Broadcom’s recent “major” update to VMware’s Cloud Platform provided the new parent with an opportunity to shower love all over its new acquisition, but it also continued to highlight ongoing controversy over license and pricing changes that have come along with VMware now nesting under the Broadcom umbrella.

Prashanth Shenoy, VP of cloud platform, infrastructure and solutions marketing at VMware, spent considerable time during a press briefing on the latest VCF updates attempting to counter some “of the FUD [fear, uncertainty and doubt] and noise in the market saying, ‘hey, when we became part of Broadcom we increased the prices and we really cut down on the offers.’”

Shenoy said that on the first accusation, “nothing can be further from the truth.”

“We cut the price by half for our VMware Cloud Foundation subscription offer,” Shenoy explained, adding that the price has dropped from $700 per core, per year, to $350 per core, per year, as part of the new subscription offering.

“What we did was move completely from a perpetual CPU-based model that we had in the previous world to a core-based subscription pricing model,” Shenoy stated of the FUD-inducing move.

Shenoy then reiterated previous comments that VMware was late in moving toward this subscription model, which “frankly for those of you who follow the cloud infrastructure industry pretty closely, this is the industry standard that every other infrastructure and enterprise software vendor has brought in for the last several years.”

Despite the boast, Shenoy did admit that long-time VMware customers with perpetual licenses and renewals of support and services for those licenses were seeing “pricing challenges.”

“Since we sunset the perpetual and the SNS renewals on them, they don't have the choice and the only choice that they have is subscription and that's where you see the price increase when they're comparing an SNS renewal price to a full-stack subscription price. … And that had to be done for us,” Shenoy said, referring to his claim of subscription now being the industry standard.

Clouding the VMware price comparison Further clouding the historical pricing comparison were Broadcom’s moves to drastically cut the number of individual VMware services to just a handful, with most of those packaged into one of its main core products like VCF, vSphere or vSAN. Shenoy explained that this has allowed customers purchasing more than one of those core products to see a cost benefit.

“When you look at the cost comparison, we've seen any customer who has more than one product component in the stack, like vSphere with VSAN, or vSphere with NSX, or vSphere with Aria automation, … for them, cost wise, it turns out to be way better than buying a-la-carte components,” Shenoy said, before adding, “if you're only vSphere and you want a VCF, definitely you're going to see a price increase.”

Naveen Chhabra, principal analyst at Forrester Research, noted that this move has had the most impact on customer pricing. He noted that the previous model would allow customers to buy just a shirt if that’s all they needed, but now Broadcom is pushing customers to buy a whole suit.

“You can argue that, yes, you can save money in that model, but is that what you were looking for? No, I was just looking for a shirt,” Chhabra said, adding that customers are being upsold on larger packages like VCF that have items they might not need. This then allows Broadcom to cut the pricing on that package to make it appear to be a deal when in the end a customer ends up spending more than if they wanted just that single item.

That upcharge then plays out longer term in that the new subscription model requires those customers to pay that price each year.

“It is not a five year [total cost of ownership],” Chhabra said. “It is a year-on-year spending that is increasing.”

Chhabra previously noted that this is a significant challenge for those customers due to how engrained VMware products have become in the enterprise.

“When I talk to the clients, I’m telling them that with dependencies it might not be easy to simply replace or swap a VMware hypervisor with another hypervisor because of the ecosystem impact, because of the ecosystem effect,” Chhabra said. “I think the power of VMware is not because of the VMware technology, it is because of the network effect. It’s both the north and south ecosystem partnerships that VMware had developed over the years, and that brings power to the VMware options.”

Forrester Research recently released a report that found “one VMware client shared that they’re experiencing a 500% price increase based on their current use of VMware products and how it maps to the new licensing and packaging.”

Is Broadcom willing to haggle? Shenoy did note that Broadcom was working with customers through the pricing change, with a focus on potentially ramping to a customer’s actual needs.

“We are working with them to do a maturity model, to do an assessment, to truly understand what the use cases are and their outcomes are, and giving them a phased approach, not only from a technology deployment and adoption, but also from a pricing perspective, to get to where they want to be,” Shenoy said. “We are extremely aware of the concerns our customers have in terms of this shift to move to a full stack, so we are working with them to have a phased approach so they can show the value at every part of the phase, not only to the IT side, but also to the CFO side, and gain the technology benefits and the business benefits as we do that.”

Rivals had previously hinted at Broadcom’s willingness to negotiate pricing, especially with larger customers.

“We’ve seen Broadcom display a lot of flexibility with respect to their pricing, their packaging changes, especially when they are faced with the probability of losing some of their larger customers or responding to push back from the market and from the customer base,” Nutanix CEO Rajiv Ramaswami said during the vendor’s most recent earnings call.

Ramaswami further explained that this pushback has also involved Broadcom being very active over the past several months in adjusting to the change their decisions are having in the market.

“They’ve tried a bunch of things,” Ramaswami said. “They’re stepping back on some of the things they’ve tried, so the competitive situation is quite dynamic on that front.”

Chhabra added that he thinks Broadcom will indeed have to be flexible on pricing terms, especially with larger customers that might be tempted to look elsewhere, but that VMware’s new packages will remain rigid.

“What VMware will not be flexible on is, ‘hey, let me create some new bundles just because you want it.’ That is not going to happen,” Chhabra said. “You want to meet their price targets, that can happen by additional discounts. That's it. No more changing of the packaging, no more changing of the product composition those packages.”