VMware Movers Will Profit from Microsoft's Licensing Reductions and Alleviation

Microsoft has introduced new licensing perks and reductions to facilitate the migration and operation of VMware workloads on Azure VMware Solutions. This initiative comes as a response to VMware's new parent company, Broadcom, whose recent licensing changes have caused many VMware customers to reassess their options.

Through the VMware Rapid Migration Plan, this program offers consistent license and cost benefits for workloads moving to the Azure VMware Solution platform. Clients can secure reserved instances for one, three, or five years at fixed rates, presenting a more cost-effective alternative to pay-as-you-go options.

Customers who purchase a one-year reserved instance term before the year's end will receive a 20% discount on Azure VMware Solution from Microsoft as an added incentive. Additionally, the five-year reserved instance option will only be available until June's end.

Microsoft is also offering up to $120,000 in Azure credits for customers who buy a new reserved instance plan, which can be used toward other Azure services or the Azure VMware Solution. Other benefits include Software Assurance, providing free Extended Security Updates for older versions and enabling users to run Windows Server and SQL Server on Azure VMware Solution without extra licensing fees.

Hyperscalers like Microsoft are critical to VMware. In 2019, Microsoft, VMware, and Dell Technologies (the former parent company of VMware) launched the Azure VMware Solutions platform. This hybrid cloud offering allows users to run VMware’s software stack on Microsoft Azure.

According to Tracy Woo, a senior analyst at Forrester Research, VMware will continue to have a role in virtualization, though it may not be as significant a revenue driver as it once was. Hyperscalers are dominating the cloud space and expanding into the private cloud area. Microsoft's Azure Stack is currently the most widely used private cloud technology, with VMware's vSphere/vCenter also maintaining strong positioning.

In response to Broadcom's recent changes to VMware’s operating model, Microsoft has added new licensing perks and reductions. This strategic move reinforces Microsoft's commitment to supporting VMware's direction under Broadcom.

Omar Khan, General Manager for Azure Product Marketing, noted that many customers are reassessing their VMware workload strategies, considering both on-premises and cloud options. This is an opportunity for clients to plan carefully, reduce technical debt, and position themselves for future success.

VMware and Broadcom are actively working to clarify changes, with Broadcom CEO Hock Tan sharing insights in several blog posts. These developments highlight the significant shifts in the landscape of virtualization and cloud solutions, as companies consider their paths forward in a market increasingly shaped by hyperscaler partnerships.