VMware Licensing Changes: The Strategic Opportunity to Migrate to Proxmox VE

With Broadcom’s recent changes to VMware licensing requirements, many small and medium-sized businesses are facing significant challenges in maintaining their virtualization infrastructure. These changes present an opportune moment to consider Proxmox VE as a viable alternative that can deliver substantial cost savings while maintaining robust virtualization capabilities.

The New Reality of Broadcom’s VMware Licensing Model

Broadcom’s acquisition of VMware has triggered a series of dramatic changes to VMware’s licensing structure that particularly impact smaller organizations with limited IT budgets. These changes include:

Elimination of Perpetual Licenses

In late 2023, Broadcom announced the discontinuation of perpetual licensing for VMware products, moving exclusively to a subscription-based sales model1. This shift forces customers into recurring payment structures rather than allowing the one-time purchase model many businesses preferred for capital expenditure planning[14].

Dramatic Increase in Minimum Core Requirements

Perhaps most concerning for small and medium businesses, Broadcom has announced that starting April 10, 2025, the minimum number of cores required for VMware licenses will increase substantially from 16 to 72 cores per command line7. For organizations with smaller server deployments, this change means paying for substantially more cores than they actually use.

Additional Punitive Measures

Broadcom has also implemented a penalty equivalent to 20% of the first-year subscription price for customers who fail to renew their subscription licenses by their anniversary date[7]. Additionally, prepaid and multi-year payment offers will only be created for orders with a minimum value of €25,000[13].

No More Free Tier

The free ESXi version that many smaller organizations used as an entry point is no longer available[6], removing a critical stepping stone for budget-conscious businesses.

Proxmox VE: A Cost-Effective Alternative

As VMware’s pricing structure becomes increasingly prohibitive for small and medium-sized businesses, Proxmox VE emerges as a compelling alternative with several advantages:

Open-Source Foundation with Flexible Licensing

Proxmox VE is built on an open-source foundation, which brings both immediate and long-term financial benefits[5]. Unlike VMware’s new mandatory subscription model, Proxmox offers a genuinely free version with all core features included[6]. Organizations can deploy Proxmox without any licensing costs, making it particularly attractive for budget-conscious environments[12].

Subscription Options That Make Sense

For businesses requiring additional support, Proxmox offers several reasonably priced subscription tiers:

Community Subscription: €115 per year per CPU socket[12]
Basic Subscription: €355 per year per CPU socket with support tickets[12]
Standard Subscription: €530 per year per CPU socket with more extensive support[12]
Premium Subscription: €1,060 per year per CPU socket with premium support options[12]

Even the highest-tier Proxmox subscription costs significantly less than equivalent VMware offerings, particularly for smaller deployments12.

Competitive Performance

In performance benchmarks, Proxmox has demonstrated impressive capabilities, with one study indicating it achieved 50% higher peak performance than VMware, while maintaining 30% lower latency and 38% higher bandwidth[6]. This suggests that moving to Proxmox doesn’t necessarily mean sacrificing performance.

Migration Pathways from VMware to Proxmox

Proxmox offers several approaches to migration that can ease the transition from VMware:

Integrated Import Wizard

Proxmox VE version 8.2 and higher provides an integrated VM Import Wizard that uses the storage plugin system for native integration into the API and web-based user interface[10]. This tool allows for importing entire VMware ESXi VMs with a streamlined process4.

Migration Process Overview

The migration process typically involves:

Enabling SSH on VMware ESXi
Finding the VM storage path
Connecting to the host IP of the VM
Creating and configuring the new VM in Proxmox[4]

While the migration process is not without challenges, it has become increasingly reliable and provides a manageable path away from VMware dependency[15].

Pros and Cons for Small and Medium-Sized Businesses

Advantages of Migrating to Proxmox VE

Significant Cost Savings: Eliminating expensive licensing fees, particularly under Broadcom’s new requirements for minimum core counts5
No Vendor Lock-in: Open-source foundation prevents future licensing “surprises” similar to what Broadcom has implemented[16]
Comprehensive Feature Set: Proxmox includes high availability, live migration, and clustering capabilities that would require expensive licensing tiers in VMware6
Dual Virtualization Technology: Native support for both virtual machines and containers provides flexibility for modern workloads[12]
Simplified Management: No need for a separate management server like vCenter, reducing complexity and costs[16]
Active Community: A vibrant community provides support, documentation, and continuous improvements[5]

Challenges to Consider

Learning Curve: Staff familiar with VMware will need to adapt to Proxmox’s interface and management approach
Enterprise Support: While Proxmox’s support options are improving, they may not match VMware’s enterprise-level support for critical applications
Migration Complexity: Depending on the complexity of your current VMware implementation, migration may require careful planning and testing
Third-Party Integration: VMware has more extensive third-party tool integration, which may need to be considered in migration planning

Conclusion: A Strategic Opportunity

For small and medium-sized businesses facing the harsh reality of Broadcom’s new VMware licensing requirements, the timing has never been better to evaluate Proxmox VE as an alternative. The combination of dramatically lower costs, comparable features, and increasingly mature migration tools makes this transition more feasible than ever before.

While migration requires careful planning and may present some challenges, the long-term benefits of escaping the escalating cost spiral of VMware licensing under Broadcom could deliver substantial returns on investment. Organizations should consider starting with a pilot migration of non-critical workloads to assess compatibility and performance before committing to a broader transition.

In an era where IT budgets are under constant pressure, Proxmox VE represents not just a cost-saving measure, but a strategic opportunity to regain control of virtualization costs while maintaining the capabilities needed to support business operations.

Useful Links:

[1] https://redresscompliance.com/broadcom-vmware-licensing-and-subscription-changes-explained/

[2] https://www.reddit.com/r/k12sysadmin/comments/1gwjvpu/broadcom_vmware_licensing_nightmare/

[3] https://stormagic.com/company/blog/vmware-licensing-changes/

[4] https://www.vinchin.com/vm-migration/migrate-vmware-to-proxmox.html

[5] https://www.readability.com/how-does-proxmox-ensure-cost-effective-virtualization-for-businesses

[6] https://www.1300nerdcore.com.au/post/proxmox-vs-vmware-which-virtualisation-solution-should-you-choose

[7] https://www.crn.com/news/data-center/2025/broadcom-vmware-ups-minimum-core-purchase-substantially-levies-late-renewal-penalties

[8] https://rcpmag.com/Articles/2024/04/22/VMware-Changes-Broadcom.aspx

[9] https://www.reddit.com/r/vmware/comments/1f8pr61/vmware_licenses_gone_since_broadcom_migration/

[10] https://www.proxmox.com/en/services/training-courses/videos/proxmox-virtual-environment/proxmox-ve-import-wizard-for-vmware

[11] https://dnsnetworks.com/blog/posts/how-moving-from-vmware-to-proxmox-can-cut-your-virtualization-costs