March 31, 2023


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Broadcom plans to 'quick transition' to VMware's subscription revenue

Broadcom plans to ‘quick transition’ to VMware’s subscription revenue

Zoom / A sign in front of an office of Broadcom on June 03, 2021, in San Jose, California.

Broadcom announced last week that it is seeking to drop $61 billion in cash and inventory to acquire VMware. We still don’t know exactly what changes Broadcom plans to make to VMware’s products or business model once the acquisition is complete. However, Broadcom Software Group President Tom Krause made clear on a Broadcom earnings call last week: Focus on software subscriptions.

as such reported by the recordBroadcom plans to “quickly transition from perpetual licenses to subscriptions” for VMware products, replacing separate, one-time-use versions forever, although “quick” in this case would apparently take several years. Broadcom CEO Hock Tan said the company wants to keep existing VMware customers happy and build on the relationships and relationships of VMware’s existing sales team.

Subscription-based software has some benefits, including constant updates to correct security flaws and ensure compatibility with new operating system updates Virtualization software that requires access to low-level hardware is disabled more often by new operating system updates than most applications other. But the move toward more subscription-based software licenses may still be unwelcome news for individuals and companies who would rather pay for individual upgrades as they want or need them, rather than continue as long as they need the software.

VMware may be far from the first company to prioritize subscription-based software as a service and its most consistent and reliable revenue stream over permanently licensed software. Adobe has badly moved its Creative Suite apps to the Creative Cloud subscription model Almost a decade ago, with no options left for customers who prefer perpetual licenses. Microsoft still offers perpetual licenses for its Office applications for Mac and Windows (office 2021 It was released in September), but it doesn’t offer all the same features as the constantly updated version of Microsoft 365. Even services like PlayStation Plus or Xbox Game Pass One-time game purchases are exchanged for ongoing subscriptions.

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Broadcom currently plans to use the VMware moniker to replace the Broadcom Software Group brand once the acquisition is complete. The Broadcom software group also includes companies formerly known as CA . Technologies And the Symantecwhich were also multibillion-dollar purchases of Broadcom.

VMware It is said that 40 days To find a buyer willing to pay more than $61 billion that Broadcom offers.