VMware’s 72-Core Rule: SMBs Face New Costs

In the realms of server infrastructure and cloud computing, it is commonplace for software licenses to be priced based on CPU core count. The greater the number of cores, the higher the licensing cost—this model is not tied to individual devices but rather to the processing power within them.

Following its acquisition of virtualization software company VMware, semiconductor giant Broadcom has now set its sights on small and medium-sized enterprises. Beginning in April 2025, VMware’s new licensing policy will require both new subscriptions and renewals to include a minimum purchase of 72 CPU cores.

Previously, VMware allowed enterprises to license based on CPU sockets—physical slots on a server’s motherboard that house processors. For instance, a server might contain two or four sockets, and VMware’s earlier model permitted licensing per socket, irrespective of how many cores each processor contained.

Under the new policy, even if a company’s server is equipped with only 32 or 48 cores, it will still be compelled to purchase a license covering at least 72 cores. This drastic shift significantly inflates the cost of ownership and, for small and mid-sized businesses, amounts to what many see as legalized extortion.

To make matters worse, Broadcom will impose a 20% penalty on customers who delay renewals. Any lapse in subscription will be treated as a contractual breach, incurring an additional surcharge—placing further financial strain on organizations with limited budgets.

The message from Broadcom is unequivocal: VMware is no longer courting the small and mid-sized business segment. Instead, its focus has shifted toward Fortune 500 companies, major financial institutions, and hyperscale enterprises.

Broadcom’s previous moves to consolidate VMware’s licensing structure and raise prices were met with considerable backlash. Yet, in its financial disclosures, Broadcom reported that the majority of its large clients had already adopted the new licensing model, and the price hikes had significantly boosted VMware’s revenue.

In response, a growing number of small and medium-sized businesses have begun exploring alternatives such as Proxmox VE. Nevertheless, VMware remains unmatched in the virtualization space—at least for now. Only when contenders like Proxmox VE mature into fully-fledged rivals might Broadcom begin to feel the competitive pressure.