Broadcom's Acquisition of VMware: Impact on Businesses & Alternatives

The Acquisition's Impact on Licensing Costs

Broadcom acquired VMware in November 2023 for approximately $61 billion. This acquisition has raised concerns about potential increases in licensing costs and changes to the licensing structure, which have been substantiated.

Reported examples of these increases include:

• AT&T: AT&T indicated that Broadcom proposed a price increase of 1,050%.
• Veeam: Veeam reported a 300% price increase in the VMware products it uses.
• CloudBolt: CloudBolt customers cited price increases ranging from 140% to 600%.

Additionally, Broadcom announced that it would no longer offer perpetual support renewals or contracts for VMware perpetual licenses. Businesses with active perpetual licenses can continue using them, but they will need to transition to a subscription model once their current contract expires to receive continued support or updates.

Exploring Non-VMware Hypervisors as Alternatives

For smaller organizations with limited budgets, absorbing the price increases is not feasible. Consequently, many customers have started exploring non-VMware hypervisors as alternative solutions.

Benefits of Azure Local

Customers with Microsoft environments holding Windows Server Datacenter licenses with active Software Assurance, needing to remain on-premises might consider Azure Local. As announced at Microsoft Ignite 2024 in Chicago, Azure Stack HCI has been rebranded to Azure Local. Unlike a traditional Hyper-V cluster, Azure Local is designed with tighter integration to the Microsoft cloud. Examples include:

• Azure Arc Integration: Connect your Azure Local instances to Azure Arc, allowing you to manage and operate physical machines like cloud resources. This includes lifecycle operations such as deployment, configuration, updates, and monitoring.
• Azure Monitor: Integrate Azure Local with Azure Monitor for unified observability across cloud resources and distributed locations. You can monitor your distributed VMs, Kubernetes clusters, and physical infrastructure from a single pane of glass.
• Azure Backup and Site Recovery: Implement Azure Backup and Azure Site Recovery to ensure robust disaster recovery and business continuity. This helps protect your data and applications in case of a disaster.
• Azure Virtual Desktop: Deploy Azure Virtual Desktop on your Azure Local instances to provide remote access to virtual desktops and applications.
• Azure Kubernetes Service (AKS) Enabled by Azure Arc: Run Kubernetes clusters on your Azure Local instances and manage them through Azure Arc. This allows you to deploy containerized applications seamlessly.
• Azure Policy and Security: Apply Azure policies and integrate with Microsoft Defender for Cloud to enhance security and compliance across your distributed infrastructure.
• Infrastructure as Code: Use Azure Resource Manager (ARM) templates and Bicep templates to define and deploy your Azure Local configuration consistently at scale.

Customers with Windows Server Datacenter licensing with Software assurance, can exchange 1-core license of Software Assurance-enabled Windows Server Datacenter for 1-physical core of Azure Local. This exchange waives the Azure Local host service fee and the Windows Server guest subscription fee on your system. Effectively this offers customers substantial cost savings.

Migrating from VMware to Azure Local

Right before the announcement at Ignite, Microsoft also released a preview of Azure migration from VMware environments to Azure local. So now, customers have a roadmap on how to copy and activate virtual machines from one standard to another.

In summary, Boradcomm has placed many customers challenging position, and for those looking for hypervisor alternatives and need to remain on premise (governance, network latency, etc.), Azure Local should be considered. If you would like to discuss this on-premise option, please reach out to the Rutter sales team for assistance. 

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