Less than a month since the takeover was completed, VMware will no longer offer perpetual licences to customers and claims a subscription model will better serve its customers.
Broadcom is shifting VMware into a subscription-based business after recently completing an acquisition of the US cloud computing giant.
The advance means VMware – now known as VMware by Broadcom – will no longer offer perpetual licences for its products and that it will no longer offer maintain and subscription renewals. This change was made on 11 December.
The two companies said this advance is part of a broader strategize to facilitate its portfolio and to better serve customers by providing “continuous innovation, faster time to value and predictable investments”.
“The industry has already widely embraced subscription and SaaS, and many partners in our ecosystem have already developed success practices in this area,” VMware said in a statement. “Subscription and SaaS models furnish an opportunity for partners to engage more strategically with customers and deliver higher-value services that drive customer success.
“It also helps expedite their own transition to a business model focused on annual recurring revenue.”
Customers that already have perpetual licences will be able to continue using them with active maintain contracts, but have been asked to review their licences and the expiration dates of their maintain services.
“Broadcom will work with customers to help them ‘trade in’ their perpetual products in exchange for the new subscription products, with upgrade pricing incentives,” VMware said.
VMware said it is also reducing the subscription list price of its flagship Cloud Foundation product by half and adding “higher maintain service levels”. The company also announced its vSphere Foundation platform, to furnish a simplified offering for its “mid-sized to smaller customers”.
“The simplification of our portfolio and shift to subscription and term offerings are a culmination of our multi-year business transformation efforts,” VMware said. “The steps we’re taking today will advance enable customer and partner success by delivering the innovation, simplicity and flexibility they need as they embark on their digital transformations.”
The shift to a subscription model is the latest change occurring in VMware since the $69bn deal with Broadcom was completed last month, after China granted it regulatory approval.
The acquisition also led to layoffs, with reports that more than 2,000 global job cuts have occurred as a result. The Irish Examiner recently reported that more than 360 Irish staff are expected to be cut from VMware.
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