VMware Licensing Under Broadcom: Proxmox as an Alternative

Since Broadcom’s acquisition of VMware at the end of 2023, virtualization has, for many mid-sized companies, turned from a technical into an economic question. The licensing models were rebuilt, the portfolio radically consolidated, and for a portion of customers the costs have risen considerably. The obvious reaction – “then we’ll just switch to Proxmox” – is sometimes right and sometimes premature. This article frames the actual licensing situation and describes when a migration holds up and when VMware remains the more sensible decision.

What has actually changed under Broadcom

Three changes are documented and relevant to the cost calculation.

Subscription only. Broadcom has discontinued the sale of perpetual licenses for new purchases. Existing perpetual licenses remain valid within their support term, but new purchases are exclusively in the subscription model with annual renewal. Anyone who used to buy once and use for years thus shifts into an ongoing cost position.

Radical portfolio consolidation. From several thousand SKUs came a few bundles: VMware Cloud Foundation (VCF) as the full stack, vSphere Foundation (VVF) as the core with operating tools, plus vSphere Standard and vSphere Enterprise Plus in smaller cuts as well as complementary add-ons such as vSAN or Live Recovery. For environments that previously licensed individual components deliberately, bundling frequently means that functions are paid for that are not used.

Core-based licensing with minimum quantities. Licensing is per CPU core, with a minimum of 16 cores per CPU. A plan communicated via distributors in early 2025 to raise the minimum to 72 cores per order was withdrawn after clear pushback from the market on the intended effective date (April 10, 2025); the 16-core minimum per CPU still applies. On top of this: for late renewals after the expiration date, Broadcom provides for a surcharge rule; there is no generous grace period. Punctuality at renewal thus itself becomes a cost factor.

How much the costs rise in individual cases depends on the starting license, the core count, and the chosen bundle; blanket percentages from the trade press vary widely and are not useful as a planning figure. Only the calculation on your concrete environment is dependable. Anyone who draws it up quickly sees where the pain sits: with small clusters with few, well-utilized hosts, where minimum quantities and bundling take an especially unfavorable effect.

Additionally: the partner program

Beyond the license itself, Broadcom has also rebuilt the sales and provider landscape. The previous program for Cloud Service Providers (VCSP) including the white-label model was ended at the end of October 2025 and replaced by a program in which partners participate by invitation only. For companies this means indirectly: the familiar local point of contact or hosted VMware service can fall away, and the number of procurement paths narrows. This is not a technical argument against VMware, but a factor in procurement and operations planning.

Proxmox VE as an alternative – and what it delivers

Proxmox VE is an open-source virtualization platform based on KVM and LXC, with a web interface, clustering, high availability, and – via Proxmox Backup Server – integrated backup. The software itself is free; what costs money is the subscription, which provides access to the stable enterprise repository and vendor support. The economic difference from VMware lies less in “free versus expensive” than in the cut: the Proxmox subscription is charged per CPU socket, without core minimums and without the bundling of functions that are not needed.

For a substantial portion of mid-sized environments – classic server virtualization, manageable clusters, standard workloads – Proxmox VE functionally covers what is actually needed. This is exactly where a switch is a serious option, and this is why the licensing-cost development at VMware is, for many companies, the occasion to examine alternatives at all.

When a switch holds up – and when VMware should stay

The honest answer is: it depends on the environment. A switch to Proxmox VE is usually viable when

the workloads are standard and no VMware-specific functions are deeply embedded,
the clusters are manageable and the new minimum quantities and bundles hit especially unfavorably,
there is no hard dependency on third-party products that are certified or supported exclusively for vSphere,
and the team is ready to shift operating routines to a new platform.

Conversely, there are good reasons to stay with VMware. Anyone who runs NSX microsegmentation, vSAN in production, mature DRS, or a tightly interlocked ecosystem of backup, monitoring, and security products certified for vSphere shifts effort and risk in a switch instead of reducing them. Software vendors who guarantee support only on vSphere also effectively tie you to the platform. And finally, the pure license sum is only part of the calculation: migration effort, training, adapted operating processes, and the rebuilding of automation belong to it. In some cases, VMware remains, after full consideration, simply the more economical choice – above all where still-valid perpetual licenses are running and buying time for an orderly decision.

This is why at the start there is no product recommendation but a stocktaking: which functions are really in use, which dependencies exist, and what the respective option actually costs over the contract term – license and operation together.

Migration without operational interruption

If the decision for Proxmox VE is made, the approach determines the risk. What has proven itself is a stepwise migration during ongoing operation instead of a cutoff-date switch:

Build the target environment in parallel. The Proxmox cluster is set up alongside the existing vSphere environment and fully tested before a single productive VM moves.
Move in waves. Virtual machines are migrated in groups – uncritical ones first, business-critical ones last, each with a defined maintenance window. Proxmox VE brings tools for importing VMware VMs; what is decisive is the subsequent adaptation of drivers, guest-driver integration, and network configuration.
Test the way back before every step. Before each wave stands a tested rollback: the source VM is kept intact and shut-down-capable until the migrated instance is stably verified. This keeps every single switch reversible.
Backup first. Before the migration stands a checked, recoverable backup – not as a formality, but as a dependable fallback should a wave not run as expected.

The sore point of almost every migration is not the VMs themselves but the periphery: backup connection, monitoring, automation, and the question of whether third-party software in use is supported on Proxmox. These dependencies belong resolved before the first migration wave, not in the middle of it.

How sector7 supports you

We plan, migrate, and operate virtualization environments on VMware and Proxmox VE – vendor-close but not vendor-beholden. As a Proxmox reseller we also supply the subscriptions, and as a certified engineering house (Juniper, Cisco, HPE, F5, Fortinet, Palo Alto Networks) with our own server park in Germany, we know both platforms from ongoing operation, not just from the data sheet. At the start stands the sober assessment of whether a switch holds up for your environment at all – including an honest cost calculation over the contract term and an assessment of your licensing and procurement situation. If the decision falls for a migration, we carry it out stepwise, during ongoing operation, and with tested ways back; the subsequent operation is monitored by our NOC around the clock, on request at plannable flat monthly rates.

VMware Licensing Costs Under Broadcom: Proxmox as an Alternative – Soberly Assessed