This is Part 1 of our four-part series examining Broadcom’s acquisition of VMware, the disorienting changes that followed, the legal and regulatory matters that came after, and what VMware customers should do to protect themselves.
Simple answer: Because it impacts so many companies in such a dramatic fashion.
Imagine walking across what appears to be familiar ground, a path you’ve walked innumerable times over the years. Nothing looks particularly dangerous or out of the ordinary. You know the terrain, which way to go, and what to expect. You are, in a word, complacent. Perhaps a bit more reliant on autopilot than you normally would be. But, as they say, “If it ain’t broke, don’t fix it.” Then, without warning, you find yourself on terra incognita, or even worse, in a minefield of unforeseen risks and hazards.
Put differently, what if, without warning, you find that the proverbial “it” IS “broke” and needs fixing?
For many long-term customers, the VMware relationship broke abruptly after Broadcom acquired VMware. From that moment on, a vendor relationship that once seemed stable and predictable had become anything but, and the long-term consequences of making the wrong move became unusually significant. And, just like that, the world of software licensing changed.
In sum, Broadcom’s November 2023 absorption of VMware for approximately $61 billion in cash and stock marked one of the largest technology acquisitions in history. To put it mildly, the acquisition disrupted the status quo, with Broadcom using it as a vehicle for seismic change – be it pricing, rules, or other terms governing software customers had already purchased. Broadcom’s new playbook, in our view and in the view of many, was a radical departure from the terms under which customers originally purchased VMware software.
These changes have been of great interest to our clients and our firm. Over the last two years, Beeman & Muchmore has been retained by multiple companies trying to manage the precipitous changes in Broadcom’s VMware licensing strategy. During that time, we have benefitted from a firsthand look at Broadcom’s approach, and, with no hyperbole, “mercurial” barely begins to describe the volatility and unpredictability. We have witnessed dramatic escalations and existential threats to our clients’ business interests delivered with little apparent warning, leaving long-standing and once-loyal customers struggling to navigate rapidly changing demands and uncertain consequences.
We have advised clients through these uncertainties while closely following litigation matters around the globe. Over this and the next three blog posts, we take a closer look at how Broadcom has approached VMware licensing since the acquisition, the legal and commercial disputes that have followed (thus far), and what these developments mean for companies that depend on VMware software.
To understand how we got here, it helps to look at Broadcom’s broader strategy with regard to enterprise software.
VMware was not Broadcom’s first foray into enterprise software, but it was by far its biggest. The VMware acquisition marked a major turning point in Broadcom’s transformation from a company known primarily for semiconductors into a major provider of enterprise infrastructure software.
Arguably, Broadcom’s broader strategy began in earnest in 2018, when Broadcom acquired CA Technologies for approximately $18.9 billion. At the time, Broadcom described CA as an important addition to its portfolio of “mission critical technology businesses,” citing its sizable customer base and predictable, recurring revenue. Broadcom said the acquisition was an important building block in its effort to create “one of the world’s leading infrastructure technology companies.”
As we will discuss later, the CA acquisition itself has spurned contentious litigation. While this acquisition was no less impactful to its customers, because CA has a much smaller customer base than VMware, it did not yet set the industry on high alert.
Four years later, Broadcom announced its proposed acquisition of VMware and said the combined company would give enterprise customers “greater choice and flexibility.”
Broadcom's public statements at the time also offered reassurance to VMware's existing customers. In November 2022, Broadcom CEO Hock Tan said the company intended to “continue serving customers of all sizes” and described its approach as “no customer left behind.”
Whether Broadcom changes can actually benefit customers of all sizes is another matter entirely. Critics have urged that the primary beneficiaries are larger companies while smaller companies are seeing massive price increases and little value. As reported by Networkworld, even Broadcom’s CEO appears equivocal as to whether there is benefit for mid-sized or smaller companies:
“Beyond the largest 10,000, are we seeing a lot of success? We’re seeing some,” Tan said, adding that the value of moving to VCF is much less for smaller companies. “We see the top 10,000 as where it makes a lot of sense, where they derive a lot of value in deploying private cloud using VCF. Now we are looking at whether the next 20,000, 30,000 mid-sized companies see it the same way.”
But Broadcom was also explicit about what it planned to change. On an earnings call the same day Broadcom announced the VMware transaction, executives discussed VMware’s existing perpetual-license business. Hock Tan described VMware as having a roughly $3 billion business in perpetual licenses and said Broadcom intended to convert those customers to subscriptions “over the next couple of years.” He described the change as “restructuring the contracts, perpetual to subscription.”
Broadcom’s announcement would prove to be one of the most significant and consequential changes Broadcom made after acquiring VMware. More than just a change in VMware’s product catalog, it would reshape the commercial relationship between VMware and its customers and raise fundamental legal and ethical questions.
A brave new world lay ahead.
In Part 2, we examine the shift from perpetual licenses to subscriptions, the elimination and bundling of products, and the important distinction between what Broadcom now offers and the rights customers may already have under agreements they signed years ago.
Published on October 7, 2026
Software licensors are known for vague contracts—they’ve made a business of it.
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