Broadcom's Acquisition of VMware
In November 2023, Broadcom acquired VMware, a leading provider of hypervisor technology. In the short time since the acquisition, we have seen an increase in pricing, as Broadcom had previously made it clear of their intention to maximize their returns on this investment by raising VMware prices. However, for some, this increase has become too great of a burden to accept.
After reviewing the new Broadcom pricing model and exploring different market alternatives, we feel that there are several cost-effective approaches for reconfiguring our customers’ virtual environments to achieve high-quality solutions without necessarily resorting to a rip-and-replace strategy.
Before we dive into the specific changes, let us first review what a hypervisor is.
What is a Hypervisor?
A hypervisor, also known as a virtual machine monitor (VMM), is software that allows multiple operating systems to run on a single physical machine by creating and managing virtual machines (VMs). In short, it lets you run multiple virtual machines on one physical machine, saving both money and resources.
What Has Changed?
Many of our customers have already implemented VMware Essentials or Essentials Plus. As a point of reference, Essentials Plus was roughly $6,000 for the initial investment, with an additional $1,000 in annual support costs. VMware also offered more feature-rich products, such as VMware Standard and Enterprise Plus, along with several cloud offerings.
However, Broadcom has simplified VMware licensing in the following ways:
- Removed perpetual licensing: VMware now only provides subscription-based licenses. To keep software functionality, a paid subscription must now be in place.
- Added new alternatives: For most of our customers, VMware is offering these four alternatives:
- Essentials Plus (3-host, 96-core solution)
- Standard
- vSphere Foundation
- Cloud Foundation
- Based the new conventions and pricing on the number of cores and CPUs.
Findings From a Real-World Example
One of our customers had a vSphere Essentials Plus configuration. Before the pricing model changed, they would have paid $1,000 per year for licensing and support. Now, with the new model, this would cost them $4,800 per year MSRP (manufacturer’s suggested retail price), an increase of almost 5x.
By changing our approach and switching to vSphere Standard, we could supply our customers with a proxy for their current environment at $1,984 versus the previous cost of $1,000. This is still about a 100% annual cost increase, but when comparing the cost of changing to a different hypervisor, it was more cost-effective.
What Other Options Are Available for Hypervisors?
Most of our customers run Windows VMs on top of their VMware hypervisor. Without going into every detail, it is safe to say that we can convert from VMware to Microsoft Hyper-V. Another option is to move to a different platform such as Nutanix, Proxmox VE, RedHat OpenShift, or Oracle Linux. An additional option to consider is moving some (or even all) your workloads to Microsoft 365 and Azure.
What to Consider Before Moving to a New Hypervisor?
Beyond performance and manageability, we suggest reviewing these two critical points of discussion:
- Backups: Whatever backup solution you use must support “agentless” backups for VMs, as it is necessary for ease of system restoration. We will assist with reviewing the compatibility of your hypervisor with the various options for backup systems.
- Supportability: Your hypervisor supplier must offer a contact for support issues. Partners like Digicorp have trained engineers but need the knowledge of the hypervisor developers’ support in some cases.
Help Us Help You!
The use of hypervisors has been going on for years. The recent marketplace changes with VMware may force us to consider other options, but we stand ready to serve as your committed partner and review all your different options with you.
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