VMware customers take wait-and-see approach amid Broadcom changes

Meanwhile, moving to a subscription pricing model makes sense for both VMware and its customers, Tan wrote. Customers that paid for older perpetual licenses can continue to use the older vSphere versions they purchased, he said.

“Subscription licensing is the model all major enterprise software providers deploy today and ensures that customers have the latest and greatest in VCF while providing the kind of predictability needed to fuel continuous innovation for our customers,” Tan wrote.

Tan’s clarifications regarding Broadcom’s strategy and pricing for VMware came amid customer backlash and questions from the European Union regarding how the company has handled licensing and support.

Difficult negotiations

Despite the new licensing terms, it’s too soon to see whether customers will eventually abandon VMware in large numbers. But many companies are seeing significant price increases, says Hubert Selvanathan, partner at digital consulting firm West Monroe.

VMware customers should expect to engage in protracted negotiations, leading to delays, when their VMware licenses come up for renewal, he adds. The number of eventual non-renewals will depend on individual customer needs, including views of competing products and the associated switching costs, he says.

With Broadcom seemingly focused on the large enterprise market, VMware may see the largest number of lost customers in the small to midsize business space. “Taken in conjunction with an anemic economy, there is certainly a heightened potential for customer churn in that segment,” Selvanathan says.