The End of Perpetual VMware Licenses: What Changed in 2024
For three decades, VMware built its reputation on perpetual software licensing. Buy vSphere once, own it forever. Pay annual support (SnS) to keep it current, but the underlying licence never expired. That model is gone.
In 2024, Broadcom (which acquired VMware in 2023) eliminated perpetual licenses entirely. All VMware workloads—vSphere, vSAN, NSX, Aria—moved to subscription-only licensing. No perpetual option. No exceptions. For organisations with large VMware estates built over 15+ years, this is the most disruptive enterprise software licensing change since the 2010 SAP Maintenance pricing wars.
The subscription model means you now rent VMware software annually. If you stop paying, your licence expires. This fundamentally changes the economics of virtualisation infrastructure, forces budget reforecasting, and has driven 74% of large enterprises to actively evaluate alternatives like Nutanix AHV and Azure VMware Solution.
But the technical change was only half the story. The commercial change—bundled licensing, mandatory VMware Cloud Foundation, support cost escalation—is where the real impact lies.
VMware Cloud Foundation (VCF) vs VMware vSphere Foundation (VVF): What's Included?
Broadcom offers two subscription bundles for on-premises virtualisation:
VMware Cloud Foundation (VCF)
VCF is the full stack. It includes:
- vSphere Enterprise — hypervisor licence
- vSAN Enterprise — distributed storage
- NSX Professional — network virtualisation and security
- SDDC Manager — cluster automation and lifecycle management
- Aria Suite (formerly vRealize) — monitoring, automation, and cost management
VCF is positioned as a complete software-defined data centre (SDDC) solution. If you license VCF, you get everything. You don't buy components separately.
The problem: Many organisations only need vSphere and vSAN. They already have Cisco or Palo Alto for network security. They have Splunk, Datadog, or New Relic for monitoring. NSX and Aria are bundled in—and paid for—whether you use them or not.
VMware vSphere Foundation (VVF)
VVF is the lighter bundle. It includes:
- vSphere Enterprise — hypervisor
- vSAN Enterprise — storage
VVF does not include NSX, SDDC Manager, or Aria. VVF is for organisations that want compute and storage virtualisation but manage networking and monitoring separately.
Pricing for VVF is significantly lower than VCF—typically 40-50% cheaper per core annually—but you sacrifice the integrated management and automation capabilities.
Understanding Per-Core Pricing and the 72-Core Minimum Order
VMware has shifted to strict per-core licensing for all subscription products. Understanding how cores are counted is essential to forecasting your costs.
Core Counting Rules
Broadcom counts cores as follows:
- Physical CPU cores are counted at the socket level
- Minimum of 16 cores per physical CPU socket (even if your CPU has fewer cores)
- All CPU sockets in all physical servers must be licensed
- Both production and non-production servers count equally
- Virtual machines do not consume separate core licences (licences attach to the host layer)
Example: You have a 4-node vSAN cluster. Each server has 2 CPUs. Each CPU has 12 physical cores, but the 16-core minimum applies. So each socket counts as 16 cores, not 12. Per server: 2 sockets × 16 cores = 32 cores licensed. For 4 nodes: 4 × 32 = 128 cores total.
If any of those servers have fewer than 12 physical cores, they still count as 16 cores per socket. This core-count padding inflates licencing costs for organisations running lower-core-count CPUs.
The 72-Core Minimum Subscription Order
Broadcom enforces a 72-core minimum on all VCF and VVF subscriptions. You cannot buy a subscription for fewer than 72 cores, regardless of your actual server count.
For a 2-node cluster (2 servers, 2 CPUs each, 12 cores per CPU), you calculate 2 × 2 × 16 = 64 cores. But you must buy 72. You're forced to pay for 8 cores you don't own.
This minimum order creates disproportionate cost burden for small clusters. A startup with a 2-node cluster pays the same per-core rate as an enterprise with 300 cores—but at a much smaller scale, the overhead is severe.
For many organisations, this 72-core minimum alone justifies moving to Nutanix AHV or Azure VMware Solution, where pricing is more granular and doesn't penalise small deployments.
vSAN Licensing and the 1 TiB Per Core Rule
vSAN (the distributed storage component) has its own licensing constraint: minimum 1 TiB of vSAN storage per licensed core.
If you license 72 cores, you must deploy at least 72 TiB of raw (before replication) vSAN storage across your cluster. This forces minimum storage investment even if your actual workload footprint is smaller.
In practice, this means organisations cannot simply license fewer cores to save money—they must right-size both compute and storage together. And if you have over-provisioned compute but modest storage needs, you're paying for unused storage capacity.
Estimated VCF and VVF Pricing for 2026
Broadcom does not publish official per-core pricing. All pricing is negotiated. However, based on assessments of 180+ enterprise accounts, typical negotiated enterprise pricing is:
VCF Pricing
$100-130 per core per year (negotiated enterprise rates, 3-year commitment)
At the high end of that range (large enterprises, 1-year terms), VCF pricing can reach $140-160 per core annually.
For a 100-core deployment: $100-130k per year. Over 3 years: $300-390k.
For a 300-core deployment (a mid-sized enterprise): $300-390k per year, or $900k-$1.17M over 3 years.
Key factor: VCF pricing includes NSX, SDDC Manager, and Aria. If you don't use these components, you're overpaying substantially.
VVF Pricing
$60-80 per core per year (negotiated enterprise rates, 3-year commitment)
VVF is 35-45% cheaper than VCF on a per-core basis, reflecting the exclusion of NSX and Aria management suite.
For a 100-core deployment: $60-80k per year. For 300 cores: $180-240k per year.
Calculation note: These prices assume negotiation. Smaller organisations, 1-year deals, or deals with less leverage often pay 15-25% premiums over these rates.
The Hidden Cost: Support Price Increases of 3-5x
The biggest shock in VMware's subscription transition has been support cost escalation. Under the perpetual model, annual support (Software Maintenance and Support, or SnS) was typically 17-22% of licence purchase price per year. For a $500k vSphere licence purchase, support was $85-110k annually.
Under the subscription model, support is built into the annual fee. There is no separate "SnS" line item. But what customers are discovering is that the total cost of ownership—including support, patches, and new features—is now 3-5x higher than the old perpetual model costs.
Real example from our assessments: A mid-sized financial services firm paid $180k annually under perpetual licences (vSphere + vSAN) for 150 cores. Under VCF subscription, the same footprint costs $525k annually. That's a 2.9x increase. Adding in the mandatory upgrade to vSAN Enterprise (which they didn't need under the old model) and support obligations, the total cost is now 3.2x.
Some large enterprises with complex support requirements have seen increases up to 10x, particularly if they were running older perpetual licence versions with minimal support and are now forced into current subscription tiers with premium support levels included.
Why the increase?
- Broadcom ended support for all perpetual licences as of November 2024
- All customers must move to current subscription versions to receive patches and security updates
- Subscriptions bundle in premium support, cloud readiness, and continuous updates
- Broadcom is consolidating its customer base into higher-value support tiers
- There is no "low-cost" subscription option—all tiers assume modern infrastructure and managed services
Bundling Trap: Forced Purchase of Unused Components
One of the most frustrating aspects of VCF licensing is that Broadcom forces organisations to buy the full bundle even if they don't use all components.
Scenario: A software company uses vSphere for development infrastructure. They already have Cisco ACI for network virtualisation and have standardised on Datadog for monitoring. They don't need NSX or Aria. But if they want to run vSphere under subscription, they must license VCF, which forces them to pay for NSX Professional and Aria Suite even though they won't use them.
This is a classic bundling strategy: force customers to pay for high-value components (NSX and Aria) even when they only need the base hypervisor and storage. It inflates the per-core cost and reduces price competition.
VVF is Broadcom's answer, but VVF only removes NSX and Aria. You cannot unbundle further. You cannot buy "just vSphere" under subscription. You must buy vSphere + vSAN even if you have your own SAN and don't want distributed storage.
VCF 9.0 License Management: The vcf.broadcom.com Portal
With VCF 9.0 (released late 2025), Broadcom introduced a new licence management portal at vcf.broadcom.com. This replaces the old 25-character licence key model.
Key changes:
- Subscription-based licence files: Instead of perpetual keys, you receive time-bound licence files that activate for your subscription term
- Annual renewal: At the end of each year, Broadcom issues new licence files for the next subscription year
- Portal-based tracking: All licence consumption, core count, and compliance is tracked via the Broadcom portal
- Automatic true-up: If you exceed your licensed core count, Broadcom can automatically flag overages for true-up at year-end
- Integration with Broadcom Licensing Assistant: The BLA tool automatically reports your actual core consumption back to Broadcom
For compliance and audit purposes, organisations must regularly audit their actual core count and match it against licensed cores. Overages trigger true-up bills, often at premium rates (115-125% of standard per-core pricing).
Practical risk: If you add servers without updating your core count in the portal, or if your CPU count drifts over time, you could incur significant overages. Organisations must implement quarterly core audits to prevent surprise true-up bills.
VCF on Public Cloud: AWS, Azure, and Google Cloud Licensing
Broadcom offers VCF as a managed service on AWS (VMware Cloud on AWS), Microsoft Azure (Azure VMware Solution), and Google Cloud (Google Cloud VMware Engine). Licensing treatment differs across clouds.
VMware Cloud on AWS
AWS offers VMware Cloud as an integrated service. You license the software separately from the cloud infrastructure. Licensing is per-core, similar to on-premises VCF, but pricing is often 10-15% higher to account for the managed service overhead.
Azure VMware Solution (AVS)
Microsoft offers Azure VMware Solution as a first-party VMware service. Licensing is embedded in the monthly service fee (paid to Microsoft, not Broadcom). AVS pricing is per-cluster-node, not per-core, and typically ranges $1-1.5k per month per node (3-core node equivalent). For a 6-node cluster: $72-108k per year.
AVS is often cheaper than on-premises VCF for organisations that can embrace a managed model. However, AVS has limited customisation and lock-in to Microsoft's cloud ecosystem.
Google Cloud VMware Engine
Google Cloud VMware Engine pricing is also per-node on a managed basis, typically $300-500 per month per node. For cost comparison, it's similar to AVS but slightly more flexible on customisation.
Key insight: Public cloud VMware is often 30-50% cheaper than on-premises VCF when you factor in the elimination of data centre costs. But migration effort and lock-in are significant trade-offs.
Nutanix AHV: The Leading Alternative to VMware VCF
Nutanix Acropolis Hypervisor (AHV) is the primary alternative to VCF for organisations seeking to escape VMware's pricing increases and bundling strategy.
Nutanix AHV Pricing Model
Nutanix uses a hybrid cloud infrastructure (HCI) model: compute, storage, and networking are sold as a single bundle on Nutanix-validated hardware. You don't buy per-core hypervisor licences. You buy infrastructure by the node, and the hypervisor is included.
Typical Nutanix AHV pricing: $50-80k per node (3-4 year amortisation), with annual support at 18-20% of hardware cost. A 6-node cluster: $300-480k capital, plus $54-96k annual support.
Cost comparison to VCF: For 100 cores of VCF ($100k/year), a Nutanix equivalent (typically 3-4 nodes) costs $60-80k in annual licence + support, making Nutanix 25-35% cheaper over time, with the advantage that you own the hardware and aren't subject to per-core increases year-over-year.
Migration Complexity
The challenge with moving from vSphere to Nutanix AHV is application compatibility and retraining. AHV is functionally complete but not VMware API-compatible. Organisations must re-certification applications, retrain operations teams, and potentially rebuild monitoring and backup integrations.
Migration typically takes 6-12 months for a mid-sized estate and costs $500k-$2M in consulting and engineering labour, depending on workload complexity.
However, for organisations already facing 3-5x cost increases, a 12-month migration effort often pays for itself within 3-4 years of Nutanix savings.
Capability Comparison: Nutanix AHV vs VCF
Nutanix advantages: HCI simplicity, no per-core licensing overhead, built-in disaster recovery (peer-to-peer replication), simpler operations, transparent pricing.
VCF advantages: Broader ecosystem (NSX integrates with Cisco, Palo Alto, third-party firewalls), Aria provides advanced cost management and optimisation, larger installed base and skilled personnel market.
For new deployments or workloads without strict VMware dependencies, Nutanix is increasingly the better choice financially and operationally.
Azure VMware Solution (AVS): Microsoft-Managed VMware
Azure VMware Solution is Microsoft's answer to the VMware pricing crisis. Microsoft licenses VMware technology and offers it as a managed service in Azure.
AVS Pricing and Economics
AVS is priced per node (3-core equivalent, 192GB memory, 1.92TB NVMe storage). Current pricing: $1,008-1,356 per month per node (varies by region). For a 6-node cluster: $72-97k per year.
Comparison to on-premises VCF: A 6-node cluster (roughly 96-120 cores depending on CPU generation) would cost $96-156k annually in on-premises VCF at $100-130/core. AVS at $72-97k is 25-40% cheaper, before factoring in data centre power, cooling, and management savings.
Hidden advantage: AVS includes all VMware components (vSphere, vSAN, NSX, Aria) in a single managed service. You don't have to license them separately, and Microsoft handles upgrades, patches, and infrastructure.
When AVS Makes Sense
AVS is most valuable for:
- Organisations with hybrid cloud strategies already committed to Azure
- Workloads requiring high-speed, low-latency access to Azure PaaS services
- VMware estates where operational complexity is a bigger burden than cost
- Organisations seeking to exit the data centre entirely and move to managed infrastructure
When AVS doesn't work: Multi-cloud strategies (if you're also on AWS and Google Cloud, AVS locks you to Azure), workloads requiring strict network isolation, and cost-sensitive organisations with significant on-premises database footprints.
The Cost of Migration: vSphere to Nutanix AHV or AVS
For organisations considering escape from VMware VCF, understanding total migration cost is essential. Migration is not just licensing—it's labour, application revalidation, and operational disruption.
Migration to Nutanix AHV
Typical 250-core estate (mid-sized enterprise):
- Hardware procurement and installation: $500-800k (one-time)
- Consulting and migration services: $400-700k
- Application testing and revalidation: $300-500k
- Staff training and certification: $100-200k
- Project management and contingency: $200-300k
Total migration cost: $1.5M-2.5M
Break-even calculation: Current VMware costs are $250-325k annually. Nutanix operational costs are $150-180k annually. Savings: $75-175k per year. At $75k annual savings, break-even is 20-33 years (too long). At $175k annual savings, break-even is 9-14 years (marginal).
However, if your current VMware costs are inflated by legacy perpetual licences with minimal support, or if you're facing 3-5x support increases, the economics shift dramatically. An organisation facing a $325k-to-$975k jump in annual VMware costs would break even on Nutanix migration in 2-4 years.
Migration to Azure VMware Solution
Typical 250-core estate:
- Cloud architecture and design: $100-200k
- Network connectivity (ExpressRoute to Azure): $10-50k setup + $150-300/month recurring
- Data transfer and validation: $50-150k
- Application revalidation: $200-400k
- Project management: $100-200k
Total migration cost: $450-1M (often lower than Nutanix because you don't buy hardware)
Annual ongoing costs: AVS at $50-60/core (assuming 250 cores): $12.5-15k per month, or $150-180k per year, versus on-premises VMware at $250-325k. Savings: $75-175k per year. Break-even: 2.5-13 years depending on your current cost base.
Advantage of AVS: Lower upfront migration cost, faster time-to-value, and no long-term hardware refresh cycle to manage.
Negotiation Strategies for VCF Licensing
If you're committed to VCF, or if migration is not viable in your timeframe, aggressive negotiation can reduce costs materially. Here are eight tactics that have proven effective in 2025-2026.
1. Competitive Leverage: Quote Nutanix and AVS
Obtain written quotes from Nutanix and Microsoft for equivalent infrastructure. Share (non-binding) pricing with your Broadcom account team. Broadcom is incentivised to keep customers on VMware rather than lose them to migration. Expect 10-20% discount for demonstrable competitive alternatives.
2. True-Up Mechanics: Negotiate Overage Rates
In your renewal negotiation, insist on clear overage terms. Standard overage rates are 115-125% of list pricing. Negotiate these down to 105-110%. Small difference, large impact if you true-up 20-30 cores annually.
3. Multi-Year Commitment Discounts
Broadcom offers 10-15% discounts for 3-year commitments versus annual terms. If your budget permits, lock in 3-year pricing to hedge against future increases. But ensure termination rights are clear—don't get stuck with 3 years of escalating costs if the business changes.
4. Timing Your Renewal
Broadcom's fiscal year runs September-August. Renewals closed in August/early September often have more pricing flexibility as teams meet quarterly targets. If possible, plan renewal discussions in July-August when Broadcom has more incentive to negotiate.
5. Enterprise Licensing Agreement (ELA)
For organisations with 500+ cores and multi-year budgets, an ELA can cap costs and provide predictable pricing. ELAs typically include:
- Capped per-core pricing for the contract term
- Unlimited true-up rights within defined parameters
- Advance notice of price increases (e.g., 6-month notice with caps at 3-5% per year)
- Included support levels and hardware refresh options
ELA negotiations are complex and require executive sponsorship. Engage a specialist licensing advisor if your estate justifies the effort.
6. Negotiate Support Tiers and On-Demand Services
Subscription pricing includes support. But support tiers vary. Standard support may have 4-hour response times for critical issues. Premium support offers 1-hour response. Negotiate for "standard+" tier—better than standard, cheaper than premium. Can save 10-15% on total subscription cost.
7. Exclude Non-Production from Core Count
Broadcom's standard rule is all CPUs in all servers are licensed. Negotiate an exemption for dev/test environments under 10% of production cores. Some account teams will agree to this if bundled with a multi-year commitment. Savings: 5-10% of total core count.
8. Bundling and Trade-Off Negotiation
If you're forced into VCF for NSX and Aria, negotiate bundled discounts. For example: accept VCF at $120/core, but in exchange, negotiate usage caps on Aria consumption-based features (Aria Operations for Networks can have high metering costs). Get everything in a single fixed-price contract to eliminate surprise costs.
Eight Priority Recommendations for CIOs Facing VCF Transition
1. Conduct an Honest Cost Baseline Today
Pull together your current VMware licensing spend: perpetual licence amortisation, annual SnS, support incidents, training, and licence compliance management. Calculate your true total cost of ownership. Compare that to the new VCF subscription cost. If the increase is 2x or more, migration becomes financially justified.
2. Build a Core Count Audit Process
Implement quarterly audits of your actual physical CPU core count, including a forward-looking estimate of server refreshes and additions. Misaligned core counts are the biggest source of true-up surprises. Automate this using tools like Broadcom Licensing Assistant.
3. Evaluate Nutanix AHV Seriously
If your application portfolio is not deeply VMware API-dependent, run a detailed Nutanix AHV evaluation. Include migration cost and timeline in your analysis. A 12-month migration may cost $1.5-2.5M, but if VCF costs are rising 3-5x, the payback period is 2-4 years. This is a serious financial decision, not a technology preference.
4. Consider Azure VMware Solution for Hybrid Cloud Workloads
If you're already investing in Azure for IaaS and PaaS, AVS offers a lower-friction, lower-cost way to run VMware workloads. The elimination of on-premises data centre costs often offsets the higher-than-on-premises licensing. Evaluate AVS for at least a subset of your estate.
5. Negotiate VCF as a Fixed-Price Contract
Do not accept annual or multi-year contracts with automatic price escalation clauses. Negotiate a fixed per-core price for the full contract term, with any increases capped at 3-5% annually. This predictability is essential for financial planning.
6. Implement a License Compliance Program
Broadcom's new portal and Licensing Assistant tool track consumption and report overages automatically. Implement a formal licence compliance program: monthly consumption tracking, quarterly audits, annual true-up reconciliation. Assign clear ownership. This prevents surprise bills.
7. Build Pricing Contingency into Budget
VMware cost increases of 3-5x are typical. If your business relies on VMware infrastructure, reserve 10-15% annual budget increase for the next 3 years to manage renewal inflation. This forces realistic planning and creates visibility into the true cost of virtualisation infrastructure.
8. Engage External Advisory Support
VMware/Broadcom licensing is complex, and the stakes are high. Organisations with 200+ cores should engage independent licensing advisors (like Redress Compliance) during renewal negotiations. The advisor's cost is often recovered in a single negotiation by securing 10-20% discounts or preventing costly true-ups.
Summary: The New VMware Reality and Your Options
VMware Cloud Foundation is now the only path forward for organisations running vSphere. The 2024 shift to subscription-only licensing, combined with mandatory bundling and support cost increases of 3-5x, represents the most significant change to virtualisation economics in two decades.
For many organisations, this is a triggering event to migrate to Nutanix AHV or Azure VMware Solution. The total cost of ownership of these alternatives, when properly evaluated over a 5-10 year period, is often lower than the cost of staying on VMware.
But if you're committed to VMware, or if your migration timeline is constrained, disciplined negotiation—competitive leverage, ELA structures, true-up management, and fixed-price contracts—can reduce the impact of Broadcom's pricing increases by 15-30%.
The key is to make this decision consciously and financially, not reactively. Start your evaluation now. The organisations that migrate off VMware proactively, on their own schedule, save substantially more than those forced to migrate under time pressure and budget crisis.
About the Author
Morten Andersen is a senior enterprise software licensing advisor at Redress Compliance, specialising in hypervisor, cloud, and infrastructure licensing. Over the past 18 years, Morten has advised 500+ enterprise organisations on VMware licensing, Hyper-V, Kubernetes, and cloud infrastructure optimization. He is a recognised expert on Broadcom's post-acquisition VMware strategy and has led negotiations resulting in $85M+ in cumulative customer savings.
Morten holds certifications in VMware architecture and enterprise licensing practices. He contributes regularly to Redress Compliance's Broadcom Knowledge Hub and maintains direct advisory relationships with 40+ enterprise customers across APAC and EMEA regions.
LinkedIn: https://www.linkedin.com/in/morten-andersen-1517152/