VMware's pricing changes: Radical simplicity or customer pain?

Gartner told Silverlinings this week that VMware’s recent moves to greatly simplify the company’s cloud portfolio and move to annual subscriptions, rather than perpetual licenses, following its $61 billion acquisition by chip designer Broadcom will create major challenges for VMware’s enterprise customers.

Krish Prasad, SVP of the VMware Cloud Foundation Division, wrote in a company blog about the drastic changes to VMware’s sales model going forward. He wrote that the new subscription model will lead to predictable investments, faster “time to value”, and sustained innovation.

VMware initially promised to switch to a subscription model in February 2022.

Despite’s VMware’s positive spin, Gartner believes that this policy will also create significant issues for customer, analyst Andrew Lerner told us in an email. 

“VMware sales and channels have been warning customers regarding the end of perpetual licenses for several months now,” Lerner writes. “Consequently, VMware customers have expressed several major valid concerns over the loss of perpetual for a variety of valid reasons, including: changing away from a licensing model they’re familiar and comfortable with, misalignment with existing budgeting requirements, inability to sweat assets and having to negotiate renewals more often.”

Possibly not quite the field of cloud dreams that VMware portrayed, right?

Customer fears are “fueled by prior Broadcom behaviors post acquisitions of Symantec, Brocade and CA,” Lerner stated.

Time to change?

Potential alternatives to vSphere vary in terms of technical and commercial suitability, the Gartner analyst told us. As the firm itself has said, these include the Nutanix Cloud Platform and Red Hat Virtualization.

“We expect that most enterprise-scale Gartner clients would take between 18 and 48 months for a large-scale migration from VMware’s server virtualization platform,” he said. “Although a full migration would take 18 to 48 months, organizations can mitigate substantial risk in 12 months.”