VMware. A name synonymous with virtualization, a powerhouse in the infrastructure space and seemingly the enterprise standard for those managing VMs, to put it simply. But if you haven't noticed yet, behind that familiar name is a new age of license complexity, unexpected renewals, and sharp price hikes that have left many organizations scrambling. Since Broadcom acquired VMware, these challenges have only intensified, with customers blindsided by costs increasing several hundred percent overnight.

In this post, we'll dig into the real costs of running VMware, where the hidden expenses lie, and why so many teams are reconsidering whether VMware is still the safe bet it once was.

The Myth of Predictable Licensing

Broadcom's $61 billion aquisition of VMware ranks among the largest deals in tech history. Since the acquisition, it's impossible to talk about your VMware bill without mentioning the 'Broadcom tax'. According to The Verge , "the company focuses on subscriptions and its most lucrative customers to increase annual revenue". In other words, VMware is squeezing more out of large enterprises that can afford it, and forcing out those that can't. While contract pricing increases seem inevitable, that's not the only thing that makes a VMware bill unpredictable.

As the company moves from a perpetual license model to subscription-based pricing, it's forcing the hands of users across the board. A combination of forced upgrades, raised renewal costs, late renewal fees, and bundled offerings that fail to match user needs is leaving many companies in a difficult spot. And they haven't just raised prices; they've made predicting future costs an even bigger headache.

Licensing Complexity: CPU vs Core, Bundles, and Minimums

Let's dive into the bare bones of their licensing complexity. Historically, perpetual licenses were tied to CPUs, which made costs more predictable. But the shift to subscription models has pushed many customers onto per-core pricing, which can make modern, high-density servers far more expensive to operate.

Broadcom has added to the pressure by introducing license minimums such as a 72-core floor, even if your hardware has fewer cores, and by discontinuing entry-level offerings like Essentials Plus, which once provided smaller organizations with an affordable entry point. On top of that, VMware's new bundled packaging often forces customers to pay for features they don't need, inflating costs without delivering extra value, as reported by ZIMCOM.

Cost Escalations & Hidden Fees

From customer anecdotes and widespread reporting, it is easily confirmed that most VMware contracts are skyrocketing, but by how much might shock you. Many organizations are reporting renewal increases of 200% - 500%, while some enterprises have been hit with 1,000%+ hikes. In Europe, IT pro claims Broadcom's new licensing terms have pushed costs up as much as 1,500% for certain customers.

Beyond the raw license costs, hidden fees have also become a growing concern. Minimum core requirements, the forced bundling of products, and mandatory support contracts mean companies are often paying for much more than they did before. What was once a predictable line item in IT budgets has turned into a volatile and inflated expense, leaving many teams scrambling to reevaluate their infrastructure strategy.

Alternatives to look at
Teams, small and large, are left with a bill in their hands and are not sure where to turn. Yet, solutions remain for those willing to explore their options. Read our blog on top 5 VMware alternatives for a more in depth break down, and here are a few that may be worth looking into:

Cycle.io - Cycle takes a modern approach to orchestration and DevOps. With Cycle, teams can deploy applications directly onto infrastructure (cloud or bare metal) through a unified platform that handles orchestration, scaling, networking, and security out of the box. Unlike VMware, which often requires stacking multiple products and add-ons (vSphere, vCenter, NSX, Tanzu, etc.), Cycle consolidates these functions into a single system with far less complexity.

Proxmox VE - An open-source virtualization platform that combines KVM-based virtual machines and LXC containers under one management interface. Proxmox has grown popular with small to mid-sized teams thanks to its no-nonsense setup, flexible storage support, and the fact that licensing is optional (support subscriptions are available, but not mandatory).

OpenStack - A more heavyweight, enterprise-grade solution, OpenStack is an open-source cloud platform that enables organizations to build their own IaaS environments. It's powerful and flexible but comes with a steeper learning curve, making it best suited for large enterprises or service providers with the resources to manage and operate it effectively.

Regulatory and Industry Backlash

The fallout from the VMware/Broadcom inflation isn't just an inconvenience for IT teams around the world; it is becoming a legal issue. Those in Europe are digging into the drastic and seemingly unfair price hikes. Cloud Infrastructure Service Providers of Europe, or CISPE, stated in WSJ , "Its actions should be seen as those of a dominant player as it forces 'take it or leave it' terms on customers." The backlash doesn't end there. Many are calling for regulatory backlash against the recent changes. Many are expressing their backlash by migrating from VMware to other solutions.

Conclusion

While this is far from the end for VMware, the actions of Broadcom have left a bad taste in the mouth of the IT world. As a dominant player forces its decisions on the ecosystem, it puts a lot of companies in a tricky position. Those that are able will look for alternatives, but others need to wait out their current contracts or will get hit with late renewal fees and who knows what else.

Cycle has thrived on the idea of transparency with our customers. From our road map to our pricing, we are always straightforward with our expectations. We believe that if you treat your customers right, they will do the same in return. It has been great connecting with those in the VMware ecosystem, and as we look to make the product more diverse, our customers will feel the impact directly with no surprises.