In response to customer feedback and amid increasing scrutiny from the industry and now regulators, Broadcom CEO Hock Tan has announced a major rollback to 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 acquisition of VMware in November 2023.
Since then and under its new leadership, VMware's portfolio has undergone significant changes, including the termination of perpetual licenses that left a sour taste in the mouths of many longtime customers.
in a advertisementTan highlighted the company's intention to move towards simplicity and cost-effectiveness, noting that the previous pricing structure for VMware and its customers was complex and expensive.
Tan also acknowledged that the company's move toward a subscription-based model had left perpetually licensed customers unsupported. However, in an effort to appease disgruntled users, Broadcom has now confirmed that it will provide “free access to zero-day security patches for supported versions of vSphere,” and that more products will receive similar treatment over time.
The CEO said this was to recognize that “the rapid change[s] may require more time,” indicating that customers had expressed concerns about balancing expenses between capital and operating expenses.
Still, Broadcom remains committed to transitioning VMware to a subscription-based company, stating that work began in 2018, long after many rivals had already done so.
In addition to pledging to support VMware services with “billions of dollars in new investments,” Tan also announced that VMware Cloud Foundation (VCF) would experience dramatic price reductions.
A spokesperson for the European Union stated (via Reuters): “The Commission has received information suggesting that Broadcom is changing VMware's software licensing and support terms.”
Now, according to the report, EU antitrust regulators are asking Broadcom about changes to VMware's new licensing conditions.
