How VMware Licensing Works

VMware’s licensing model changed quickly after Broadcom completed its acquisition in December 2023. The shift touched every part of the portfolio, and customers had to adapt almost immediately.

Broadcom removed perpetual licenses and moved the entire VMware catalog to subscription-only as of February 2024. This wasn’t a small adjustment. The company collapsed more than 160 SKUs into two main bundles: VCF and VVF. This consolidation was meant to simplify the lineup, although many organizations experienced the change as disruptive because it altered how capacity is measured and how renewals work.

A simple way to see the impact is to look at adoption numbers. Broadcom reports that 87% of VMware’s top 10,000 customers already operate under VCF, which suggests that most large enterprises had to move early.

The change wasn’t smooth for everyone. A well-known example comes from Tesco, which filed a lawsuit claiming Broadcom ended support for its perpetual VMware licenses even though those licenses were purchased with support timelines through 2026. Tesco argued that the move forced them toward higher subscription costs and affected almost 40,000 server workloads. While the legal process is still unfolding, it shows how quickly these licensing shifts reshaped the market.

VMware’s new model brings specific rules about how compute capacity is measured, and these rules decide how much a customer pays.

Per-Core Model

The first major rule is that VMware licensing works by counting every physical CPU core. Older “per CPU up to 32 cores” models are gone. This means that hosts with high-core-count processors no longer get cost efficiencies from socket-based licensing. Licensing follows the hardware exactly, and organizations need accurate inventories to avoid under-counting.

Minimums That Affect Cost

Two minimums define how costs scale:

• 16-core minimum per CPU, even when a processor has fewer cores
• 72-core minimum per license instance, introduced on April 10, 2025

These two rules can combine in ways that surprise teams. For example, a host with two 10-core CPUs technically has 20 physical cores. Under the old logic, this would require licensing 32 cores (16 per CPU). Under the 2025 change, the same host now triggers the 72-core minimum.

That gap of 20 physical cores vs. 72 licensed cores creates what analysts call “shelfware,” and cost increases of 200–350% are common in small or edge deployments. On the other hand, larger clusters may feel the increase less because they already exceed the minimums.

Compliance & Audit Considerations

Broadcom requires precise core reporting. Many organizations underestimate their counts or forget to apply minimums, which leads to audit findings and forced true-ups. This is why counting tools and official KB guidance exist on the support portal. Another way to think about it is that the financial risk comes from the gap between physical hardware and licensing rules, not from the software itself.

VCF sits at the center of Broadcom’s strategy, so understanding its licensing model is essential.

What’s Included

VCF gives organizations a fully integrated stack. It includes vSphere for compute, vCenter for management, Aria Suite tools, Tanzu Kubernetes Grid for container workloads, NSX for networking, and lifecycle automation tools.

All of these operate under the same per-core model following the 16-core and 72-core minimums. That means VCF licensing scales with the physical size of the ESXi hosts running the environment.

vSAN Licensing Change (Nov 22, 2024)

A key update arrived on November 22, 2024. vSAN no longer activates automatically through the VCF or VVF solution key. Instead, it requires its own license key to unlock storage virtualization features.

The solution key still covers the rest of the bundle, but vSAN now behaves like a separate add-on. This change matters for customers who assumed that vSAN was still bundled, because it alters how they calculate total licensing cost.

Versioning, Upgrades & Downgrades

Official documentation explains how VCF licensing handles version transitions. Customers can upgrade or downgrade solution keys depending on what their cluster versions support. This is especially important in mixed environments, where older clusters cannot always run the latest version of a bundle. The ability to reassign keys or match cluster versions keeps environments compliant even during phased upgrades.

Portability has become a major part of how VMware licensing works because it affects long-term strategy and budgeting.

How Portability Works

VCF License Portability applies to VCF 5.1+ subscriptions purchased after December 13, 2023. These entitlements can run on-prem, within authorized VMware Cloud Service Provider (VCSP) environments, or inside supported public clouds.

The licensing follows the customer rather than staying tied to a specific data center. This avoids paying twice for the same workload capacity when teams move applications during migrations or disaster recovery operations.

Supported Platforms

There are two major hyperscalers with explicit support for license portability:

• Google Cloud VMware Engine (GCVE)
• IBM Cloud

Broadcom also highlights select Pinnacle and Premier VCSP partners that support portability, and Azure appears in partner ecosystem messaging as part of hybrid cloud strategies. The underlying requirement is that the destination must be a certified endpoint.

Practical Scenarios

The following scenarios help explain why portability matters:

• A team might need burst capacity in a public cloud during seasonal demand.
• During disaster recovery, workloads can fail over to a cloud region without purchasing new licenses.
• Migration across cloud platforms becomes easier since entitlements are portable.

The final major area is operational. Knowing how VMware licensing works is useful, but organizations still need a plan to track capacity, match bundles to workloads, and manage renewals.

Step-by-Step Checklist

1. Inventory every physical CPU core across all ESXi hosts.
2. Apply the 16-core minimum per CPU rule.
3. Apply the 72-core minimum per license instance rule.
4. Decide whether VCF or VVF matches the architecture you are running.
5. Determine whether vSAN is required and license it separately.
6. Confirm that your MSP remains an authorized VCSP. The program became invite-only on November 1, 2025, and only a select few partners remain authorized.
7. Evaluate VCF License Portability to avoid duplicate spending across environments.
8. Set straightforward renewal reminders to avoid penalties or service disruptions.

Budgeting & Governance

Enterprises often fold VMware licensing into internal audit processes, especially when they follow SOX or ISO-driven controls. Variations can reach 200–1,000% when moving from legacy or perpetual models to per-core subscriptions, so financial governance matters.

Teams frequently recheck their numbers after hardware refreshes or cluster expansions because those changes impact subscription minimums. Another way to look at it is that licensing and hardware planning now overlap more than they used to, and both shape the final budget.

Understanding how VMware licensing works has become essential because the rules now depend on accurate core counts, strict minimums, and bundle-based subscriptions. These shifts also combine with changes to the partner ecosystem and with new portability options that influence where workloads can run. The overall system is more integrated than before, but the details matter at every step.

OTAVA remains a Broadcom Pinnacle Partner and helps organizations evaluate their compute environments, calculate compliant core counts, and explore the licensing paths available through VCF. We also guide teams through renewals, cloud portability, and partner alignment so they can avoid unnecessary costs or compliance issues. When you’re ready to assess your environment or plan your next licensing cycle, contact us. We can support you with clear guidance based on your current workload and goals.