Broadcom execs say VMware price, subscription complaints are unwarranted

Broadcom has made controversial changes to VMware since closing its acquisition of the virtualization brand in late November. Broadcom executives are trying to convince VMware customers and partners that they'll eventually see the subscription-fueled light. But discontent remains, as illustrated by industry groups continuing to urge regulators to rein-in what they claim are unfair business practices.

Since Broadcom announced that it would no longer sell perpetual VMware licenses as of December 2023, there have been complaints about rising costs associated with this model. In March, a VMware User Group Town Hall saw attendees complaining of price jumps of up to 600 percent, The Register reported. Small managed service providers that had worked with VMware have reported seeing the price of business rising tenfold, per a February ServeTheHome report.

Broadcom execs defend subscription model

However, Sylvain Cazard, president of Broadcom Software for Asia-Pacific, reportedly told The Register that complaints about higher prices are unwarranted since customers using at least two components of VMware's flagship Cloud Foundation will end up paying less and because the new pricing includes support, which VMware didn't include before.

The Register reported that Cazard, as well as Paul Turner, VP of product management at VMware, and Prashanth Shenoy, VP of product and technical marketing for the Cloud, Infrastructure, Platforms, and Solutions group at VMware, all agreed that people who think moving to subscriptions is unfair aren't considering that VMware waited longer than many in the industry to implement the model.

This is an argument Broadcom has made before. Broadcom CEO and President Hock Tan called subscription-only licensing “the industry standard” in a March blog post defending VMware's changes.

Pushing for government intervention

Despite Broadcom execs' efforts to convince people that its changes are reasonable and will eventually end up financially benefitting stakeholders, there's still effort from industry groups to get federal regulators involved with how Broadcom is running VMware.

As reported by Dutch IT magazine Computable on Friday, representatives from Beltug, a Belgian CIO trade group; Le Cigref, a French network of companies interested in digital technology; the CIO Platform Nederland association for CIOs and CDOs; and VOICE e.V., a German association for IT decisionmakers, sent a letter [PDF] to European Commission President Ursula von der Leyen and European Commissioner Thierry Breton on Thursday to "strongly condemn" Broadcom's businesses practices and ask the commission to take action.

The letter complains of “sudden changes in policy and practices” that Broadcom issued to VMware that the authors claim led to: "steeply increased prices; non-fulfillment of previous contractual agreements; disallowing reselling of licenses; refusing to maintain security conditions for perpetual licenses; (re)bundling of licenses, leading to higher costs; a shake up of the ecosystem of VMware resellers and partners"; and "a loss of knowledge."

The letter reads, in part:

In the context of the VMware takeover and the change in business strategy, Broadcom's contempt and brutality towards its customers are unprecedented in the recent history of the digital economy in Europe. In view of its scale and Broadcom's impact, this case cannot be left exclusively to competition law technicians.

The letter also discusses concerns about Broadcom driving business to the public cloud with negative consequences for the European economy.

"This will further strengthen the position and power of the hyperscalers, which will have a profound impact on the entire market," the letter says.

It's worth noting that this group has written letters to the commission before and that the commission approved Broadcom's VMware acquisition in July 2023 after an antitrust probe. However, Broadcom was recently contacted by antitrust authorities in Europe regarding claims that it was changing VMware software licensing and support conditions, MLex reported on Wednesday.

Regardless of whether a government body steps in, longtime VMware users and partners are reconsidering whether the company's vision aligns with their own businesses. Meanwhile, rivals are pushing hard to capitalize on the disruption happening at VMware.

Cloud Foundation updates

Broadcom has a couple of big updates planned for VMware's Cloud Foundation that, execs told The Register, will help people understand the value of the new VMware.

In July, Broadcom plans to update Cloud Foundation so that a single license key can be used for all components. The update is also supposed to heighten OAuth support as the company seeks to bring single sign-on to all VMware products and add a VMware NSX overlay. Turner told The Register that the changes are examples of how Broadcom is trying to make VMware Cloud Foundation easier to implement than before Broadcom took over.

In the first half of 2025, VMware plans to release the VCF 9 update, which will be "the fullest expression of Broadcom's vision for product integration,” Shenoy told The Register. Turner claimed that because of the update, users with multiple VMware products would no longer need individual silos for discrete storage.