How vSphere and vSAN Changed Under Broadcom
For the two decades prior to Broadcom's acquisition, VMware vSphere and vSAN were available as individual, granular products. Enterprises could purchase vSphere Standard, vSphere Enterprise Plus, vSAN Standard, vSAN Advanced, or vSAN Enterprise as standalone products, mixing and matching tiers across their infrastructure based on actual capability requirements. A compute-only environment used vSphere without vSAN. A storage-only environment could theoretically be deployed without upgrading its compute licensing. Customers paid precisely for what they needed.
Broadcom ended this model in December 2023 as part of its "drastic simplification" of the VMware portfolio. The granular product family was consolidated into two primary bundles: VMware Cloud Foundation (VCF) and VMware vSphere Foundation (VVF). vSphere Standard was announced for discontinuation from July 2025. The practical effect is that most enterprises now have a binary choice at renewal: VCF (the full stack at premium price) or VVF (the reduced stack at lower price).
Simultaneously, all perpetual VMware licences were discontinued in 2024. Broadcom ceased selling new perpetual licences for any VMware product. Customers who had purchased perpetual vSphere licences found themselves with a choice at their SnS renewal: convert to subscription or lose support access for their current environment. The elimination of perpetual licensing is the single most commercially impactful change Broadcom has made to VMware's commercial model.
vSphere Foundation (VVF): The Entry Subscription
VMware vSphere Foundation represents Broadcom's entry-level enterprise subscription for organisations that need compute virtualisation and basic storage capabilities. It is the closest successor to the vSphere + vSAN combination that many enterprises deployed before the acquisition.
What VVF Includes
vSphere Foundation includes vSphere (ESXi hypervisor and vCenter Server), vSAN Standard (software-defined storage at the baseline tier), and Aria Suite Standard (cloud management automation). The inclusion of vSAN Standard means that VVF customers are paying for software-defined storage even if they run their VMs on external SAN or NAS storage arrays. This is the "forced bundling" problem in its most direct form: customers with traditional storage are paying for vSAN whether they use it or not.
vSphere Foundation also includes basic Tanzu functionality for Kubernetes workloads, though advanced Tanzu capabilities require VCF Advanced or higher. For organisations running containerised workloads on Kubernetes, the Tanzu inclusion may provide value; for those running only traditional VM workloads, it is another component in the bundle with no immediate use.
VVF Pricing and Cost Impact
VVF is priced per physical CPU core per year on a subscription basis. List pricing typically falls in the $20 to $40 per core per year range, subject to term length, volume, and negotiated discounts. At the midpoint of $30 per core per year, an environment with 500 licensed cores incurs $15,000 annually — before the 72-core minimum applies, before mandatory non-production licensing is addressed, and before annual escalators are factored in over a multi-year term.
For enterprises that previously paid for vSphere Enterprise Plus perpetual + SnS at approximately $400 to $600 per socket per year (two sockets per server, 12 to 16 cores per socket), the equivalent subscription cost under VVF has increased from $200 to $400 per year per core-equivalent to $30 per core per year — representing a 3 to 5 times increase in annual spend. This is the support cost multiplier effect that is consistently observed across our advisory client base.
VMware Cloud Foundation (VCF): The Full-Stack Subscription
VMware Cloud Foundation is Broadcom's premium infrastructure product. It represents the full software-defined infrastructure vision that VMware had been building toward for over a decade, now packaged as a mandatory subscription bundle for enterprises that need any of its constituent capabilities.
What VCF Includes
VCF Standard bundles vSphere, vSAN (at enterprise capability level), NSX (software-defined networking, including micro-segmentation, distributed firewall, and network virtualisation), and Aria Suite Standard for cloud management. VCF Advanced adds Aria Suite Enterprise, Aria Automation, and additional multi-cloud management capabilities.
The inclusion of NSX in VCF is the defining difference from VVF and the primary driver of VCF's premium price. NSX is a capable, sophisticated network virtualisation platform that delivers material security and operational benefits for organisations that actively deploy it. However, many enterprises that deployed standalone NSX before the acquisition used only a subset of its capabilities, and some used it solely because it was bundled with other VMware products at a competitive price. Under VCF, NSX is mandatory for all customers, regardless of whether they use it at all.
VCF Pricing and Cost Impact
VCF is priced higher than VVF, typically in the $40 to $80 per core per year range at list. The premium over VVF reflects the inclusion of NSX, which was previously priced at $30 to $80 per VM or per port as a standalone product. For organisations that were running NSX Advanced or Enterprise before the acquisition, VCF pricing can actually represent a cost reduction compared to what they were paying for vSphere + vSAN + NSX separately. For organisations that were running vSphere + vSAN without NSX, VCF pricing represents a significant cost increase.
The most commercially exposed enterprises under VCF are those that: used vSphere Enterprise Plus with traditional (non-vSAN) storage and no NSX deployment. These organisations are now forced into a bundle that includes both vSAN (which they do not use because they have SANs) and NSX (which they have never deployed), at a price significantly above their previous vSphere-only spend.
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We build independent cost models with real negotiated pricing benchmarks.The vSAN Bundling Problem
vSAN has historically been one of VMware's strongest products — a genuine technology advantage that enabled software-defined storage on commodity hardware. Under the pre-acquisition model, organisations that wanted vSAN paid for it. Those that did not want it did not.
Under both VVF and VCF, vSAN is included in the base subscription whether or not the organisation uses it. For enterprises running VMware on traditional SAN storage from Pure Storage, NetApp, HPE, or Dell EMC, vSAN provides no operational value. Yet they are paying for it as part of their mandatory subscription.
The vSAN bundling problem is compounded by the fact that enterprises with existing storage investments have no practical path to exclude vSAN from their licence. Broadcom's product strategy does not offer a compute-only vSphere subscription that excludes storage software. Organisations that want the most cost-effective VCF or VVF subscription must accept vSAN as part of the package.
This is creating a secondary market effect: some enterprises are evaluating whether to deploy vSAN on their existing hardware (to extract value from the licence they are paying for) or to migrate storage workloads away from their existing arrays at refresh. The economic argument for vSAN adoption is strong for enterprises renewing VMware subscriptions — they are paying for it regardless, so not deploying it represents pure waste.
The 72-Core Minimum: Who It Hurts Most
From April 2025, Broadcom enforces a 72-core minimum per subscription order. Additionally, each physical CPU is counted as a minimum of 16 cores, regardless of actual core count. These rules interact in ways that disproportionately penalise specific infrastructure profiles.
The 72-core minimum primarily affects small clusters, branch office deployments, and test environments. A typical three-node vSphere cluster for a branch office might run three servers with dual 12-core processors, totalling 72 physical cores — exactly at the minimum. A two-node cluster with the same processors would have 48 physical cores but would require a 72-core subscription, overpaying by 50 percent.
The 16-core-per-CPU minimum primarily affects environments that have not refreshed hardware recently and are running older processors with lower core counts. A four-socket server running quad-socket 8-core processors has 32 physical cores, but under Broadcom's counting rules, each CPU counts as 16 cores, requiring a 64-core subscription even though only 32 cores exist. Combined with the 72-core minimum, this server requires a 72-core subscription.
The compounded effect of these minimum rules on small environments can be severe. We have assessed environments where the effective licence cost per physical core is 3 to 4 times higher than for a large enterprise deployment, solely due to minimum requirements creating mandatory over-licensing.
Non-Production Environment Licensing
One of the most frequently misunderstood aspects of VMware's pre-acquisition licensing was the non-production discount programme. Under the perpetual model, many enterprises licensed test, development, and DR environments at significantly reduced rates — sometimes 10 percent of production licence cost. This made it economically straightforward to maintain non-production VMware environments at scale.
Under Broadcom's subscription model, non-production licensing requires explicit subscription coverage. The non-production discount programme has been restructured, and the effective discount available for non-production environments has decreased significantly for many customers. Enterprises that previously ran large test and development environments under favourable non-production terms are now facing full or near-full subscription rates for these environments.
This is contributing to accelerated rationalisation of test and development infrastructure — either migrating non-production workloads to alternative hypervisors (Nutanix AHV, KVM, Hyper-V) where licence costs are absent, or to cloud environments where consumption-based pricing aligns better with intermittent non-production usage patterns.
vSphere 7 End of General Support: The Upgrade Forcing Function
VMware vSphere 7 reached its end of general support on April 2, 2025. For organisations still running vSphere 7 — which includes a significant portion of the VMware installed base that deferred upgrading while evaluating Broadcom's direction — this creates a support decision point that intersects with the subscription conversion question.
Continuing to run vSphere 7 beyond its end of general support without active vendor support requires either a third-party support arrangement or operating in an unsupported state. Organisations on vSphere 7 perpetual licences that have not converted to subscription face the choice of: converting to a VCF or VVF subscription (and accepting the cost increase) to maintain support on a supported version, engaging third-party support to maintain the current vSphere 7 environment, or accelerating migration to an alternative platform.
The vSphere 7 end-of-support date is Broadcom's most powerful forcing function for conversion: organisations that were waiting to make a decision about Broadcom's subscription model must now act, because remaining on unsupported software is not an acceptable long-term position.
Nutanix: The Primary Alternative to vSphere and vSAN
Nutanix is the most direct strategic alternative for enterprises evaluating exit from VMware vSphere and vSAN. Nutanix provides a hyperconverged infrastructure platform that combines compute virtualisation (via the AHV hypervisor, included at no additional licence cost), software-defined storage, and cloud management in a subscription model that, for comparable enterprise capabilities, is typically priced competitively with VVF and materially cheaper than VCF.
Nutanix Technical Parity Assessment
For most enterprise VM workloads, Nutanix AHV delivers comparable performance to vSphere. The areas where vSphere retains technical advantages include: the depth and maturity of the vSphere management ecosystem (vCenter, vSphere Lifecycle Manager, vSphere Distributed Switch), extreme vSAN advanced capabilities (stretched clusters, Metro availability, VVols), and breadth of third-party integration for monitoring, backup, and DR tooling.
Nutanix's advantages over VMware under Broadcom include: the AHV hypervisor is included at no additional cost (unlike vSphere which requires a VCF or VVF subscription), Nutanix's pricing has been stable relative to Broadcom's post-acquisition increases, and Nutanix's investment in migration tooling (Nutanix Move) and professional services has made the technical barrier to migration lower than it was three years ago.
Nutanix Migration Economics
A migration economic model for a 500-core VMware environment moving to Nutanix should include: the annual licence delta (VMware VVF at $30 per core per year equals $15,000 annually; Nutanix at comparable pricing might be $12,000 to $18,000 annually depending on configuration), the one-time migration cost (professional services labour, migration tooling, application testing, downtime management — typically $200,000 to $600,000 for a 500-core environment depending on complexity), and the ongoing operational impact (retraining for vCenter administrators who will use Prism instead, third-party integration updates, backup tool reconfiguration).
For a 500-core environment where the annual licence delta is neutral or modestly favourable for Nutanix, the migration economics are typically positive over a three-year horizon for organisations with sufficient engineering capacity to execute the migration. For larger environments where the VMware cost is significantly higher than the Nutanix alternative, the payback period is shorter.
Azure VMware Solution: Cloud-Native VMware Without Broadcom
Azure VMware Solution (AVS) provides a VMware-native environment — vSphere, vSAN, and NSX — running on dedicated hardware in Microsoft Azure datacentres. Microsoft manages all VMware licensing as part of the AVS service, eliminating the Broadcom commercial relationship for those workloads. For organisations with strong Microsoft Azure alignment, AVS is a structurally clean path away from direct Broadcom exposure.
AVS pricing is consumption-based, charged per dedicated host per hour. Reserved instance pricing is available at one-year or three-year terms, reducing the hourly rate by 35 to 50 percent. For a typical enterprise AVS deployment of eight hosts at three-year reserved pricing, the annual cost is approximately $500,000 to $700,000 depending on the host configuration and region. This is significantly more expensive than on-premises VMware for steady-state workloads, but for organisations including the cost of hardware refresh in their on-premises VMware model, the gap narrows substantially.
AVS is best suited to: cloud-first organisations that have already committed significant Azure spend and can leverage Azure Hybrid Benefit and existing commitments, environments where the on-premises hardware is nearing refresh and the capital expense of refreshed hardware would otherwise be incurred, and disaster recovery use cases where AVS provides a VMware-compatible target environment at lower cost than maintaining a full secondary on-premises vSphere deployment.
The CIO Decision Framework
Every CIO with a significant VMware estate faces a three-way decision: stay with VMware under Broadcom's terms, migrate to Nutanix, or migrate to AVS (or in some cases, KVM or Hyper-V for specific workloads). This decision should be structured around five variables:
- Annual cost delta: What is the difference in annual licence cost between Broadcom's proposal and the best alternative? The greater the delta, the stronger the migration economic case.
- Migration complexity: How technically complex is your VMware environment? Environments with extensive NSX micro-segmentation, vSAN stretched clusters, and deep third-party tool integration are harder to migrate than compute-only environments. Higher complexity increases migration cost and reduces the attractiveness of moving.
- Time horizon: If you are planning a significant infrastructure refresh in the next 12 to 18 months, migration timing can be combined with hardware refresh to reduce the incremental migration cost. If you refreshed your hardware 18 months ago, migration costs are incremental.
- Organisational capacity: Migration requires engineering time and expertise. If your infrastructure team is currently occupied with other transformation programmes, taking on a VMware migration simultaneously may not be feasible. Sequence your decisions based on actual organisational capacity.
- Strategic direction: What is your organisation's infrastructure direction? If you are actively moving toward public cloud and expect on-premises infrastructure to shrink materially over five years, investing in a platform migration may be less valuable than staying on VMware short-term while you decommission on-premises workloads. If you expect on-premises infrastructure to remain significant, a platform decision that reduces long-term licence dependency on Broadcom has strategic value beyond the immediate cost comparison.
For independent advice on navigating your VMware vSphere and vSAN subscription decision, contact Redress Compliance's Broadcom practice or download the VMware Negotiation Guide for cost modelling templates and negotiation frameworks.