Broadcom plans a “rapid transition” to subscription revenue for VMware

Last week, the company said it wanted to drop 61 billion in cash and stock to acquire the company. We don't know what changes will be made to the business model of VMware once the acquisition is complete. The emphasis on software subscriptions was made clear in the earnings call by the president of the software group.

As reported by The Register, the transition from perpetual licenses to subscriptions will take several years. The company wants to keep the current customers happy and take advantage of the existing sales team.

Virtualization software that requires low-level hardware access gets broken more often by new OS updates than other apps, which is one of the benefits of subscription-based software. The move toward more subscription-based software licensing could be bad news for individuals and businesses who prefer to pay for individual upgrades as they need them, rather than continuously for as long as they need the software.

It's not the first company to prioritize subscription-based software-as-a-service over licensed software. Adobe moved its Creative Suite apps to a Creative Cloud subscription model nearly a decade ago, with no remaining options for customers who prefer perpetual licenses. Microsoft still offers perpetual licenses for its Office apps for Mac and Windows, but it doesn't provide the same features as the continually updated Microsoft 365 version. One-time game purchases are being replaced by ongoing subscriptions.

Once the acquisition goes through, the VMware name will be used to replace the Broadcom Software Group branding. The companies formerly known as CA Technologies and Symantec are included in the Broadcom Software Group.

It has 40 days to find a buyer willing to pay more than the $60 billion that Broadcom is offering.