This article has been updated for 2026 to reflect the latest developments in Broadcom’s VMware licensing transformation.
The Broadcom overhaul of its VMware licensing structure signaled a major transformation in how businesses procure and manage VMware solutions.
The move, which swept away the familiar comfort of a perpetual license and replaced it with a subscription-based model, wasn’t just a minor pivot for Broadcom. It was part of a greater change within the industry heavyweight’s strategic direction while reshaping how its customers plan and operate their IT environments.
More than two years after Broadcom’s acquisition of VMware, the virtualization landscape has fundamentally changed. What began in late 2023 as a corporate takeover has evolved into one of the most disruptive licensing transformations.
VMware Licensing: What’s Changed?
In late 2023, Broadcom announced it would discontinue perpetual licensing for VMware products, moving exclusively to a subscription-based sales model. This approach modernized the revenue framework of VMware, ensuring more predictable income and promoting broader adoption of subscription services.
This change still impacts customers today. Leading research bodies suggest that in 2026 and onwards, navigating the shift will be long, expensive, and risky for customers. This isn’t reassuring, although we think finding a low-risk and low-cost VMware alternative is possible.
What’s Changed Since 2024?
The 72-Core Minimum Proposal (April to May 2025)
In April 2025, Broadcom proposed a 72-core minimum purchase requirement. The proposal would have significantly impacted smaller deployments. Here’s how it would have worked: a 2-node cluster with 32 total cores would require purchasing 72 cores. For organizations running smaller infrastructures, this represented a substantial cost increase. Following feedback from customers and partners, Broadcom reversed this decision by April 10, 2025, maintaining the 16-core per-CPU minimum.
What this tells us: Broadcom’s focus is clearly on larger enterprise deployments. Organizations with smaller footprints need to carefully evaluate whether this strategic direction aligns with their infrastructure needs.
Partner Ecosystem Restructuring (2025 to 2026)
Broadcom has streamlined VMware’s go-to-market approach significantly. In June 2025, the company eliminated the “Registered” tier from the VMware partner program, focusing on three Advantage-tier levels: Pinnacle, Premier, and Select.
In January 2026, VMware Cloud Service Provider (VCSP) agreements transitioned to an invite-only model aligned around VMware Cloud Foundation.
What this means: The partner network is more focused but also more limited. Buying paths look different than they did two years ago, which may impact organizations that relied on regional service providers. If you’ve worked with a specific partner or value-added reseller (VAR) in the past, it’s worth confirming their current status in Broadcom’s partner program. The dynamics have shifted, particularly for customers who depend on local partners for implementation and support.
Hyperscaler Licensing Changes (November 2025)
For organizations running VMware in public cloud environments, November 2025 brought significant changes. Broadcom restructured VMware Cloud Foundation (VCF) licensing for hyperscaler platforms. Microsoft, for example, stopped selling Azure VMware Solution with included VCF subscriptions after October 15, 2025.
Why Did Broadcom Move VMware Licensing to Subscriptions?
Broadcom targets significant revenue growth, aiming to boost VMware’s contribution to its pro forma EBITDA to $8.5 billion within three years by leaning into recurring subscription revenue. Additionally, the current broader technology landscape increasingly favors subscription models for their flexibility, scalability, and continuous delivery of updates and innovations. Subscription models reduce the complexity of license management and enable Broadcom to deliver more integrated, comprehensive solutions.
You could say that Broadcom is betting big on subscriptions. It provides the predictable cash flow of subscription services, making it a logical choice for Broadcom. In fact, thought leaders emphasize the prevalence of subscription-based models across many types of industries and businesses, not just the technology sector.
But what does it mean for customers?
How Does the New VMware Licensing Increase Expenses for Customers?
Customers who previously relied on perpetual licenses faced increased costs with the switch to subscriptions. Broadcom focuses more on ensuring licensing compliance, which has led to more frequent audits, and businesses will likely feel pushed to transition to subscription plans, even if the costs are higher or less efficient overall.
This is something to be cautious of in today’s market. Many customers may resist the switch to subscriptions, viewing them as more expensive than the traditional perpetual licenses. Businesses that carefully managed costs under the old model may feel pressured by recurring fees, potentially leading to dissatisfaction or exploring alternative solutions. Broadcom’s challenge will be to demonstrate enough value in the subscription model to justify the potentially higher ongoing costs.
What is the 3-year Commitment to Renewals (or 3-year Lock-in)?
The 3-year commitment to renewals relates to renewals of existing vSphere licenses. This requires users of vSphere to commit in advance for a three-year period, essentially ‘locking in’ costs and requiring an upfront payment. Previously, many customers renewed annually, providing more flexibility.
This has spiked a rise in businesses searching for VMware vSphere alternatives. While Broadcom controls its end of the deal, customers might be surprised to know that managing a migration from VMware isn’t as difficult as it may seem.
What This Means for Different Organization Sizes
Small and Medium Organizations
Broadcom’s strategy clearly targets large enterprise deployments. This creates questions for organizations with different needs, such as 2-node to 3-node clusters for business continuity, ROBO deployments in retail, manufacturing, and healthcare, edge computing for distributed applications, and cost-effective high availability (HA) at smaller scale.
The challenge is straightforward: if your infrastructure needs don’t match the enterprise scale that Broadcom is optimizing for, you need to evaluate whether you’re paying for a platform that’s designed for someone else’s use case. If you’re looking for a VMware alternative, StorMagic provides virtualization software designed for environments where simplicity and operational efficiency matter, especially at the small, edge, and distributed locations. You can migrate from VMware using StorMagic with minimal downtime, and automated deployment means you can roll out our software across your entire infrastructure without manual installation at every location.
How to Avoid the 3-year Commitment of VMware Licensing
Since the news of Broadcom’s changes in 2023, vendors have had time to develop and promote new solutions that offer an alternative to VMware products and licensing. To stay relevant, these vendors evolved quickly, demonstrating that they can deliver purpose-built, dependable, and cost-effective solutions.
To avoid the 3-year commitment of VMware licensing, search for purpose-built and cost-effective solutions that aren’t dependent on VMware. Preferably, a provider with demonstrable experience navigating IT infrastructures away from VMware licenses.
Now that Broadcom’s VMware licensing decisions have matured, there are many vendors offering alternatives. These vendors offer a lower total cost of ownership compared to VMware vSphere’s new subscription-based pricing. Ideally, they should include software utilities that simplify VM migrations from vSphere to their platform. Download a copy of the 2024-25 DCIG TOP 5 SMB/Edge VMware vSphere Alternatives Report to learn more about the leading vendors.
Looking Ahead: What to Expect
Current Status of the VMware Licensing Model
The VMware licensing model stabilized in 2025 with no new changes announced for 2026. However, organizations should stay informed about potential future adjustments.
The absence of announced changes doesn’t necessarily mean long-term stability. Broadcom has demonstrated a willingness to make significant adjustments based on business objectives. Staying aware of industry developments and maintaining open communication with your Broadcom account team helps you avoid surprises.
Ongoing Considerations
Renewal negotiations now work differently, with discount structures that have changed from the pre-acquisition era. Compliance verification through license true-ups continues and may be more rigorous.
Your renewal timing matters more than it used to. Understanding current discount availability, support policies, and contractual terms before your renewal date gives you time to evaluate options rather than making decisions under deadline pressure.
Evaluate all options by considering multiple platforms rather than defaulting to what you’ve always used. Choose flexible infrastructure that’s hardware-agnostic where possible, which gives you freedom to change without replacing storage or other components. Consider hybrid strategies where different platforms serve different needs based on what makes sense for each workload. This is something StorMagic has developed in 2026, with a wide range of compatible partner offerings available on the StorMagic partner solutions hub.
Use current pricing to base decisions on 2026 costs, not historical prices that no longer apply. Learn from others by connecting with organizations that have migrated or stayed with VMware to understand their experiences.
Lastly, infrastructure refresh cycles are natural points to reevaluate platform choices. If you’re buying new hardware anyway, it’s the ideal time to assess whether your virtualization platform still fits your needs.
