Broadcom Subscription and Support Terms in Enterprise Agreements
As Broadcom expands its software empire by acquiring companies like CA Technologies, Symantec, and, most recently, VMware, it is fundamentally changing how enterprise software licensing works.
Procurement leaders, CIOs, and IT Asset Management (ITAM) teams must navigate Broadcom’s enterprise subscription terms that tie software licenses and support together under multi-year contracts.
Broadcom now pushes customers toward subscription-based licensing models (away from traditional perpetual licenses), typically aligned to an Enterprise License Agreement (ELA) term of 3–5 years. Read our comprehensive guide to Broadcom Enterprise License Agreements (ELA/PLA) and Framework Contracts.
In these deals, everything – from core VMware infrastructure software to security tools – is bundled into one subscription package, including support and upgrades for the duration of the term.
On the surface, this approach offers simplicity: one contract, one renewal date, and continuous access to the latest versions. Broadcom markets it as reducing complexity and providing predictable costs.
However, the support terms in a Broadcom ELA carry significant risks if not carefully managed. Once the initial term ends, customers can face steep renewal prices or a “reset” of discounts they initially enjoyed.
The one-size-fits-all bundle also reduces flexibility – you can’t easily drop a product or scale down support without impacting the whole agreement.
This guide takes a skeptical look at Broadcom’s subscription-and-support model in enterprise agreements and offers strategies to protect your organization from hidden costs and pitfalls.
Subscription Licensing in ELAs
Broadcom’s enterprise agreements now tie all software licensing to the term of the subscription. In practice, this means no more perpetual licenses – you cannot buy a VMware product once and own it indefinitely.
Instead, every product entitlement under an ELA or portfolio license is a time-limited subscription (commonly 3 or 5 years, co-terminating across all included products). During that term, you have the right to use the software and receive all updates, patches, and new version upgrades as they are released, because support is bundled into the subscription.
But when the clock runs out, so do your rights: without renewing the subscription, your license to use the software (and your access to support) expires.
For customers used to VMware’s old model of “buy once, use forever and pay annual support,” this is a dramatic shift. Broadcom has effectively phased out perpetual licensing for VMware (and other acquired product lines) in favor of recurring subscriptions.
The downside is higher long-term costs: subscription fees over a multi-year period often exceed what a perpetual license plus maintenance would have cost for the same timeframe.
Many VMware clients who switch to a 3-year subscription find that by the end of the term, they’ve paid more than the old perpetual price of the software – and now must pay again to renew. Broadcom counts on this lock-in, knowing that once you’re on subscription, it’s difficult to reverse course.
Another impact is how Broadcom handles existing licenses. Suppose your organization previously invested in perpetual VMware licenses (or CA or Symantec software) and you want to stay supported and up-to-date.
In that case, Broadcom will require converting those into subscription entitlements.
When you next renew, Broadcom will ask you to either trade in or migrate your legacy licenses to the new subscription model. Without doing so, you risk losing support and access to newer versions. This conversion is essentially one-way – once you are on subscription, you can’t revert to the old perpetual usage model for the current software.
Support Terms in Enterprise Deals
One immediate change under Broadcom’s model is how support and maintenance are handled. In the past, enterprises would buy software licenses outright and then pay an annual maintenance fee (often ~25% of the license cost) for support and updates.
Broadcom’s default with subscriptions is to bundle support into the subscription for the full term of the ELA.
In other words, you pay one combined price that covers both the right to use the software and the support services for that period. There’s no separate support renewal to worry about during the term – it’s all included up front.
While bundling simplifies administration (you won’t accidentally lapse on support mid-term since it’s prepaid), it also means you lose flexibility.
You cannot drop or scale back support for any component of the deal without impacting the entire agreement, as licenses and support are bundled into a single package. If a certain product in the portfolio is non-critical, you’re still paying for support on it as part of the bundle.
Broadcom’s standard support is at the “production” level; if you need premium support or dedicated personnel for a mission-critical system, such as VMware, that costs extra and must be negotiated separately.
The biggest concern comes at the end of the ELA term. Since the initial subscription fee included support, what happens when it’s time to renew? Without negotiated protections, customers may face a nasty surprise: Broadcom can present a renewal quote significantly higher than what you were paying, sometimes with support fees effectively reset to a higher percentage of the (now increased) license value.
Unlike a perpetual license scenario, where you can opt to forgo support and continue running the software you own, here you have no such option if you want to remain compliant and supported.
It’s renew on Broadcom’s terms, attempt a major scope reduction (which Broadcom often resists), or potentially lose rights to use the software altogether.
Unified Support Contracts Across Product Lines
Broadcom often pushes a single unified support contract that covers all product lines in a portfolio ELA. This can simplify vendor management (one support agreement, one escalation path), but it also means a loss of flexibility.
You can’t drop or change support for one product line without affecting the entire contract, and you won’t receive a clear cost breakdown by product, making it difficult to determine if you’re overpaying for certain components.
Risks of Broadcom’s Subscription & Support Model
Despite Broadcom’s advantages, there are key pitfalls to watch for:
- Steep Renewal Uplifts: Without price protections, your renewal could be dramatically more expensive. Broadcom has even proposed renewals at double or triple the prior cost – especially if any initial discount “resets” and disappears at renewal. Always assume Broadcom may push a big uplift unless you cap it contractually.
- Long-Term Cost Escalation: Broadcom’s model can drive up your total cost of ownership over time. They may change licensing metrics or bundle extras that increase the number of licenses you need. And many deals bake in automatic yearly price increases (5% or more). If you don’t negotiate these down, you could be paying far more in later years than planned.
Negotiation Strategies
Fortunately, you can negotiate to mitigate many of these risks.
When structuring or renewing a Broadcom enterprise agreement, consider these strategies:
- Protect Renewal Pricing: Negotiate strict limits on future price increases to ensure stability. For example, include a clause stating that “renewal pricing shall not exceed a 3% uplift annually” and ensure that any initial discount off the list price is carried into the renewal. Locking in these protections prevents Broadcom from springing a big price hike later.
- Negotiate True-Down Rights: Broadcom contracts allow you to grow (true-up) by paying more, but often prohibit reducing your commitments. Push for a true-down clause so you can decrease license counts or spending if your needs drop (at an annual checkpoint or at renewal). Even a limited true-down option – say the right to cut quantities by 10% at renewal – can save you from paying for shelfware you no longer use.
- Insist on Support Transparency & Flexibility: Demand a clear breakdown of support costs by product and try to build in some flexibility. Knowing the cost of each component helps identify overpriced areas. Also, negotiate the right to adjust or drop individual product support at renewal if needed. Broadcom will resist carving up the contract, but even a small concession here can save money if your needs change.
- Strengthen SLA and Escalation: Don’t settle for Broadcom’s standard support SLA if your operations require better. Negotiate specific support commitments, such as a 1-hour response time for critical issues or a designated support engineer, and define an escalation path to Broadcom management if issues remain unresolved. By including higher service levels in the contract, you ensure that a major VMware outage or security incident will receive priority attention.
Read about the changes to VMware contracts, VMware Contract Changes Under Broadcom – What’s Different and How to Negotiate.
For quick reference, here’s a comparison of Broadcom’s default terms versus a negotiated best-case scenario:
| Aspect | Broadcom’s Default | Negotiated Best Practice |
|---|---|---|
| Term & License Model | All licensing is subscription-only, tied to a 3–5 year term. No new perpetual licenses – you must renew the subscription to continue use. | Choose a term length that suits your needs (don’t automatically accept the longest period). If converting existing licenses, negotiate credits for their value. |
| Renewal Pricing | No price protections – renewal costs can jump significantly, and initial discounts often vanish. | Set caps on renewal pricing (e.g. max 5% per year) and carry over your initial discount into the renewal. This keeps future pricing predictable and avoids surprises. |
| Support Bundling | One all-inclusive support fee for all products, with no per-product cost breakdown. You can’t drop support for any single component. | Insist on transparency – get a cost breakdown by product. Push for flexibility to drop or adjust support for individual product lines at renewal. |
| Service Levels (SLA) | Standard, generic SLA across all products (Broadcom’s default support terms). Little room for product-specific improvements. | Add custom SLA terms to your contract. Specify critical support metrics (e.g. faster response for key systems) and a clear escalation process for major issues. |
FAQs
Q: Are VMware products only available via subscription under Broadcom?
A: Yes. Broadcom no longer sells new perpetual VMware licenses; all new VMware purchases are subscription-only and tied to a specific term. If you have existing perpetual VMware licenses, you can keep using them on the version you own, but to get new versions or support, you’ll have to switch to a subscription agreement.
Q: Does Broadcom force a unified support contract for all products?
A: In most cases, yes. A Broadcom enterprise deal will bundle all your products under one support contract and SLA. Broadcom strongly prefers not to split support by product line. Unless you negotiate otherwise, expect a single consolidated support agreement covering your entire portfolio.
Q: How can I avoid renewal cost spikes in a Broadcom ELA?
A: Build protections into your contract from the start. Include a clause capping any renewal price increase and ensure that your initial discount is carried over. That way, Broadcom can’t hit you with a huge uptick later. Additionally, prepare early for renewal and consider alternative options to ensure you have leverage during negotiations.
5 Actionable Tactics for Broadcom ELA Negotiations
- Lock in Renewal Protections Upfront – Ensure your contract caps future price increases (and ideally predefines renewal pricing) so you won’t face surprises later.
- Insist on Discount Continuity – Ensure any initial discount you negotiated will still apply at renewal time; get that commitment written into the contract.
- Demand Support Cost Transparency – Ask for a clear breakdown of costs by product in your Broadcom agreement. Transparency helps you identify areas where you can trim or renegotiate later.
- Negotiate True-Down Rights – Try to include provisions that let you decrease license counts or support scope if your needs contract, not just increase them.
- Calculate the Long-Term TCO – Before signing, model the total cost of the ELA over the term (and compare it to past licensing or alternatives) to ensure the deal makes financial sense and to inform your strategy.
Read about our Broadcom Negotiation Service.
