Improved multi-cloud data management has simplified operations and supports seamless KubernetesFrom my perspective, the biggest challenge with VMware right now is the pricing. To be very honest, in many cases I find myself recommending alternative solutions instead of VMware. Even if those alternatives come with a bit more complexity, customers are often more willing to accept that than the current VMware pricing model. In the past, VMware used a socket-based licensing model, which was easier for customers to understand and budget for. Now the shift to a core-based licensing model has significantly increased costs for many environments, especially for organizations running modern high-core CPUs. One positive aspect of the new model is that VMware has bundled several components together. For example, earlier when deploying vSphere, customers also had to purchase vCenter separately for management. Now multiple components are packaged into a single SKU, which simplifies some aspects of procurement and deployment. While this consolidation has its benefits, the overall licensing and commercial costs remain very high. Pricing is not the only issue. I believe Broadcom also needs to reconsider its strategy in light of the current market conditions. The approach they are taking may be strategic from a business perspective, but from what I see in the field, it is leading to lost opportunities. Many customers who previously relied on VMware are now actively exploring alternative virtualization platforms. I’m not sure where this direction will ultimately lead, but based on my experience, it is already affecting adoption. Since you’ve been trying to reach me for some time—and we also had a discussion a couple of years ago—I hope this feedback helps Broadcom understand the current sentiment in the market and potentially make adjustments. Another important concern is the way features are bundled. In many cases, customers only need basic virtualization and high availability capabilities. However, the current packaging often includes additional features that they may not need. A good analogy is that if a customer only needs an entry-level car, we shouldn’t be forced to sell them a Rolls-Royce. VMware could benefit from adopting a more modular or à la carte licensing model, where customers can choose only the components they truly require. For example, if a customer only needs core virtualization functionality, they should be able to purchase just that. This would allow partners and solution providers to better align solutions with customer requirements and position VMware more competitively in the market. Another challenge I want to highlight is the pricing model based on U.S. dollars and the way multi-year licensing is handled. In many enterprise and government projects, customers prefer to commit to three-year or five-year licenses and pay the full amount upfront. However, in approximately 20% of the deals I work on, we lose opportunities because VMware only provides dollar-based pricing for the first year. When it comes to the following years, the contract requires renewals annually rather than allowing a fixed multi-year upfront payment. This approach is particularly problematic for government and public sector customers. Many of them are ready and willing to pay for three or five years in advance, but the current VMware model does not support that structure effectively. Because pricing is tied to the U.S. dollar and subject to yearly adjustments, VMware does not lock in pricing for the full term. From a customer’s perspective, this introduces uncertainty and makes procurement more complicated. Ideally, if a price is quoted—for example, $100 per year—it should remain consistent across a multi-year agreement. Customers would be comfortable committing to a five-year term if the price were fixed and predictable. Unfortunately, that flexibility is currently not available across VMware products, whether it is vSphere, VMware Tanzu solutions, or other offerings. For large enterprise environments, one-year commitments are usually not practical. Many enterprise customers prefer longer-term agreements for budgeting and procurement reasons. Even when they are willing to accept the higher cost associated with the core-based licensing model, the lack of a clear multi-year upfront option often becomes a deal-breaker.
