VMware customers under Broadcom will face price increases if they do not start a subscription model on time. The fines apply not only to renewals, but also to new subscriptions.

Broadcom imposes fines on VMware customers in the form of price increases of around twenty percent. These fines are the result of what Broadcom considers late subscription renewals. However, customers tell Business Insider that they are surprised by the increases and that they are being enforced even in situations that seem less obvious.

Broadcom, for example, requires VMware customers to switch from a perpetual licensing model to a subscription formula. Adjustments to the offering are already causing costs to increase tenfold for some (usually smaller) customers. In many cases, such customers are starting a subscription using the classic licensing model for the first time and this can take some time. Fines are also possible if Broadcom believes such new subscriptions were not completed on time.

Threatening emails

Partners report that there are scenarios where customers continue to receive support but are already incurring fines. The fines are a result of the changed contract conditions. Customers are not yet aware of this and many buyers do not agree with it. However, their dependence on VMware to acquire Broadcom leaves them no other choice.

Business Insider reports that emails announcing fines appear threatening. The fines are shown in bold and sometimes serve as a warning to customers whose deadline is approaching. Customer loyalty doesn’t seem to play a role.

Extra drops in the ocean

Fines for late renewals are not uncommon in the industry. In this case, they stand out because Broadcom’s acquisition of VMware is already a nightmare for many customers. Prices are skyrocketing, available packages are no longer tailored to companies’ needs, and deadlines are quickly pressing. However, companies are stuck in VMware and unable to migrate in a timely manner when they want to.

Advocacy groups criticize Broadcom’s behavior, but it has little effect. The company is only interested in the largest strategic customers. The fact that other loyal users will get into trouble and possibly leave at some point is not a bad thing about the new strategy. Broadcom expects VMware’s revenue to decline, but costs to fall faster, allowing the company to see higher margins. That doesn’t make customers happy, but it does make shareholders happy.