Broadcom has signaled its $61 billion acquisition of VMware will involve a “rapid transition from perpetual licenses to subscriptions.” (The Register)
I'm wondering what is your general opinion about this announcement of transition to subscriptions? I don't like this new chapter for VMW at all.
Subscription is a key driver to stock valuation. VMware could not get there due to a variety of reasons. IMO if they were a subscription based model 3yo 4 years ago they would not be in this position as their stock price would likely have been 30% to 60% higher. Huge strategic bungle not moving earlier to subscription. VMware is a good legacy software company but they missed any chance they had to be relevant as an innovator in todays modern software world. I think the outcome in landing with Broadcom was set in stone 5+ years ago given this lack of vision. Good luck to all.
The entire software world is doing this. Just too many big customers riding on the wave of heavy discounts and legacy full lifetime licenses. There’s no evolution nor real partnership with such behaviours.
Flipping to subscription was the new life for the same old products. Nothing new there but I wonder how the Broadcom effect will change the existing plays.
If you have been paying attention this is no different then what VMware was already trying to do. So unsure why this is a thing people are worried about.
Subscription is all ensuring that the customer keeps paying. With perpetual the customer can refuse to upgrade untill you fix some problems or add a feature. With subscription if they don't keep paying you just shut them off and their stuff stops working and then they pay.
Also from this article - https://www.theregister.com/2022/05/30/broadcom_strategy_vmware_customer_impact/
""Krause also outlined Broadcom's ambition to stop selling perpetual licenses and sell more, and longer, subscriptions. Doing so creates what he called "quality revenue" that's better than the revenue from maintenance deals.""
I think that moving to subscription aligns with the current plans of VMware as it introduces a pathway from onprem licenses to subscriptions.