnerable to these changes. VMware’s previous pricing model allowed SMEs to make one-time investments, which helped control their budget without worrying about recurring expenses. VMware was already slowly moving towards a subscription model before the Broadcom takeover, but Broadcom ripped the bandaid off immediately and across the portfolio. Now, under Broadcom’s new structure, these recurring subscription fees are inflating operational costs, leaving SMEs to grapple with new budget constraints. The public cloud has operated in a similar way—being subscription-based since its inception—and many businesses have continued to be caught out by the unexpected cost escalations of such models.
For SMEs, this shift can mean:
- Higher Yearly Costs: Subscriptions mean IT budgets need to account for ongoing annual payments that can grow over time.
- Reduced Flexibility: SMEs with limited budgets may find it harder to adjust to VMware’s new rules, which make their environments more rigid and harder to expand without substantial cost increases.
Example: Imagine a small software company that had invested in VMware a few years ago. They initially paid for a perpetual vSphere Standard license, which allowed them to keep costs predictable. Under the new model, this company now faces an annual subscription cost that makes their operations more expensive year over year, eating into funds that could be invested in growth. Thus, another customer to the public cloud (and a future customer of the repatriated cloud).
Impact on CSPs and MSPs
For Cloud Service Providers (CSPs) and Managed Service Providers (MSPs), the changes pose challenges not just in terms of cost, but also in how services can be offered to customers. CSPs and MSPs rely on VMware for hosting multiple client environments, which means their licensing needs are often much more complex.
Broadcom’s new subscription model introduces:
- Higher Overheads: Recurring licensing fees directly impact overheads, reducing profit margins for CSPs and MSPs.
- Service Limitations: Changes in licensing restrictions can make it more challenging to provision new services or adapt existing ones without facing significant cost increases.
Example: Consider a regional CSP that provides cloud hosting to multiple local businesses. Previously, they used VMware’s flexible “Rental” licenses to keep overhead costs down and competitive. With Broadcom’s new subscription model, and assuming they met the 3,500 VCF core minimum, the CSP is now forced to pay significantly higher recurring fees, impacting their ability to offer competitively priced services to clients, and drastically reducing profit margins across the board.
Why These Changes Should Make You Consider Alternatives
At Instelligence.io, we believe that these licensing changes represent an important moment for businesses to rethink their private cloud strategy. With escalating costs and reduced flexibility, it’s worth asking: is there a better alternative?
Proxmox as a Cost-Effective Solution
- No Licensing Fees: Proxmox, an open-source virtualisation platform, provides a highly capable alternative to VMware’s hypervisor without the ongoing licensing costs.
- Full Control: With Proxmox, you regain full control of your infrastructure without worrying about vendor-imposed restrictions.
- Scalable and Flexible: Proxmox offers the same core functionalities—virtualisation, clustering, and high availability—at a fraction of the cost, making it easier to scale without breaking the bank.
By moving away from VMware (in fact many proprietary software), businesses can regain control of their private cloud budget, achieve cost stability, and avoid the vendor lock-in that Broadcom’s changes are pushing for.
How Instelligence.io Can Help
- VMware to Proxmox Migration Services: If your current VMware environment is becoming unsustainable due to cost increases, we offer VMware to Proxmox migration services. Our experts can help you transition smoothly to Proxmox, a cost-effective open-source virtualisation platform that offers flexibility, scalability, and freedom from licensing constraints.
- Open-Source Consultancy: Our team specializes in helping businesses transition from costly proprietary solutions to open-source alternatives, delivering similar capabilities at a reduced cost.
- Tailored Migration Plans: We understand that each business is unique, which is why we craft tailored migration plans that minimize disruption and maximize the benefits of moving to Proxmox or other open-source environments.
Conclusion: Take Control of Your IT Costs Today
Broadcom’s changes to VMware’s licensing models are not simply a price increase—they’re a call to action. Businesses that want to maintain predictable costs, retain control over their IT environments, and avoid vendor lock-in should consider alternatives sooner rather than later.
Instelligence.io is here to guide you through that transition, offering a path away from escalating costs and towards a more stable, efficient, and flexible IT future.
