VMware to Microsoft: What the Broadcom Price Hikes Actually Mean

Broadcom closed the VMware acquisition, and a lot of organizations found out what that meant when their renewal quote landed. I sat down with Microsoft MVP Karl Wester-Ebbinghaus to talk through what’s actually happening on the ground and where Microsoft fits as an alternative.

This is episode one of my “VMware to Microsoft” series, and it’s the scene-setter. Karl works with SMB customers in the 50 to 250 user range, and he’s seeing the same panic I am: price increases up to 30%, sometimes 8x to 10x, and in the extreme cases he’s heard about, 30x. I mentioned one contact of mine whose VMware quote went from $8 to 12 million up to over $200 million. That’s not a typo. That’s the kind of number that forces a board conversation.

Why this is happening now

Broadcom didn’t just raise prices. It restructured the whole portfolio. Horizon, VMware’s VDI product, is now split off from the core vSphere lineup. Karl’s clients feel that as more than a pricing change. It feels like the company they built their infrastructure around isn’t the same company anymore, and nobody’s sure what’s next for the products they depend on.

Karl also cited an industry stat worth sitting with: 75% of enterprise organizations run VMware. This isn’t a niche problem for a few unlucky shops. It’s touching everyone from 50-person offices to governments.

The options Microsoft is offering

Karl laid out the real paths, and none of them are “just switch overnight”:

Azure VMware Solution (AVS). Move your existing VMware workloads into Azure and keep the platform you already know. Fewer variables to manage during the migration itself. Microsoft was running a promotion locking in AVS pricing for five years, and Karl mentioned it was set to expire about a month after we recorded this. Worth checking whether a similar offer exists if you’re reading this later.
Straight migration to Azure. Use Azure Migrate and leave VMware out of the picture entirely.
Windows Server and Hyper-V on premises. If you’re not ready to leave your own hardware, Windows Server 2022, with more coming in 2025, is a real option if you’ve already got capital tied up in physical infrastructure.
Azure Stack HCI. For SAN-heavy environments that want a hyperconverged approach, Karl pointed to Dell’s Apex Cloud nodes as a close analog to VxRail, plus newer options for scaling storage independently of compute.

Karl kept coming back to one line: it depends. How deep you’re invested in VMware, what your hardware lifecycle looks like, whether you’re already licensed for Azure Virtual Desktop (AVD) or Defender through Microsoft 365, all of that changes the right answer for a given organization.

The licensing angle nobody advertises

This is the part of the conversation I’d flag hardest. If you’re already paying for Windows Server Datacenter with Software Assurance, through an Enterprise Agreement or a CSP subscription with software assurance rights, a lot of what Microsoft charges for separately is already included.

Azure Stack HCI normally runs $10 per active core per month. With Software Assurance, that drops to zero. Azure Update Manager normally runs $5 per VM per month. Also zero, under the same benefit. Karl pointed out that Microsoft doesn’t lead with this in its own marketing. They’ll quote the sticker price before anyone mentions it’s free if you already own the license.

That’s the real version of what people call the VMware tax. You already have to license Windows Server for support. If you’re also paying VMware separately for features Windows Server already covers, you’re paying twice for the same coverage.

Don’t rush the lift and shift

Karl’s closing advice was blunt: do the math on licensing and hardware before you move anything. Lift and shift feels fast, but organizations that lift and shift without a plan to consolidate afterward almost never go back and finish that work. Budget, staffing, and the next fire always get in the way. You end up carrying costs that can outpace what Broadcom was going to charge you in the first place.

The payoff for doing it right is real. Karl’s seen Azure Stack HCI consolidation ratios approaching eight servers to one. That’s a meaningful cut in hardware, licensing, power, and rack space, on top of whatever you save by getting off VMware’s new pricing.

Where this leaves you

There’s no single right answer here. If you’re deep into VMware and not ready to move, AVS keeps you on familiar ground while you plan. If you’re already licensing Windows Server with Software Assurance, you might be closer to a free Azure Stack HCI deployment than you think. Either way, the mistake is deciding under pressure before you’ve actually run the numbers.

This is part one of my “VMware to Microsoft” podcast series, where Karl and I get into the specifics episode by episode.

Subscribe for more of these.