In April 2025, VMware introduced significant alterations to their pricing structure. The changes have affected all customers and all products. Broadcom has responded to initial backlash, and the situation may continue to evolve. However, customers should plan on some form of altered pricing becoming permanent.
Many Corsica clients have already adapted to the changes as they stand today, but we’re working with others to determine the best path forward. Regardless of your use cases, your budget, or your strategic priorities, there’s a lot to know as you navigate virtualization in this new market landscape.
We’ve got all the details in this post—PLUS VMware cost optimization tactics and alternative technologies.
Key takeaways:
- VMware’s price increase is driven by a new subscription-based model and a new 72-core minimum purchase (per product or order line) coupled with per-core licensing.
- Low-core CPUs will generate the most significant price increases for customers of all sizes.
- Core consolidation is the best way to optimize costs while sticking with VMware.
- Microsoft Hyper-V and other options provide helpful alternatives where VMware is no longer a fit.
What is the VMware price increase?
Broadcom acquired VMware in 2023. That transaction has led to a shift in VMware’s pricing model starting in 2025. There are several significant changes to VMware’s licensing.
- Subscription-based licensing has replaced perpetual licensing. Customers must now pay recurring fees for VMware products rather than making a one-time purchase and owning the software license perpetually.
- Customers can’t purchase fewer than 72 licenses. VMware’s previous minimum license count was 16, but now customers must buy licenses for at least 72 cores. (Note that the required minimum 16 cores per CPU has not changed, only the minimum license count per product or order line.)
- Customers must pay a 20% fee for late renewals. While VMware always had a late renewal fee in place, it has increased to 20%.
- VMware has consolidated its catalog to fewer, bundled offerings. These bundles are not flexible, meaning customers must pay for every product or feature included in a given bundle.
- Software is now licensed per core, with a minimum of 16 cores per CPU. Customers will be billed for 16 cores per CPU even if their CPU has fewer cores.
How is the VMware price increase affecting customers?
Price hikes are always a concern for businesses, but when they reach such unprecedented levels, they can disrupt financial planning and operational stability. For many organizations, VMware’s services are integral to their IT infrastructure, ensuring safe and efficient operations. The dilemma then becomes whether to absorb the increased costs or seek alternative solutions.
Every VMware customer is affected by these changes. While customers of all sizes are experiencing technical effects, smaller customers may also experience significant financial effects.
Here are some of the largest impacts we’re seeing among clients.
Impact on SMBs and midmarket
VMware has retired the Essentials Plus Kit, a bundle that gave SMBs and midmarket companies access to sophisticated features at a lower price point.
VMware’s new 16-core minimum also impacts smaller businesses with lower CPU usage, forcing them to pay for 16 cores per CPU whether they have 16 or not.
Impact on enterprise customers
Enterprise customers may feel similar impacts as smaller companies, including reduced flexibility in product bundling and the impact of the 72-core minimum requirement per CPU. This will be especially true for enterprise customers that have a large number of CPUs with a low number of cores per CPU, as customers are now forced to pay for 72 cores per CPU whether they have that many or not.
How will the 72-core minimum affect my small servers?
Unfortunately, small servers will see the largest impact from VMware’s new 72-core licensing minimum. New orders require licensing at least 72 cores per product, with the 16 core per CPU minimum still in effect.
This will affect several types of use cases.
- Small businesses
- Branch offices
- Edge CPUs
- Any use case in which fewer cores are distributed over more servers
What are the risks of vendor lock-in?
Being heavily reliant on a single vendor can put any organization at a disadvantage. Vendor lock-in not only limits flexibility but also exposes businesses to risks associated with sudden price changes, service disruptions, and lack of innovation. In the case of VMware, the recent price hike has highlighted the vulnerabilities of such dependencies.
Can we negotiate or grandfather existing VMware contracts?
Theoretically, yes. VMware may negotiate with a customer for short-term pricing to make the transition easier. In most cases, however, and for most customers, it’s unlikely that VMware will budge on their new pricing policies. Companies should enter negotiations with a well-defined BATNA (best alternative to a negotiated agreement).
Is Corsica Technologies still a VMware reseller?
No. Broadcom restructured its partner program, requiring existing resellers to reapply under more restrictive criteria. Like many MSPs, Corsica Technologies will no longer be a reseller going forward. We can help our clients connect with another reseller, but we cannot sell directly.
Are there alternatives to VMware that have lower licensing costs?
As organizations look for ways to mitigate the impact of VMware’s pricing strategy, exploring alternative solutions becomes imperative. Promising alternatives include Microsoft Hyper-V and Azure Infrastructure as a Service (IaaS).
There are several alternatives to VMware that may present lower costs in specific use cases. Here are some of the leading providers, including the two Microsoft solutions.
- Microsoft Hyper-V is built into Windows Server, and it’s a great choice for Microsoft customers.
- Azure IaaS offers on-demand access to cloud resources like storage, virtual machines, and networking.
- Nutanix is a great provider for hyperconverged infrastructure (HCI).
- Proxmox VE offers open-source virtualization and web-based management.
- OpenStack is another open-source option that’s highly customizable.
- Oracle VM is a great option for companies that use Oracle products.
Benefits of Microsoft Hyper-V and Azure IaaS
- Cost Reduction: Transitioning to Hyper-V or Azure IaaS can significantly reduce IT costs by optimizing resource usage and minimizing hardware expenses. Hyper-V provides a more budget-friendly licensing model, enabling significant savings over time.
- Performance Improvement: These platforms provide enhanced performance through better resource allocation and management, leading to faster application delivery. Hyper-V offers exceptional performance for virtual machines, ensuring optimal resource utilization.
- Integration with Microsoft Tools: Hyper-V and Azure IaaS offer seamless integration with existing Microsoft tools, enhancing functionality and user experience across the organization. This integration simplifies management and allows IT teams to manage resources more effectively.
- Scalability and Flexibility: The scalability features of Hyper-V and Azure IaaS allow businesses to easily adjust resources based on current demands and workloads. Azure’s global data centers enhance the deployment of applications worldwide, ensuring proximity to users and improved performance.
- Advanced Security and Compliance: Azure offers advanced security features and numerous compliance certifications, helping organizations safeguard sensitive data and meet regulatory requirements. Hyper-V also ensures robust security and service quality maintenance despite rapid scaling.
How complicated is it to migrate from VMware to an alternative?
In most cases, migrating off of VMware is a complex project requiring significant planning and coordination. While the licensing costs for an alternative solution may be lower, the migration project will create its own costs, which aren’t insignificant. Switching providers also has the potential to disrupt operations, as it’s essentially a server migration.
In some cases, migrating off VMware may be justified. In others, it may not be worth the cost and effort. If you’re unsure, we’re happy to help you determine the best path forward for your organization. Just reach out to us.
What is the process for transitioning to Hyper-V or Azure IaaS?
Switching from VMware to Hyper-V or Azure IaaS requires careful planning and execution. Here are some steps to consider:
- Assess Your Needs: Conduct a thorough assessment of your organization’s requirements and identify the specific features and capabilities you need from a new service provider.
- Evaluate Options: Compare different service providers, focusing on factors such as cost, security, integration, and support. Hyper-V and Azure IaaS should be top contenders given their comprehensive offerings.
- Plan the Migration: Develop a detailed migration plan that outlines the steps involved in transitioning to the new service. This should include timelines, resource allocation, and risk mitigation strategies.
- Test and Validate: Before fully committing to the new service, conduct thorough testing to ensure compatibility and performance. This will help identify any potential issues and allow for adjustments before the full rollout.
- Train Your Team: Ensure that your team is well-prepared for the transition by providing training on the new tools and features offered by the chosen service. This will help maximize the benefits of the new solution.
How can we optimize costs while keeping VMware?
For many customers, VMware may still be the best option. Switching to another provider may create too much pain or operational impact, or VMware may have essential features on which the business depends.
Whatever the reason, there are several ways to optimize costs while retaining VMware products.
- Right-size your environment. Audit your virtual machine usage and eliminate over-provisioning. Try to consolidate workloads onto fewer, higher-density servers to maximize the vale of your core licenses.
- Pick the right bundle. If you don’t need advanced networking or storage features, choose vSphere Foundation (VVF) rather than VMware Cloud Foundation (VCF). This way, you don’t pay for extras like NSX or vSAN.
- Negotiate the longest contract you can afford at today’s pricing. This will lock you in and protect you against price increases.
- Consider VMware Cloud Services. VMware Cloud on a major cloud platform can simplify your VMware licensing. Of course, the use case needs to be a good fit for the cloud beyond the potentially beneficial licensing.
- Optimize your core count. If you have nine servers today, each with eight cores, can you consolidate those into one server with 72 cores? It won’t be possible in all cases, but applying this principle can align your VM architecture with VMware’s new pricing rules.
- Offload non-critical workloads to non-VMware environments. For example, try running Microsoft Hyper-V on dev or test environments while keeping VMware on production environments.
The takeaway: Do your homework and understand your priorities
While VMware’s pricing changes are significant, they don’t have to disrupt your business. The key is to understand your virtualization requirements, understand VMware’s new pricing policies, and choose the best way forward for your organization. Here at Corsica Technologies, we’ve helped 1,000+ clients solve their business problems through technology. Contact us today, and let’s figure out the right virtualization strategy for your organization.
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