Broadcom is backing away from VMware’s pricing rules as the EU begins an investigation into complaints
In response to customer feedback and amid mounting criticism from the industry and now regulators, Broadcom CEO Hock Tan has announced a significant decline in the company’s pricing model.
The move comes as the European Union launched an investigation into complaints about the company’s pricing practices following its November 2023 acquisition of VMware.
Since then and under his new leadership, VMware’s portfolio has undergone significant changes, including the termination of perpetual licenses, which left a bitter taste in the mouths of many existing customers.
In a announcementTan emphasized the company’s intention to move towards simplicity and cost-effectiveness, noting that the previous pricing structure of VMware and its customers was complex and costly.
Tan also acknowledged that the company’s move to a subscription-based model had resulted in customers with perpetual licenses no longer being supported. However, in an effort to pacify disgruntled users, Broadcom has now confirmed that it will “provide free access to zero-day security patches for supported versions of vSphere,” with more products receiving similar treatment down the line.
The CEO said this was to recognize that “fast-moving changes may take more time”, indicating that customers had expressed concerns about balancing expenditure between capital and operational expenditure.
Still, Broadcom remains committed to VMware’s transition to a subscription-based company, claiming work began in 2018, long after many rivals had already done so.
In addition to his pledge to support VMware services with “billions of dollars in new investments,” Tan also announced that VMware Cloud Foundation (VCF) would see dramatic price reductions.
This is what a spokesperson for the European Union says (via Reuters): “The Commission has received information indicating that Broadcom is changing the terms of VMware’s software licensing and support.”
According to the report, EU antitrust regulators are now investigating with Broadcom information about changes to VMware’s new licensing terms.