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Original page content Education bodies and charities are facing massive increases in VMware licensing fees after the virtualisation supplier’s new owner Broadcom withdrew a programme offering generous discounts to non-profit organisations. Many customers also face extra costs associated with changes to VMware software bundles now being sold as well as server licence changes that may disadvantage those organisations who have deployed VMware based on powerful multi-core on-premise servers. The academic licensing programme offered significant discounts against list prices, and some education customers that have already reached a renewal point are receiving new licence fees that have more than doubled. Often, they are locked in to VMware as their IT infrastructure relies on the software and they have not been given time to migrate. London Grid for Learning (LGfL) is a non-profit owned by London local authorities that provides IT services and internet connectivity to over 3000 schools. It provides IT services that are essential to the education system in the capital and across England, such as school admissions, free school meals, and internet connectivity, security and web filtering. Over two million teachers, pupils and public sector workers across England connect to the LGfL network on a daily basis – and its critical datacentre infrastructure is built around VMware products. According to Michael Eva, programme manager at LGfL, new pricing was provided by VMware only six weeks before the April 2024 licence renewal date. LGfL currently has a perpetual licence, a pricing model which Broadcom has also withdrawn, forcing a move to a subscription-based licence. LGfL bought a three-year VMware licence in 2021. The renewal price for a new three-year contract quoted to LGfL last month is a 268% increase in cost. If LGfL chose not to take the three-year subscription licence and only take up an annual maintenance agreement in order to review alternative products, the price for a one-year renewal would still be 125% of the cost of the previous three-year licence and maintenance arrangement. It is deeply concerning that a supplier can increase costs by hundreds of percentage points and not provide pricing until six weeks before renewal Michael Eva, LGfL Eva described the price rises as a “blatant misuse of VMware’s market position”. “If LGfL ever decided not to renew the proposed subscription-based model, the application would cease to work, which would cause chaos and disruption to tens of thousands of classrooms in England,” he said. “It is deeply concerning that a supplier can increase costs by hundreds of percentage points and not provide pricing until six weeks before renewal. It feels deeply unethical, especially as there is no reasonable time to look at alternative solutions and to implement them without causing disruption to teaching and learning or being exposed to significant security risks.” If LGfL chose not to renew its maintenance agreement, the VMware platform would no longer receive security patches, leaving its virtual environment at a critical risk. LGfL’s VMware implementation also manages the secure, filtered internet service that children use to connect to the web, both in school and at home. Without this, pupils would be connecting directly to the internet with no filtering applied, which presents serious safeguarding concerns. The LGfL VMware environment also provides schools - both LGfL customers and non LGfL customers - with a wide range of curriculum content, along with services for schools to claim pupil premiums from central government for under-privileged families. LGfL has been a VMware user for more than 10 years. Eva said that as a non-profit, the only way the organisation can recoup the additional licence fees would be by charging cash-strapped schools more for its services, which is not an option for LGfL. Licensing changes Other academic institutions have experienced significant delays working with academic resellers, who need to liaise with the larger VMware resellers who deal directly with Broadcom. Other licensing changes are set to impact those IT departments that use VMware via their cloud service provider, where sources suggest licence fees have gone up by as much as 1200%. KU Leuven in Belgium is another of the institutes that has been affected. Herman Moons, a member of the university’s ICT management team, said KU Leuven is a heavy user of VMware and typically pays €200,000 per year in licensing fees. “We've invested a lot in virtualising everything. We use VMware for the e-learning environment and our administrative environment. Our SAP systems run on top of VMware,” he said. The university’s websites also use VMware and it operates a VMware-based virtual desktop infrastructure (VDI). Broadcom has also changed the way VMware is priced from per-socket to per-core licensing. Read more about Broadcom and VMware VMware/Broadcom: Should you consider the Nutanix hypervisor? - Nutanix’s latesting quarterly filing shows the company is benefiting from the fallout following Broadcom’s acquisition of VMware. Broadcom swings its axe at VMware - The dust had barely settled on Broadcom’s $69bn acquisition of VMware before Broadcom, much as its critics had predicted, blew it all up in the air again. Uncertainty lingers with Broadcom’s VMware acquisition - Large enterprises with complex VMware environments are looking to de-risk their businesses from potential changes resulting from the Broadcom-VMware deal. Moons said this effectively puts those organisations that previously ran large multi-core server installations at a financial disadvantage. In a blog posted in January examining the per-core licence change, Derek Loseke, a senior engineer at Kidwell Technologies, which creates systems for schools and hospitals, wrote that VMware’s new licensing has a minimum limit of 16 cores per processor. “If you have two eight-core processors in your server, you actually need to buy 32 cores [of VMware licensing],” he warned. Loseke said that vSphere Foundation and vSphere Standard are sold per-core, but VMware Essentials Plus is sold only as a 96-core licence. He said: “This means that if you have a small environment like many of my clients, with a single 16-core processor, you're still going to need to pay for the 96-core kit when using Essentials Plus.” Unlike many facing an imminent price hike, KU Leuven was in the fortunate position of being able to renew its VMware licence at the end of 2023. “We got a quote for 90% of our installation and we were able to place the order at the end of last year,” said Moons. This, he said, provides three years of academic licensing. The reason Moons was able to achieve this was because the university had not got round to consolidating all its VMware contracts. “Of the 10 VMware contracts we had, one contained the virtual desktop component. That was the one contract we couldn't renew,” he said. In February this year Broadcom announced the end-user computing division of VMware, which includes its VDI product offerings, was being sold to global investment firm KKR. Prior to the sale, Broadcom had not made its intentions fully clear over the future of the end-user computing division. This has complicated licensing negotiations, especially for those organisations that bundled in VMware VDI licensing with server virtualisation licences. Moons said KU Leuven had a lucky escape: “I was planning to consolidate this year so I was really relieved we hadn't done so yet.” VMware software bundles drive up costs Broadcom has also made changes to the VMware products it offers, as Moons explained: “They [Broadcom] don’t sell VMware vSphere Enterprise Plus anymore. They put it in a bundle with a lot of other products that we don't need. The bundle is more expensive. This is okay if you use everything, but not if you only use the virtualisation software.” Moons’ main problem with VMware by Broadcom is the way these changes have been put in place. He said: “The problem is not that they changed their licensing model, but the fact that they don't give you time to do a migration to another solution.” Among the challenges, he said, is that certain products, such as the university’s SAP system, were previously only certified to run on VMware, which meant it was not possible to use alternative hypervisors. One of his options going forward is to downgrade to VMware vSphere standard edition, which lacks some of the features needed for enterprise deployments. Going down this route would not require KU Leuven to embark on retraining, which would be needed if alternative hypervisor technologies were deployed instead. The standard edition offers similar functionality to other hypervisors. As the university plots out its virtualisation strategy, Moons said he is also considering alternative hypervisors like Hyper-V from Microsoft or the Linux-based KVM hypervisor. Changes to VMware licensing The generous discount previously available to academic institutes is no longer on the price list; Broadcom has removed some products and bundled others into more expensive packages; The server software licensing model has also been changed from a socket-based to core-based licence, which impacts those organisations deploying servers with powerful multi-core processors. Regulators are also being urged to look at some of Broadcom's recent changes. In March the Cloud Infrastructure Services Providers in Europe (CISPE) membership body asked regulators, legislators and courts across Europe to scrutinise the actions of Broadcom in unilaterally cancelling licence terms for virtualisation software. According to CISPE, new terms in VMware software licensing include minimum commitments amounting to tens of millions of Euros over three-year periods. CISPE said that in some cases, costs have increased 1200%. At the time of writing, Broadcom had not responded to Computer Weekly’s questions over the changes to VMware’s licensing and product bundles. However, in March Broadcom CEO Hock Tan posted a blog covering the first 100 days of taking over VMware. Tan discussed the company’s plans to push VMware Cloud Foundation, in a bid to provide CIOs and CTOs with an innovation platform that simplifies support and improves resiliency. He wrote: “We overhauled our software portfolio, our go-to-market approach and the overall organisational structure. We’ve changed how and through whom we will sell our software. And we’ve completed the software business-model transition that began to accelerate in 2019, from selling perpetual software to subscription licensing only – the industry standard.” Commenting on the software licensing changes to VMware, Mark Boost, CEO of cloud provider Civo said: “People are frustrated with the updates. Under the new system, licences are now more expensive than before, with subscriptions needed and products sold in bundles. There’s also concern that this move is going to stifle innovation across the industry by strengthening hyperscalers and harming cloud competition.” Broadcom’s VMware acquisition explained: The impact on your IT strategy In this guide, we look at Broadcom’s acquisition of VMware and how it influences your IT desktop, server, cloud and supplier management strategies | UK non-profit London Grid for Learning and Belgian university KU Leuven are just two of the academic organisations facing huge licensing increases after Broadcom scraps VMware academic discount scheme