Key points
- A Dutch court forced VMware and Broadcom to keep supporting a major government agency as it moves away from their software.
- VMware users face high costs under new subscription models, with some seeing price hikes of up to 500%.
- Microsoft’s Hyper-V and other tools are gaining attention as alternatives as companies seek to avoid vendor lock-in.
A Dutch court has ordered VMware and its parent company, Broadcom, to continue supporting the Dutch Ministry of Infrastructure and Water Management (Rijkswaterstaat) for up to two years while the agency transitions to new software. This follows a dispute over Broadcom’s new subscription licensing model, which caused Rijkswaterstaat’s annual costs to soar by nearly 85%. The agency, a longtime VMware customer, previously paid €2.1 million ($2.4 million) per year for perpetual licenses and tools like vSphere and vSAN. Under Broadcom’s changes, the price jumped to nearly €4 million ($4.6 million), which Rijkswaterstaat called “unsustainable.”
The court ruled that Broadcom breached its duty of care by refusing to help the agency maintain or replace critical systems managing Dutch bridges, tunnels, and locks. This includes denying access to source code for independent support and refusing to extend support beyond July 2025. Now, VMware and Broadcom must provide maintenance, updates, and technical assistance for two years, or face fines of up to €250,000 ($290,000) per day—potentially totaling €25 million ($29 million). The decision marks a rare challenge to Broadcom’s aggressive licensing strategy since its $69 billion VMware acquisition in late 2023.
Broadcom’s policy shift has sparked backlash globally. The company scrapped perpetual licensing for VMware products, pushing customers into costly bundled subscriptions. Some organizations reported license fees rising by 500%, while others, like a U.S. telecom giant (possibly AT&T), have filed lawsuits over similar issues. In Europe, antitrust regulators are investigating Broadcom’s practices following complaints from businesses, highlighting regional concerns about fair competition and cost pressures.
The Dutch ruling could set a legal precedent. Experts warn that forcing companies to keep supporting legacy systems with a court-ordered “duty of care” framework might apply to others, especially those using VMware in sectors like healthcare, energy, and transportation. Sanchit Vir Gogia, CEO of Greyhound Research, said the case shows vendors can’t ignore customers’ need for stability during migrations. “When companies pull support without clear exit strategies, they create big legal and operational risks,” he added.
Meanwhile, the crisis has driven interest in Windows Server and Microsoft Hyper-V as alternatives. Forrester analysts estimated up to 20% of VMware’s enterprise customers might switch vendors due to price hikes and rigid subscriptions. Microsoft’s cloud and virtualization tools—including Azure and OpenShift Virtualization—are being evaluated by organizations wanting to avoid conflicts with Broadcom. Smaller companies are also accelerating cloud migrations to reduce reliance on virtualization platforms.
Broadcom’s recent policy changes, which require minimum 72-core purchases per license order, have been especially tough on smaller deployments. European cloud providers report 3,500-core minimums in VMware partnerships, costing up to $800,000 annually, effectively pricing out smaller firms. While the €25 million penalty in the Dutch case is minor for Broadcom’s goal of $8.5 billion in yearly VMware profits, the broader message is clear: customers are pushing back against one-sided licensing deals.
The timing is critical as many large VMware clients face contract renewals in 2025. With the Dutch ruling as a template, companies may now legally challenge sudden support cutoffs. Gogia predicts this trend could push vendors to “respect legacy contracts” or risk losing trust. Microsoft and competitors are seeing this shift as an opportunity to attract customers with flexible pricing and cloud services. As Rijkswaterstaat works to exit VMware, its case reflects a larger push in tech by buyers to demand choice, fairness, and reliability—especially in public infrastructure where costs and compliance matter most.
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