If your business runs virtualized infrastructure, and a lot of property management companies, hospitality groups, and clinics do, you have probably heard the noise about what happened to VMware licensing after Broadcom acquired the company. The questions I get are usually some version of the same one: is this actually going to cost me a lot more, and do I have to do something about it?
The honest answer for most small and mid-sized businesses is yes to the first part, and it depends to the second. Here is what changed and how to think about it without panicking or overreacting.
What Actually Changed
Broadcom completed its acquisition of VMware in late 2023 and restructured the product line quickly. The changes that matter to a small business:
- Perpetual licenses went away. VMware moved to subscription only. If you bought a perpetual license years ago and have been paying for support, that model is no longer offered going forward.
- The product catalog collapsed into bundles. A long list of individually purchasable SKUs was consolidated into a small number of packages. If you used one or two components, you now buy a bundle that includes a great deal you may not need.
- Minimum purchase requirements went up. Licensing moved to per-core with minimum core counts, and those minimums have been raised more than once. For a large data center this is noise. For a two-host cluster it can mean paying for substantially more capacity than you actually run.
- The free ESXi hypervisor was discontinued as a standalone free product, which affected a lot of small shops and test environments that quietly depended on it.
- The partner program was restructured, and many smaller resellers lost direct authorization. If you bought through a local vendor, your renewal path may not look the way it used to.
The practical result is that renewal quotes have come in higher for a lot of businesses, and the increase is sharpest at the small end, where the new minimums have the least to work with.
Why It Hits Small Businesses Hardest
Enterprise licensing is generally designed around large estates. When the minimum unit of purchase assumes a certain scale, everyone below that scale subsidizes the model.
Consider a clinic running two hosts with modest core counts, using vSphere for a handful of virtual machines: a practice management system, a file server, a domain controller, maybe a backup appliance. Under the old model they bought roughly what they used. Under a per-core model with high minimums, they may be buying for a footprint several times their real one, in a bundle containing components they will never turn on.
Nothing about that is illegitimate. It is simply a pricing model built for a different customer, and small businesses landed on the wrong side of it.
Your Realistic Options
There are four, and the right one is genuinely situational.
Renew, but negotiate properly. The first quote is not always the final number, particularly on a multi-year term. This is the lowest-effort path and it is the right answer more often than people expect, especially if your environment is stable and a migration would be disruptive.
Right-size first, then renew. A lot of environments have accumulated virtual machines nobody has audited in years. Consolidating onto fewer hosts, or onto hosts with different core counts, can change your licensing position meaningfully. Do this before you get quoted, not after.
Migrate to an alternative platform. Proxmox VE, Nutanix, Hyper-V, and XCP-ng all have real deployments behind them. For straightforward workloads the functional gap is much narrower than it was five years ago.
Move the workloads somewhere else entirely. Sometimes the honest answer is that the application running on that virtual machine should be a hosted service, and the hypervisor question disappears with it.
Migration Is Not Free, and Anyone Who Says Otherwise Is Selling Something
The alternatives are real, but switching hypervisors is a project, not an afternoon. Before you commit, account for:
- Backup and recovery tooling. Your current backup product may not support the new platform, or may support it with fewer features. This catches people late and it is expensive to discover late.
- Feature parity where it actually matters. Live migration, high availability, and storage integration all exist elsewhere, but they behave differently. If you depend on specific behavior, test it rather than assuming.
- Application vendor support. Some practice management, point of sale, and line of business vendors will only support their software on a named hypervisor list. This one is worth checking first, because it can end the conversation.
- The learning curve. Whoever administers your environment knows VMware. Competence on a new platform takes time, and the gap between “it runs” and “we can troubleshoot it under pressure” is where the risk lives.
- Cutover downtime. Planned, scheduled, and communicated is fine. Discovering it mid-migration is not.
What To Do Before Your Renewal
- Inventory what you actually have. Host count, sockets, cores per socket, and which VMware components you genuinely use. You cannot evaluate a quote without this.
- Get your renewal number early. Do not wait until the last month. Options narrow fast when the clock is short, and that is exactly when leverage disappears.
- Model three years, not one. Compare renewal against migration on total cost including the project work, not just the license line.
- Check your application vendors’ supported platform lists before you fall in love with an alternative.
- Pilot on something that does not matter. If you are seriously considering a migration, run a non-critical workload on the new platform for a while first.
How I Fit In
I am a consultant, not a VMware reseller and not a hypervisor vendor. I do not make more money if you renew and I do not make more money if you migrate, which is exactly why it is worth having someone like me look at it.
As a partner with OTG Consulting, I can also connect you with providers for the pieces you may need, whether that is a hosting platform, a backup solution, or a firm to execute a migration. OTG is a consultancy that presents these services rather than delivering them, so the delivery work is the provider’s. My part is telling you honestly what your options cost, what each one risks, and which one fits the business you actually run.
Do Not Wait Until Renewal Month
The businesses that handle this well are the ones that looked at it a couple of quarters early, when renewing, right-sizing, and migrating were all still live options. The ones that struggle are the ones who opened the quote three weeks before expiry.
Schedule a free consultation and we will go through what you are running, what your renewal is likely to look like, and whether staying put or moving is the better call for you.