Tony Stratton, driver of strategic growth in cloud innovation across the Asia-Pacific region.
When Broadcom acquired VMware in November 2023 for $61 billion — the largest enterprise software acquisition in history — the IT industry waited to see what would happen to pricing. What followed was one of the most aggressive licensing overhauls in enterprise software history. Renewal quotes that bore no resemblance to prior invoices. Products that had been affordable for years, discontinued. Cost increases of 8x to 15x reported by customers with no corresponding increase in delivered value.
For Australian MSPs and enterprise IT teams who had built infrastructure strategies around VMware, the Broadcom VMware pricing increase isn’t an inconvenience. It’s a structural change to the economics of every affected client engagement. Understanding what changed, what it now costs, and what the options are is the starting point for every conversation about VMware going forward.
Glossary
VMware Cloud Foundation (VCF): Broadcom’s flagship VMware bundle, combining vSphere, vSAN, NSX, and Aria Suite into a single per-core subscription. The primary product Broadcom is driving all customers toward.
VMware vSphere Foundation (VVF): Broadcom’s entry-level bundle, providing vSphere and vCenter without vSAN or NSX. Less expensive than VCF per core but with limited storage entitlement.
Per-core licensing: The pricing model Broadcom moved to in 2024, replacing the previous per-CPU-socket model. Total licence cost is calculated by multiplying licensed cores by the annual per-core rate.
72-core minimum: Since April 2025, Broadcom requires a minimum of 72 licensed cores per CPU regardless of actual core count. An organisation running an 8-core server must still licence 72 cores.
Perpetual licence: The pre-Broadcom VMware model, where a one-time purchase provided ongoing use rights with annual support and maintenance (SnS) fees. Broadcom ended perpetual licence sales in February 2024.
Broadcom Advantage Partner program: Broadcom’s restructured VMware channel program, which significantly reduced the number of authorised VMware Cloud Service Providers globally. Pinnacle is the highest tier.
VCF Pinnacle partner: The top tier of Broadcom’s Advantage Partner program. Globally, fewer than 15 providers hold Pinnacle VCSP status, giving them access to the best pricing, deal registration protection, and channel-only infrastructure agreements.
SnS (Support and Subscription): Annual support, maintenance, and update entitlements. For organisations still on perpetual VMware licences, SnS is the renewal vehicle — but these will receive no further updates once the support contract lapses.
How does Broadcom pricing impact VMware products and renewal costs for Australian partners not in the Advantage program?
Australian partners outside the Broadcom Advantage program face full list pricing on VCF and VVF with no deal registration protection, no volume discount tiers, and no ability to offer clients preferential renewal terms — making margin-positive VMware delivery structurally difficult.
The Advantage program is how Broadcom controls channel economics. Partners inside it — Premier and Pinnacle tier — receive preferential pricing, deal registration that protects their client relationships from competing bids, and access to bundled infrastructure agreements. Partners outside it transact at standard rates, which at the current AUD $230–$290 per core for VVF means packaging a competitive managed service is significantly harder.
The commercial exposure compounds at renewal. Without deal registration, there is no structural barrier preventing Broadcom or a Pinnacle-tier competitor from approaching the same end-user client directly at renewal time. For an Australian MSP that built the original relationship and manages the ongoing environment, that represents a genuine risk to revenue ownership — not just margin compression.
The practical options for partners not in the Advantage program are to negotiate entry into the program, to resell through a Pinnacle-tier provider who holds deal registration and passes the cost benefit downstream, or to evaluate whether VMware remains a viable delivery platform for their client base at current pricing.
ThinkOn’s Pinnacle VCSP status and channel-first operating model addresses the second path directly. As a Pinnacle partner with no direct sales team, ThinkOn provides deal registration protection and Pinnacle-tier pricing to Australian MSPs without introducing a competitor into their client relationships.
What changed with the Broadcom VMware pricing increase
Broadcom made four structural changes to VMware licensing — ending perpetual licences, collapsing 8,000+ SKUs into four bundles, shifting to per-core pricing with a 72-core minimum, and introducing a 20% late renewal surcharge.
1. Perpetual licences ended. Effective February 2024, Broadcom stopped selling perpetual VMware licences. All new purchases and renewals require subscription agreements. Existing perpetual licences can continue to run, but once the associated SnS contract expires they receive no further patches, security updates, or version upgrades.
2. The product catalogue collapsed from 8,000+ SKUs to four bundles. Individual VMware products — vSphere, vSAN, NSX, Aria — are no longer available as standalone purchases. Customers must now buy one of four bundles. The practical effect is forced bundling: organisations that only need vSphere are now paying for vSAN and NSX they don’t use.
3. Pricing shifted from per-CPU-socket to per-core with a 72-core minimum. In 2020, VMware moved from per-socket to per-core with a 32-core entitlement per CPU. Broadcom reduced that to 16 cores in 2023 — effectively doubling licence requirements for many high-core-count deployments. From April 2025, the minimum jumped to 72 cores per CPU regardless of actual server core count.
4. A 20% late renewal surcharge was introduced. Miss the anniversary renewal date and Broadcom applies a 20% surcharge on the first-year subscription price. On a 160-core VCF deployment at approximately $40,000 per year, a missed renewal date adds $8,000 on top of the renewal fee.
What does the Broadcom VMware pricing increase actually cost?
ypical renewal costs for Australian organisations are running 2x–5x prior perpetual-plus-SnS costs, with smaller deployments hit hardest by the 72-core minimum. A 5-host cluster that previously cost AUD $5,000–$15,000 per year now quotes at AUD $30,000–$60,000+.
Current market rates for the two primary bundles are approximately USD $190–$250 per core per year. In Australia, VVF typically quotes at AUD $230–$290 per core on one-year terms, with multi-year commitments reducing rates toward AUD $210–$215 per core.
| Pre-Broadcom (≤ 2023) | Post-Broadcom (2024+) | |
|---|---|---|
| Licence model | Perpetual + annual SnS | Subscription only |
| Pricing unit | Per CPU socket | Per physical core |
| Minimum requirement | No minimum | 72 cores per CPU |
| Product options | 8,000+ individual SKUs | 4 bundles |
| Entry-level SKU | vSphere Essentials Plus | vSphere Foundation (VVF) |
| Typical 5-host cluster/yr | AUD $5,000–$15,000 | AUD $30,000–$60,000+ |
| Late renewal penalty | None | 20% surcharge |
For Australian organisations that relied on vSphere Essentials Plus — discontinued by Broadcom — renewal quotes of AUD $80,000–$200,000+ are being reported for organisations that previously paid AUD $10,000–$15,000 per year. Enterprise organisations face two to five times prior costs once bundling and core minimums are applied. Gartner found 74% of IT leaders are actively evaluating VMware alternatives as a result, and predicts 35% of VMware workloads will migrate to alternative platforms by 2028.
What are the options for organisations facing VMware renewal?
Australian organisations facing the Broadcom VMware pricing increase have three viable paths: renew on VCF or VVF terms, migrate workloads to an alternative platform, or engage a Pinnacle-tier channel partner to negotiate and host on optimised infrastructure.
Renewing on Broadcom terms. For organisations with complex VMware estates and deep integration, full migration may not be practical on a renewal timeline. Multi-year term agreements offer the deepest discounts — but Broadcom prices against the cost and risk of your migration, not against last year’s invoice. A credible exit plan is still the strongest negotiating lever even if you ultimately renew. Rationalise the estate and validate core counts before committing to a multi-year term; a discount applied to an inflated core count is still an overspend.
Migrating to alternative platforms. For organisations not deeply tied to VMware-specific features, alternatives including Nutanix, Proxmox, and public cloud infrastructure are seeing significant uptake. Buyers who modelled moving even 20% of the estate to an alternative platform recovered 15–30% on the Broadcom renewal quote by demonstrating credible exit optionality. vSphere 7 reached end-of-support in October 2025, which has accelerated migration evaluations for organisations on legacy versions.
Engaging a Pinnacle-tier VMware Cloud Service Provider. Broadcom’s April 2025 restructure reduced authorised VMware Cloud Service Providers globally from more than 4,500 to approximately 300 Premier partners and fewer than 15 Pinnacle partners worldwide. Pinnacle partners hold the deepest pricing access and deal registration protection, and can deliver VCF-hosted infrastructure on behalf of clients — meaning Australian MSPs can offer clients access to VCF capabilities without those clients negotiating directly with Broadcom.
How ThinkOn supports Australian MSPs through the Broadcom pricing transition
ThinkOn holds Broadcom Pinnacle VCSP status and operates as a 100% channel-first provider with no direct sales team, ensuring Australian MSPs retain full customer relationships and service margins.
Margin protection through Pinnacle pricing. As a Pinnacle partner, ThinkOn accesses VCF infrastructure at the deepest tier of Broadcom pricing. That cost structure passes through to the channel — enabling Australian MSPs to package and deliver VCF-hosted environments at margins that reflect Pinnacle access, not mid-tier reseller rates.
No direct competition. Providers with their own direct sales teams can and do pursue end-user relationships — meaning an MSP’s infrastructure provider may eventually compete for the same clients the MSP services. ThinkOn’s channel-only model eliminates that risk contractually. Customer relationships and service margins remain entirely with the partner.
Predictable billing on VCF infrastructure. ThinkOn’s VCF-optimised infrastructure is priced per workload on transparent terms — no egress fees, no minimum duration charges, no billing surprises at renewal. For MSPs managing client infrastructure budgets, a predictable cost structure is a prerequisite for building margin-positive service packages.
Sovereign Australian data residency. For clients in healthcare, financial services, government, or legal — sectors subject to Privacy Act 2024, APRA CPS 234, or data sovereignty requirements — ThinkOn’s Australian infrastructure ensures data remains within jurisdiction with contractual residency commitments.
The Broadcom VMware pricing increase has reset the economics of VMware infrastructure for every Australian organisation still running it. The cost model has changed permanently — there is no path back to perpetual licensing, and the next renewal will price against your exit cost, not your prior invoice. The organisations that navigate this best are the ones that understand exactly what they’re being charged for, and what leverage they have.