Broadcom CEO Hock Tan highlighted VMware’s Cloud Foundation (VCF) as the vendor’s future-looking innovation platform – as well as admitted to license change challenges to that platform – as part of a new blog post touting Broadcom’s first 100-plus days of VMware ownership.

In the post, Tan reiterated the notion that the VCF platform is targeted at enterprise network transformation pain points. These include complexity that slows down innovation, the need for resilience and security, and the ability to attract developers.

“VMware Cloud Foundation … is our platform for innovation going forward,” Tan wrote. “It’s the solution that will help us address the business outcomes our customers have expressed to me directly as their most critical priorities.”

Broadcom's enterprise ambitions

Tan explained that VCF’s increased integration makes it more potent and easier for enterprises to use as they manage their mixed-cloud architecture.

“With VCF, our customers will achieve a highly efficient cloud operating model that combines public cloud scale and agility with private cloud security and resiliency,” Tan wrote. “And we believe it delivers this at a lower cost of ownership for the average enterprise customer, compared with the ever-increasing cost of a public cloud. To allow more customers to benefit from VCF, we’ve cut the previous subscription list price by half and increased support service levels.”

That pricing note was tied to one of Broadcom’s first moves following the close of its VMware acquisition. This included a controversial reorganization of VCF into two primary offerings, with the first slashing the previous subscription list price in half while adding higher support service levels, and the second was the launch of a new VMware vSphere Foundation package that integrates vSphere with VMware’s intelligent operations management.

Those pricing changes were part of Broadcom’s move to eliminate VMware’s previous perpetual license model and convert customers as they come up for renewals with deeper software services on a subscription basis. This includes its “support and subscription” renewals for perpetual offerings and hybrid purchase program/subscription purchase program credits.

Customers that are already on perpetual licenses will be able to keep those terms but will not be able to renew those licenses once they hit their end date.

Is the company focusing on revenues over customers?

Tan told investors during Broadcom’s recent earnings call that the pricing changes will drive new revenue growth.

“Revenue from VMware will grow double-digit sequentially quarter over quarter through the rest of the fiscal year. This is simply a result of our strategy with VMware,” Tan said. “We are focused on upselling customers, particularly those who are already running their compute workloads with vSphere virtualization tools, to upgrade to VMware Cloud Foundation.”

This new focus has drawn some barbs, as analysts have noted Broadcom’s strategy has rankled many enterprises that are deeply reliant on VMware.

Tracy Woo, principal analyst at Forrester Research, told SDxCentral in an interview that the vendor’s recent moves to simplify VMware’s offerings from “like 92 SKUs to two” does back the new focus on immediate revenue generation, but the reason VMware had so many options to begin with was because it was providing a broad mix of options for a wide customer base.

“I don’t advise people to engage with VMware right now,” Woo said. “There’s too much that is in the air and from the stories that I have heard on how they have raised pricing on their contracts and given the message of ‘good luck trying to get out of the stack. It’s going to cost you a lot more to do that than to just pay this increase.’”

Tan did hint at these challenges in his latest blog post, but claimed they would benefit all long term.

“Of course, we recognize that this level of change has understandably created some unease among our customers and partners,” Tan wrote. “But all of these moves have been with the goals of innovating faster, meeting our customers’ needs more effectively, and making it easier to do business with us. We also expect these changes to provide greater profitability and improved market opportunities for our partners.”

Broadcom revenues surge, but investors are not impressed

Despite the controversy, Broadcom reported VMware-boosted earnings.

VMware accounted for most of Broadcom’s 34% increase in Q1 revenues, contributing $12 billion to the coffers. Broadcom still managed to grow its business sans-VMware by 11% year over year.

Tan had previously stated that Broadcom’s integration of VMware would take a year and cost around $1 billion in “transition spending,” but the effort will result in a combined entity that will generate $50 billion in revenue over the next year.

Despite the robust earnings, Broadcom’s stock price has dropped nearly 10% since those numbers were released.