US-based semiconductor company Broadcom unveiled important changes this week regarding its engagement with customers and partners in relation to VMware products, amidst a looming investigation by the European Union (EU) concerning their software licensing and support approach for this vital cloud-infrastructure software.
The European Commission (EC) has called upon Broadcom to furnish information for the investigation into their modification of VMware software licensing and support conditions, as confirmed by a spokesperson of EC to Network World earlier this week.
This inquiry aligns with an announcement delivered on Monday by Broadcom’s President and CEO, Hock Tan. Under the shadow of potential disgruntled VMware clients, Tan moved towards placating customers by extending support and explaining in detail the future manner in which VMware products and support will be provided.
Tan explained in a blog that their renewed engagement strategy with cloud vendors is intended to allow customers complete autonomy to transfer their workloads between their own data centers and cloud providers.
Following the acquisition of VMware by Broadcom in the previous November, Broadcom has simplified the VMware solutions into two main packages: VMware Cloud Foundation (VCF), furnishing compute, storage, networking, management, and support services for seamless infrastructure and operations throughout clouds; and VMware vSphere Foundation, or VVF, extending enhanced compute, operational, and management services for clientele for managing across VMs and containers without the requirement of a full stack.
The modifications revealed by Tan on Tuesday incorporates a standardization in the metric for pricing services across cloud providers to per-core licensing – a metric identical to that employed in end-user licensing, and also offers license transferability for VCF.
Tan emphasized in his post, “This ensures that customers will not confront any licensing discrepancy as they transit between providers and will evade transition and supplementary licensing expenditures.”
Further, the VCF will now be accessible “at half the catalog price in comparison to previous pricing” as a default technology stack for cloud providers to render the same technology and support experience across all of them, stated Tan, though he refrained from delineating the pricing.
VMware is set to finalize its shift towards a subscription model, offering up-to-date product versions and support for a fixed term, a change initiated in 2018, well before Broadcom’s acquisition plans were revealed, as per Tan’s statements.
Moving to the subscription model won’t influence the use of existing perpetual licenses by customers, including those for previously licensed older versions of vSphere, Tan added. Clients can choose to subscribe to one of the new offerings for VSphere maintenance and support. Yet, in case they don’t choose subscription, free access to security patches for supported vSphere versions will still be theirs.
The ongoing EC investigation into VMware’s licensing practices is just another challenge Broadcom has to face ever since its announcement to acquire the company in May 2022. This has been a Herculean task for Tan and his team since the beginning, spurring criticism from many customers.
Broadcom had to wait 18 months to secure all necessary approvals to seal the deal of $61 billion acquisition. Post-finalization, Broadcom laid off numerous employees, sold business chunks, and subsequently modified licensing terms in a way that was expensive for customers.
Broadcom made a sudden declaration in late December, bringing to an end all of its partnerships with VMware resellers and service providers. This decision imposed partners to regain their positions. This move from Broadcom, though disturbing, wasn’t a complete shock. Tan had been fairly candid with his intentions for the firm since the moment of acquisition.
These final moves, however, were the tipping point for some European cloud providers. Members of the CIPSE.cloud trade organization based in the EU, which incorporates Amazon and 26 other smaller cloud providers, have collectively penned an open letter in March. They addressed regulators questioning Broadcom’s decisions. The cloud providers argue that the “harsh contract termination and the enforcement of inhibiting new license terms” for crucial cloud software will devastate Europe’s cloud infrastructure.
A representative for CIPSE expressed that the group is still coordinating with members and other connected parties to resolve the software license terms deemed as “unfair.” Numerous potential measures are under contemplation. CIPSE has refrained from commenting directly on Tan’s blog post.