Broadcom’s overhaul of VMware’s licensing model has sparked concern across the IT community — and small to midsize businesses (SMBs) are feeling the squeeze the most. The new structure brings with it increased costs, complexity, and a pressing need to reevaluate infrastructure.

If you’re an SMB running VMware, here’s what you need to know — and how you can navigate what’s ahead.

A Closer Look at the New Core-Based Licensing Model

Broadcom’s changes shift VMware licensing to a core-based, subscription-only model, with significant implications:

  • 16-Core Minimum Per CPU: Every CPU is now licensed as if it has at least 16 cores, regardless of actual core count.
  • Minimum Purchase Requirement: High entry thresholds.
  • No More Perpetual Licenses: VMware licensing is now subscription-only, often requiring 3-year minimum commitments.
  • Support for Legacy Licenses Ends: No support available for older perpetual licenses.

The result? A potentially dramatic increase in licensing costs and a heightened risk of over-licensing — especially for SMBs running modest workloads.

The Financial and Operational Impact on SMBs

For smaller organizations, the ripple effects of these changes are substantial:

  • Skyrocketing Costs: Industry reports cite increases from 150% to over 1000% in some cases.
  • Overpaying for Capacity: SMBs with low-core CPUs are now forced to pay for unused licensing.
  • Disappearance of Essentials Plus: Entry-level bundles are gone, pushing smaller customers into enterprise-level pricing tiers.
  • Budget Strain: With mandatory renewals, SMBs face recurring OpEx that replaces the one-time CapEx investments they were used to.
  • Complex License Management: Renewals now come with stricter terms and less flexibility.
  • Limited Scalability: Small-scale growth is expensive due to the rigid license structure.
Your Options: Where Do You Go from Here?

SMBs now face three main paths forward — each with its own tradeoffs:

1. Stick with VMware On-Prem

  • Pros: No migration; familiarity for engineers.
  • Cons: High licensing costs, potential for under-utilized resources, large CapEx investment to stay compliant.

2. Migrate to a Cloud Provider

  • Pros: No direct license management, built-in infrastructure redundancy, improved compliance and reporting.
  • Cons: Requires migration planning; cloud can be more expensive if not optimized.

3. Switch Hypervisors

  • Pros: Potential long-term cost savings; leverage existing infrastructure.
  • Cons: Learning curve for IT teams; complex migrations.
Why You Should Act Now

The bottom line: The new VMware licensing model significantly raises the cost of doing business for SMBs. But there are alternative options.

Now is the time to revisit your IT strategy, weigh on-prem vs. cloud ROI, and explore potential alternatives. Waiting until renewal deadlines could limit your leverage — and cost you more in the long run.

How FirstLight Can Help

FirstLight offers:

  • Free Cloud Cost Assessments
  • Side-by-side Comparisons of on-prem vs. cloud and hypervisor alternatives
  • Expert Migration Planning
  • SMB-Focused Cloud Solutions that include compliance, redundancy, and security — without the licensing headaches

Don’t wait. Contact FirstLight today to explore next steps and take control of your infrastructure strategy.