The tech industry witnessed one of the most significant mergers in recent times in November 2023, with Broadcom’s acquisition of VMware. This historic deal, now known as “VMware by Broadcom,” immediately raised questions and sparked interest among customers and industry analysts. Indeed, in an ever-evolving technological landscape, the repercussions of such a merger extend well beyond the walls of VMware and Broadcom, directly affecting existing customers and the global market for cloud services and IT infrastructure. Amidst a sea of changes, including shifts in licensing policies and potential uncertainty about the continuity of products and services offered, a clear need emerges for organizations to carefully assess their options.
It is in this context that Microsoft emerges as a key player, offering alternative solutions that promise not only to mitigate the risks associated with this major acquisition but also to provide new opportunities for growth and innovation. With a wide range of cloud services, virtualization tools, and infrastructure solutions, Microsoft stands out as a solid reference point for those seeking stability and reliability in a rapidly evolving IT landscape.
This article aims to explore in detail the impact of Broadcom’s acquisition of VMware, highlighting the main concerns of customers and outlining how Microsoft’s proposed alternative solutions can represent a strategic way out for organizations facing this significant change.
Main Customer Concerns
The following paragraphs report the main concerns raised by customers following Broadcom’s acquisition of VMware.
Transition from Perpetual Licenses to Subscriptions
A significant change introduced by Broadcom involves the transition from perpetual licenses, once a cornerstone of VMware’s offering, to a subscription-based model. This move raises concerns about long-term costs, as the recurring expenses of subscriptions can accumulate and exceed the one-time costs of perpetual licenses. Moreover, there is fear that customers may lose control over software versions and be subject to additional costs for updates.
Lack of Price Transparency
Customers express concerns about the lack of transparency in the pricing structure post-acquisition. Broadcom has announced reductions in “unit cost” but without providing clear details, raising fears of hidden costs and included services not requested. This uncertainty makes it difficult for customers to predict their future expenses.
Risk of Product Discontinuity
Broadcom’s history of optimizing product portfolios through the elimination of less profitable offerings has fueled concern over the potential discontinuity of popular VMware products. A case in point was the announcement of the end of availability of the free hypervisor vSphere (ESXi 7.x and 8.x), which has created uncertainty and pushed customers to evaluate alternative solutions.
Reduced Choice and Vendor Lock-in
The elimination of some products and increased dependence on Broadcom’s offerings can limit customers’ options, increasing the risk of lock-in with a single vendor. This scenario raises concerns about a possible increase in costs and a reduction in bargaining power.
Concerns about Reduced R&D
There is a strong concern that Broadcom’s historically cost-cutting approach could limit investments in research and development (R&D), compromising the innovation that has characterized VMware’s success. Memories of past acquisitions, where Broadcom cut R&D budgets, fuel fears about the future competitiveness and vitality of VMware products.
Impact on the VMware Ecosystem
Forrester Research Prediction
Forrester Research has predicted that about 20% of VMware’s enterprise customers may decide to abandon the VMware stack, driven by concerns related to the acquisition. This significant percentage of customers is looking for alternatives to meet their needs in areas such as virtualization, cloud environment management, remote access for end-users, and hyper-converged infrastructure solutions.
VMware Product Strategy and Focus
VMware has responded by simplifying its product portfolio, focusing the offering on three main areas: VMware Cloud Foundation, VMware vSphere Foundation, and additional services. This simplification aims to make it clearer for customers the technological path to follow, maintaining unchanged integrations with major cloud providers such as Azure, AWS, and Oracle. Moreover, for smaller implementations, VMware has kept the vSphere Standard and the vSphere Essentials Plus Kit, offering accessible options without overwhelming customers with an overly broad range of products.
Pricing and Offers
Despite the changes, VMware maintains a constant in its pricing strategy and offerings, opting for a subscription model that allows customers to align costs with the actual use of the software. This approach includes:
- Subscription model: Allows paying for software based on actual use, aligning costs with real needs and avoiding large initial capital expenses (CAPEX). With terms of 1, 3, and 5 years, it offers the possibility to choose the duration of the subscription that best suits the organization’s needs and budget forecasts.
- Core-based pricing: Rates are determined by the number of CPU cores used by the virtual machines, ensuring a cost allocation proportional to the resources used. A key aspect of the pricing model is the minimum threshold, which is equal to 16 cores per CPU.
Microsoft’s Alternative Solutions
Microsoft emerges as a key partner for customers looking for alternatives, offering innovative solutions for the migration and modernization of IT infrastructure. With an approach focused on innovation and flexibility, Microsoft primarily proposes the following solutions that can meet different needs and scenarios.
Azure Stack HCI: Bringing Azure into your data center with a hybrid infrastructure
Azure Stack HCI is Microsoft’s solution for creating an efficient and modern hyper-converged (HCI) infrastructure, suitable for running workloads in an on-premises environment with tight integration with Azure services. This solution is designed to facilitate the modernization of hybrid data centers, allowing users to enjoy a cohesive and familiar Azure experience even on-premises. Azure Stack HCI aims to simplify IT infrastructure management while improving efficiency and operational agility. For a detailed exploration of the Microsoft Azure Stack HCI solution, I invite you to read this article or watch this video. Additionally, for scenarios where a constant connection cannot be guaranteed (“disconnected” scenarios), it is possible to foresee the implementation of virtualization, storage, and network management solutions that leverage recent and innovative technologies included in Windows Server. For the latter, the new version 2025 will soon be launched.
Figure 1 – Azure Stack HCI overview
Azure VMware Solution (AVS): VMware in Microsoft’s data centers for enterprise realities
Azure VMware Solution leverages VMware technology on Azure to maintain symmetry with on-premises VMware environments, thereby accelerating the migration of VMware workloads to the Azure cloud with minimal adjustments. AVS facilitates the management of a hybrid cloud environment, offering private clouds in Azure, built on dedicated Azure infrastructure and bare-metal. Managed and supported directly by the Azure team and validated by VMware, this solution frees organizations from managing infrastructure and software. AVS includes essential VMware licenses such as vSphere, vSAN, NSX, and vMotion (VMware HCX), significantly simplifying migration and integration with Azure. For more details on the solution, you can consult this article on How to natively run VMware workloads in Azure.
Moreover, the Azure VMware Solution was recently made available in the Azure region of Northern Italy. This expansion allows customers in Italy to seamlessly integrate their VMware workloads with Azure services, leveraging the global scale, security, and performance of Azure while maintaining the VMware tools and skills they are accustomed to.
Figure 2 – Azure VMware Solution (AVS) overview
A particularly relevant aspect for organizations using Windows Server 2012 and 2012 R2 systems is the continuity of support in terms of security updates. Azure VMware Solution offers a significant advantage in this area: Extended Security Updates (ESU) for these systems are available at no additional cost when run on Azure VMware Solution. The provision of free ESU in Azure VMware Solution removes a common concern among many organizations regarding the costs and complexity associated with maintaining older systems in a secure environment. This approach allows companies to plan their migration and modernization of workloads with greater peace of mind, knowing that their Windows Server 2012 and 2012 R2 systems will continue to receive the necessary security updates for another 3 years during the transition to more recent technologies.
Azure VMware Solution not only facilitates the migration and integration of VMware environments with the Azure cloud but also provides essential support for managing legacy operating systems, offering a secure path to technological innovation and modernization without compromising security or operational stability.
Azure IaaS and PaaS: Migration and Modernization with Azure
For organizations aiming for a more radical modernization, Microsoft proposes migration to Azure IaaS (Infrastructure as a Service) and PaaS (Platform as a Service). This strategy allows migrating, restructuring, and rewriting applications leveraging modern architectural models. Azure IaaS ensures the management and execution of applications on a reliable cloud infrastructure, with a focus on security and compliance. Azure PaaS options further accelerate application development, providing a rich variety of tools. These platforms facilitate the quick creation of applications, support for development across different platforms, and the use of advanced resources in a cost-effective manner thanks to a payment model based on actual use. Modernization with Azure IaaS and PaaS offers a smooth transition to a flexible infrastructure, eliminating the need for VMware licenses.
Figure 3 – Moving to Azure IaaS and PaaS
Conclusions
Broadcom’s acquisition of VMware represents a significant turning point for the tech industry, marking the beginning of a new era of uncertainty and opportunity. While this merger raises legitimate concerns among customers regarding the continuity of products, price transparency, and the safeguarding of IT investments, it also opens the door to new horizons of growth and innovation. In this context of change, Microsoft stands out as a reference point, offering robust alternative solutions that not only directly address the concerns raised by this situation but also provide an opportunity for organizations to renew and enhance their IT infrastructures with cutting-edge technologies. The solutions proposed by Microsoft, including Azure Stack HCI, Azure VMware Solution (AVS), and migration and modernization options with Azure IaaS and PaaS, represent a strategic response to the challenges posed by the acquisition. These offerings allow organizations to achieve operational continuity, flexibility, and access to an innovative ecosystem that supports growth and innovation.
