After Broadcom completed its purchase of VMware in November of 2023 they executed their business plan. The goal was to shift from a volume-based growth model to a high-margin enterprise focus.
Broadcom has executed this plan flawlessly.
- Revenues are up significantly
- Operating margins have increased from 16% to 67%
- Retention of the largest customers has exceeded 90%
Broadcom’s highly successful application of the 80/20 rule (concentrating on the 20% of customers that generate 80% of the value) has resulted in significant positive financial results and a lot of churn at the bottom. Severe pricing shock has caused many small and midmarket customers to seek alternatives to VMware.
Shedding less profitable customers is expected. However, this aggressive plan is also having an impact on Broadcom’s largest customers. Many are exploring alternatives as part of a two-tier strategy – VMware for mission-critical workloads, and an alternative infrastructure solution for non-mission-critical workloads.
What this means is that a lot of organizations are trying to get a handle on the cost of their VMware infrastructure. At the same time, they are also considering alternatives, either as a complete replacement for VMware or as part of a two-tier strategy.
To help our customers, and any VMware user, large or small, get a better handle on their VMware licensing costs, we developed an easy-to-use calculator.
We call it the True Cost of VMware Calculator because it doesn’t just calculate estimated VMware license fees; it presents the opportunity cost of those license fees.
The calculator handles three scenarios:
- renewal of existing VMware environments
- forced upgrade from legacy VMware products that have been dropped
- new VMware environments
The calculator is flexible, allowing for overrides and adjustments to match each situation. A summary report is generated for internal use.
The estimated VMware licensing fees are then compared over a three-year period to licensing fees for a Premium Subscription for OpenNebula, a mature and proven, enterprise-grade infrastructure platform. OpenNebula is widely used and is a proven VMware alternative for organizations that need an industrial-strength infrastructure orchestration solution.
If you are analyzing VMware license fees, whether you have a specific plan in mind or not, we believe you will benefit by running the numbers through the True VMware Calculator, by Nubius Solutions, LLC.