Broadcom Subscription vs Perpetual Licensing: How to Choose the Right Model

Broadcom Subscription vs Perpetual Licensing

Introduction – The Shift to Subscription

Broadcom’s software licensing strategy has undergone a major shift in recent years.

After acquiring companies like CA Technologies, Symantec Enterprise, and VMware, Broadcom is actively moving customers away from traditional perpetual licenses and towards subscription-only models.

In practice, this means that new perpetual licenses for Broadcom’s software (including acquired products) are no longer readily available and are strongly discouraged.

Legacy perpetual options may still exist for some products, but Broadcom often makes them unattractive – for example, by sharply increasing maintenance fees or limiting support for perpetual versions. The clear goal is to drive clients into recurring subscription contracts for steady revenue.

Perpetual vs. Subscription – What’s the Difference? At a high level, a perpetual license is a one-time purchase that gives you the right to use the software indefinitely (like owning the license outright).

Typically, you pay an upfront capital expenditure (CapEx) cost for the license, followed by an annual maintenance fee (usually ~20% of the license price) for support, patches, and upgrades. Maintenance is optional in theory, but without it, you won’t get updates or support.

In contrast, a subscription license is similar to renting the software – you pay a recurring fee (OpEx) on a monthly or annual basis, which includes support and updates for the duration of the term. You only have rights to use the product during the subscription period; if you stop paying, your rights end (the software may even deactivate).

In other words, perpetual licensing treats software as an asset you own (plus optional upkeep), while subscription treats it as a service you continuously pay for.

Broadcom is making subscription the new normal. Symantec’s enterprise software, for example, shifted from offering both perpetual and term licenses to subscription-only bundles under Broadcom.

VMware is following a similar path: after Broadcom’s 2023 acquisition of VMware, Broadcom announced it would stop selling new perpetual VMware licenses in favor of subscription bundles.

Existing perpetual entitlements are being honored for now, but with conditions – e.g., standard support renewals for older VMware perpetual licenses are being phased out.

Essentially, Broadcom’s message to customers is that “pay-as-you-go” subscriptions are the future, and owning software licenses outright is being phased out.

This shift has profound implications for how you budget, negotiate, and plan your IT investments.

Cost Comparison: CapEx vs. OpEx

Cost structure is one of the most significant differences between perpetual and subscription models.

With a perpetual license, you make a large upfront capital expenditure (CapEx) investment to purchase the software, then pay a steady annual maintenance fee (an operating expenditure, OpEx) typically around 20–25% of the license cost to receive support and updates.

The upfront purchase can hit your budget hard in Year 1, but after that, the yearly maintenance is relatively predictable (and often much smaller than the initial cost).

Over a long period (say 5+ years), a perpetual model can be cost-effective if you continue using the software – you’ve paid the big cost already, and you only pay for maintenance in the future.

By contrast, a subscription license spreads costs into a recurring operational expense. There’s usually no big upfront fee – you might pay monthly, annually, or multi-year in advance – but the payments continue for as long as you use the software.

This OpEx model is more favorable for the Year 1 budget and provides a predictable expense line each year. However, the Total Cost of Ownership (TCO) over time can be higher.

For example, if a perpetual license costs $1 million plus $200k per year in maintenance, and an equivalent subscription is $300k per year, a three-year subscription ($900k) might seem cheaper than buying outright ($1 million + $600k maintenance = $1.6 million over three years).

But fast-forward to five years: the perpetual would total approximately $2 million, while the subscription would be $1.5 million – still lower in that scenario.

Over the course of ten years, though, the perpetual cost (~$3M) and subscription cost (~$3M) could break even, and beyond ten years, the perpetual model would start saving money (since you’d only be paying maintenance).

This crossover point varies by pricing model, but the longer you use the software, the more financially advantageous perpetual licensing becomes.

With Broadcom’s pricing, many customers find that over a 3–5 year period, subscription fees can equal or exceed the cost of a perpetual license plus maintenance.

Broadcom often prices subscriptions to be lucrative; it’s common to see that what you’d pay in 4–5 years of subscription is comparable to buying the license outright.

From an accounting perspective, perpetual licenses are capital expenditures – you pay once and can even capitalize and depreciate that software asset over time. Subscriptions are operating expenses – similar to a utility bill that appears on your income statement each period.

This distinction can influence company preferences: some organizations prefer spreading payments via OpEx (especially if CapEx budgets are tight). In contrast, others might have a capital budget available for a one-time spend to avoid a new ongoing expense line.

CFOs and finance teams will be interested in this: a shift from CapEx to OpEx (or vice versa) can significantly impact financial metrics and budgeting processes.

For instance, moving a large VMware expenditure from a one-time purchase to a multi-year subscription may require revising budget approvals and could impact EBITDA in the near term. It’s crucial to discuss these implications internally.

The key is to run the numbers for your situation – do a multi-year cost analysis for both models. Don’t assume a subscription is cheaper because of a smaller upfront cost; instead, look at the total costs over 5 and 10 years in any Broadcom proposal.

Broadcom is well aware of these dynamics and uses them to its advantage.

The company may offer enticing first-year subscription discounts or bundle more value into a subscription deal, but be aware of the costs in years 2 and beyond. Broadcom is known to raise fees on renewals and hike maintenance rates on legacy licenses.

In fact, one tactic is to increase annual maintenance charges (sometimes by 8–10% or more each year) for customers who stick with perpetual licensing – effectively squeezing those who don’t switch to a subscription.

Always project your costs, not just for the present, but also for a few years ahead.

A subscription might look manageable initially, but consider what happens after the initial term.

If Broadcom gives a 3-year subscription deal, what control do you have over the price in year 4 and beyond? These cost considerations should be at the forefront when deciding between models.

Flexibility & Commitment

When it comes to flexibility and commitment, perpetual and subscription models offer very different experiences. With a perpetual license, you have indefinite usage rights for the version you purchased. This means that even if you stop paying maintenance, you can continue to run the software (albeit without support or updates).

The commitment is mostly upfront – you paid for it, so you own that license. If your usage needs drop, you’re not obligated to buy more (you just might not renew maintenance on licenses you aren’t using).

However, suppose you need to expand usage (e.g., add more users or deploy on more servers). In that case, you typically must purchase additional licenses outright, which requires new budget approvals and capital outlay.

There’s also no built-in way to reduce the number of licenses you own – you can drop maintenance to save costs, but you’ll still “own” unused licenses if your needs contract.

A subscription license, on the other hand, is inherently time-bound and can be flexible in scaling – at least in theory. Because you’re essentially renting the software, you can often start with a smaller number of licenses or a shorter term and then scale up as needed by increasing your subscription.

Need more capacity? You add subscriptions (often co-termed to the same renewal date). If you no longer need as much, in principle, you should be able to reduce your subscription quantity at the next renewal.

However, Broadcom’s contracts may limit this flexibility. Broadcom often requires a multi-year commitment (e.g., a 3-year term with no cancellation option) and may stipulate a fixed quantity for that term.

They may not allow you to “true-down” (reduce licenses) in the middle of a term, and sometimes even at renewal, they might push to maintain or increase quantities. Without negotiation, you might find that once you commit to 1,000 users in a 3-year subscription, you’re paying for those 1,000 users for the full term even if your actual need drops.

In practice, subscription gives you the option not to renew at the end of the term (stop using the software entirely). Still, if you plan to keep using it, you’re effectively recommitting at each renewal interval.

Flexibility trade-offs:

Perpetual gives you flexibility, allowing you to pause spending (by not renewing maintenance) if budgets tighten or you’re satisfied with an older version. You won’t lose the software you already have – an important safety net.

A subscription gives you the flexibility to try new software or adjust usage over time, but only within the boundaries of the contract. If your usage might decline, ensure the vendor allows you to adjust down at renewal.

And if a new business need arises, subscriptions might let you add on short-term licenses more easily than buying perpetual licenses for a temporary spike in usage.

Commitment and risk:

With perpetual licenses, the risk is primarily on the vendor to keep you satisfied, ensuring you continue to pay maintenance. If you’re unhappy or tight on budget, you can drop maintenance (or simply stick with an old version) without immediately jeopardizing your operations.

With a subscription, the risk shifts to the customer – if you don’t continue to pay, you lose access to the software. This means Broadcom has more leverage: every renewal is a hard deadline for you to either pay up or face losing critical tools.

There’s a lock-in effect because once your operations depend on a subscription-based Broadcom software, not renewing is not a realistic option unless you have an alternative ready to go. Always be mindful of that dynamic.

In summary, perpetual licensing offers stability and control (you own it, you decide if/when to upgrade, you can use it as long as you want).

In contrast, subscription offers agility and access to the latest technology (always updated, scalable, but you must continue to pay and comply with vendor terms).

Broadcom’s default approach with subscriptions tends to lock in your commitment, so you will need to negotiate for any flexibility (like the right to reduce usage at renewal or to swap products if needed).

Feature Access & Updates

One big consideration is how each model affects your access to new features and updates. With a perpetual license, accessing the latest features depends on maintaining an active maintenance contract.

If you pay maintenance each year, you typically get access to all software updates, new versions, and patches for that product. However, if you decide to skip maintenance (to save money or because you’re happy with the current version), you won’t receive further updates.

Over time, a perpetual license without updates can become outdated, missing out on security fixes, performance improvements, or integration capabilities with other new systems.

Perpetual customers who lag on upgrades might find themselves running an outdated version while Broadcom focuses its development on newer releases.

With a subscription, updates are usually bundled in – you automatically get the latest version as it’s released, and support is included.

In theory, subscription customers should always have access to the cutting-edge features and improvements.

Broadcom, like many vendors, often reserves certain innovations for subscription offerings. We’ve seen cases where the most advanced capabilities or new integrations (especially cloud-related features or advanced security analytics) are made available only in subscription-based editions of the product, not in the older perpetual-licensed version.

For example, Broadcom might introduce a new AI-driven feature in its security software but only include it in the cloud subscription service. In contrast, perpetual users of the on-prem software don’t get it unless they transition. This is a form of “feature gating” to incentivize moving to subscriptions.

Another aspect is compatibility and support: as broader IT environments evolve (with new operating system versions, hardware, and security threat landscapes), a subscription ensures you’re on a supported, up-to-date version.

A perpetual license holder could theoretically skip a few years of upgrades and then be forced into a major upgrade project when the old version is no longer compatible with new platforms.

That can be costly and disruptive. Broadcom’s track record (especially after acquisitions) is that they may not put a lot of engineering effort into enhancing legacy perpetual products beyond basic maintenance; the real enhancements go into the new subscription-based services or bundles.

Perpetual customers risk stagnating on older feature sets unless they continually invest in maintenance and upgrades – and even then, the vendor’s roadmap might favor subscription services.

In summary, if having the latest features, frequent improvements, and cloud-enabled functionality is important for your business, a subscription model aligns well (as long as Broadcom delivers those updates – keep an eye on their actual release cadence).

Suppose your environment is relatively static and your software needs are being met with the current feature set.

In that case, a perpetual license can suffice – just be aware that you might not get major new features unless you eventually move to Broadcom’s subscription offering.

As a general rule, Broadcom’s newer innovations will initially appear in subscription products. When negotiating, if you plan to stay on a perpetual basis, ask Broadcom about their roadmap and whether any critical upcoming features will be available to you. If not, that might influence your decision.

Negotiation Angles – If Moving to Subscription

If you decide (or are forced) to transition from perpetual licenses to a Broadcom subscription model, it’s crucial to negotiate strategically.

Broadcom’s initial subscription proposals may not account for the investment you’ve already made in perpetual licenses or might come with terms that heavily favor Broadcom.

Here are key negotiation angles to consider when moving to a subscription:

• Request Credit for Your Existing Investment: You likely spent significant CapEx on those perpetual licenses over the years. When converting to a subscription, push Broadcom to recognize that sunk cost. This can take the form of a transition credit or a discounted subscription rate. For example, you might negotiate something like, “Customer’s prior perpetual investment will be credited toward subscription conversion fees.” In plain terms, if you already paid for licenses, you shouldn’t have to pay full price as if you’re a new customer starting from scratch. Ask Broadcom to apply a credit or give a preferential rate for the first term to account for the value of your owned licenses. The bigger your past investment, the more leverage you have to insist on this.
• Lock in Multi-Year Pricing: A common tactic is for vendors to offer a decent price in the initial term and then jack up the renewal rate. To avoid nasty surprises, negotiate price protection for multiple years. If you’re signing a 3-year subscription deal, try to lock the pricing for a renewal term as well, or at least cap the increase. For instance, include a clause like “Renewal fees shall not increase by more than 3% annually during the subscription term.” If Broadcom won’t commit beyond the initial term, then push for a longer initial term at a fixed rate (e.g., a 5-year subscription with predefined yearly costs) so you know what you’re in for. The goal is to prevent a scenario where year 4 arrives and you’re faced with a 20% higher bill because you have no alternative by then.
• Cap Renewal Uplifts: In addition to locking multi-year rates, explicitly cap any year-over-year price increases. We mentioned a 3% annual cap in the clause above, which is a reasonable negotiating target (Broadcom might start higher; they have been known to propose much larger uplifts if unchecked). Try to include language in the contract that limits the increase in the subscription fee at each renewal. Even if you can’t secure a fixed price beyond the initial term, a cap, such as “no more than X% increase,” provides some financial predictability.
• Negotiate Flexibility (True-Down and Swap Rights): Since one concern with subscription is paying for capacity you don’t use, negotiate the right to adjust quantities at renewal (sometimes called a “true-down”). For example, if you subscribe to 1,000 units and find you only actively use 800, you want the ability to reduce your commitment when renewing. Broadcom’s default contracts might not allow this, but you can attempt to add it. Similarly, consider negotiating the right to swap products or transfer credit to other Broadcom solutions if you decide to change course. If you are committing enterprise-wide to Broadcom’s portfolio, try to bake in some ability to reallocate your spend across different software in their lineup, so you’re not stuck over-investing in one product that under-delivers.
• Pilot Before Full Commitment: Broadcom will gladly sign you up for a big, long-term subscription, but you might prefer to start with a pilot or smaller scope. This is more of a strategy than a negotiation term: if possible, do a shorter subscription for a subset of your environment as a test case. For instance, convert one business unit or one product line to the subscription model first and see how the costs and support pan out. Then leverage those learnings for a broader negotiation. If Broadcom is pushing a massive multi-product bundle, consider negotiating a phase-in approach where you subscribe to critical products now and perhaps delay or have conditional terms for additional products later, based on performance or need.

In all cases, when moving to a subscription, don’t accept Broadcom’s first offer. Everything, from the rate to the bundle components, payment terms, and legal language, can be negotiated.

Ensure that any concessions you win (credits, caps, flexibility) are clearly outlined in the contract or order form.

Verbal assurances mean nothing later if they’re not in writing. Broadcom’s sales reps have quotas and might be willing to grant concessions, especially at quarter-end or if you’re a large account – but only if you ask and show reluctance to sign without those protections.

Negotiation Angles – If Staying Perpetual

What if you decide you want to stick with your perpetual licenses for now and avoid Broadcom’s subscription push? Perhaps your environment is stable, or you’ve already purchased licenses and don’t see the value in paying again as a subscription.

That can be a valid strategy, but you’ll need to negotiate wisely to protect your position as a perpetual customer under Broadcom’s regime.

Here’s how:

• Negotiate Maintenance Caps: The biggest ongoing cost for perpetual licenses is the annual maintenance fee. Broadcom is aware of this and, in some cases, has attempted to aggressively raise maintenance costs (even exceeding the industry norm of approximately a 4% annual increase). To prevent surprise hikes, negotiate an explicit cap on maintenance fee increases. For example, write into the contract, “Annual maintenance increases shall not exceed 3% or CPI, whichever is lower.” This ensures you won’t suddenly face an 8–10% jump in support costs the following year, which Broadcom might otherwise attempt to impose to make perpetual ownership less attractive. If Broadcom refuses a fixed cap, try for at least a reasonable benchmark (like tying increases to an inflation index or a low single-digit percentage).
• Secure Long-Term Support Commitments: One risk of sticking with a perpetual license is that Broadcom might decide to end support or stop releasing updates for that product version after a certain date, effectively forcing you to upgrade or migrate. During negotiations, ask direct questions about the product roadmap and support lifecycle for your perpetual products. Get clarity (in writing, if possible) on how long Broadcom will provide support for the version you’re running and what the policy is if they decide to discontinue it. If you’re signing a new maintenance contract, consider adding terms such as a guaranteed support period or an option to upgrade to a newer version at a discount if your current version is nearing end-of-life. You want to avoid a scenario where Broadcom suddenly tells you, “We’re not renewing your support next year because we’re only supporting the subscription edition now.” Insist on transparency and, if you have the clout, contractual assurances of support for a defined period.
• Leverage Competition & Alternatives: While Broadcom’s portfolio might be embedded in your operations (e.g., VMware for virtualization, Symantec for security, CA for mainframes), you may have alternatives. In negotiations, subtly remind Broadcom that you have options, even if it’s third-party support vendors or competing software. For example, some customers have turned to third-party support providers when Oracle or SAP attempted to increase maintenance costs. In the Broadcom context, this might or might not be viable, depending on the product, but raising it as a consideration can pressure Broadcom to be more reasonable on maintenance terms. If there’s a competing product in the market you could switch to in a year or two, make it known that staying on Broadcom perpetual is a choice, not a given. This can sometimes help in getting concessions (like that maintenance cap or a smaller uplift).
• Avoid Forced Migration Traps: Broadcom may approach you with an “upgrade” or new version and claim it’s only available as a subscription. Or they might say your perpetual version will go off support unless you move to the new subscription-based release. These are pressure tactics to force a migration. In your perpetual licensing negotiations, try to include clauses that grandfather your rights or give you an upgrade path that doesn’t forfeit your perpetual status. For instance, if a new version is released, can you pay a one-time fee to upgrade your perpetual license to it, rather than having to pay a subscription fee? Even if Broadcom’s policy is subscription-only for new versions, there may be ways to negotiate a special accommodation if it’s important to you (particularly for large customers or critical systems). The key is to anticipate Broadcom’s moves and negotiate upfront while you have leverage (i.e., before signing anything or renewing maintenance, when you could still choose to walk away).

Staying on perpetual licenses can be a battle of attrition with Broadcom. They will likely continue to market the benefits of subscription and may even selectively withhold some benefits from perpetual customers.

But if you handle the negotiation firmly – capping costs, ensuring support, and signaling that you’re prepared to stick with what you have – you can buy yourself time and potentially save money in the long run.

Just be sure to re-evaluate periodically: if Broadcom makes perpetual life too difficult or expensive, you might eventually decide to revisit the subscription question, hopefully on your own timeline and terms.

Use Case Scenarios

Different IT environments call for different licensing strategies. There’s no one-size-fits-all answer; the right model depends on your use case and business priorities.

Let’s explore two contrasting scenarios to illustrate when a perpetual license might be the better choice versus when a subscription is the smarter option.

Scenario A: Stable Environment – Perpetual Advantage

Consider a stable, steady-state IT environment – for example, a core data center infrastructure that remains unchanged, such as a company’s mainframe system or a long-running VMware vSphere cluster supporting critical internal applications.

In this scenario, the software’s functionality is well-understood, the workload is predictable, and there’s little need for constant feature updates.

Perpetual licensing is often ideal here. Why? Because you can make a one-time investment, deploy the software, and run it reliably for years with minimal changes.

The upfront cost may be high, but if this environment remains in place for 5, 7, or 10 years, a perpetual license with annual maintenance can yield a lower TCO than renewing a subscription repeatedly.

Key benefits in a stable scenario: you maintain control over when to upgrade (no forced updates from the vendor), and you aren’t exposed to potential subscription price hikes or terms changes down the road.

If budgets get tight, you have the option to pause maintenance for a year or two (not ideal, but possible) and continue using the software, since it’s fully paid for.

For mission-critical, stable systems (such as a mainframe running CA software or a static virtualization farm), continuity and cost predictability are paramount.

Perpetual licenses provide continuity – even if Broadcom’s policies change, your license remains yours. Organizations focused on cost control and long-term continuity tend to prefer perpetual in these cases.

They treat the software like an asset with a long usable life. As long as the system meets business needs, they don’t need the “new shiny features” every year – they need it to keep working reliably and affordably.

Scenario B: Dynamic Environment – Subscription Value

Now consider a dynamic, fast-changing environment – for example, a company’s customer-facing digital services, cloud deployments, or cybersecurity tools in the face of evolving threats.

In such an environment, staying on the latest version isn’t a luxury; it’s a necessity.

Take cybersecurity: new threats emerge constantly, and security software (such as Symantec’s endpoint protection or DLP solutions under Broadcom) requires continuous updates and the quick deployment of new features to counter these threats.

Or consider a cloud infrastructure team that’s always adopting new technologies – they might want flexibility to pivot to new tools or scale usage up and down frequently.

In such cases, a subscription model is highly effective.

Key benefits in a dynamic scenario: With a subscription, you’re always up-to-date. You receive the latest features and improvements as soon as they become available, which can be crucial for security or a competitive advantage.

You can also typically scale out more easily – spinning up additional instances or users under a subscription (especially if it’s a SaaS or usage-based subscription) can be faster than procuring new perpetual licenses and hardware.

For a fast-growing project or one that might also wind down in a year, subscription ensures you’re paying for what you use when you use it, and if the project ends, you can turn off those licenses at the next renewal and stop the spend.

Organizations in innovative spaces, or those that value agility and continuous improvement, tend to lean toward subscription models.

The OpEx nature also means if the project scales massively, you aren’t constrained by a huge upfront CapEx approval – you just expand your subscription and pay as you grow (barring any contract limits).

In summary, stable, predictable workloads (legacy systems, infrequently changing infrastructure) often favor perpetual licensing for cost efficiency and control. Rapidly evolving or growth areas (cloud services, software development tools, security) benefit from subscription for currency and flexibility.

Many enterprises actually employ a mix: they retain perpetual licenses for their “run the business” stable operations and utilize subscriptions for “change the business” initiatives that require greater agility.

With Broadcom now in the picture across mainframe, security, and cloud software, deciding the model for each use case is a strategic part of your negotiation and IT planning.

Table: Broadcom Subscription vs Perpetual – Key Differences & Negotiation Tips

The table below summarizes key differences between perpetual and subscription licensing in Broadcom’s context, and offers negotiation tips for each aspect:

Factor	Perpetual License (Own + Maintenance)	Subscription License (Term-Based)	Negotiation Tips
Ownership & Term	Buy once, own the rights indefinitely for a version. Usage is perpetual (license is your asset).	No ownership; you only have rights during the paid term. Usage ends when subscription ends.	If long-term ownership is vital, negotiate provisions for extended use or transition assistance when subscription ends. Always plan an exit strategy in case you don’t renew.
Cost Structure	Large one-time CapEx purchase for license, then yearly maintenance (OpEx) ~20% of license cost. Lower ongoing cost after upfront investment.	Recurring OpEx payments (monthly/annual fee) with support included. No big upfront fee, but continuous payments. Over several years, total $ can exceed a one-time purchase.	Run multi-year TCO comparisons. If choosing subscription, negotiate multi-year discounts or bundle pricing. If choosing perpetual, seek volume discounts on upfront fees and reasonable maintenance rates.
Budget Impact	Hits capital budget initially; maintenance is a smaller annual expense. Can be cheaper long-term if software is used for many years.	Comes entirely from operating budget; easier annual budgeting. Predictable spend, but committed every year. Long-term, costs keep accruing.	Align with your finance team on CapEx vs. OpEx preference. Negotiate pricing to fit your budget strategy. For subscription, cap renewal increases to avoid budget surprises. For perpetual, lock maintenance increases to inflation or a small fixed rate.
Upgrades & Support	Upgrades/new versions only with active maintenance. If maintenance lapses, you’re stuck on last version (usable but no updates/support). You control if/when to upgrade.	All updates included as long as subscription is active. Always on the latest supported version (vendor pushes upgrades). No separate support fee – it’s bundled.	If staying perpetual, budget for maintenance to keep support, and negotiate favorable terms for future upgrades. If moving to subscription, confirm which features and support services are included. Ensure no extra “premium” support costs hidden outside the subscription fee.
Scaling & Flexibility	Fixed license count: to expand usage, you must buy more licenses (another CapEx event). Cannot reduce license count (but can drop maintenance on unused licenses). Good for steady usage, less ideal for fluctuating needs.	Can add capacity mid-term (prorated fees) and potentially reduce at renewal if needs drop (contract permitting). Suits changing usage patterns, but you’re locked into current commitment until renewal. If you stop using software, you can drop at next term (but lose access entirely).	For subscription, negotiate true-down rights at renewal – ensure you can reduce quantities if needed. Avoid overcommitting: start with what you need and add later. For perpetual, consider phased purchases (don’t over-buy upfront) and keep maintenance flexible (drop it on unused licenses to save cost).
Renewal Dynamics	Maintenance renewal is optional each year. If you don’t renew, software still runs (on last version) but without support/updates. You have leverage at renewal since you already own the product. Maintenance fees can increase (negotiate limits).	Must renew subscription to continue using the software. Renewals are mandatory deadlines – missing a renewal = loss of software. Broadcom often uses multi-year terms; at renewal, vendor has leverage to raise rates or bundle more.	For perpetual, use the option of not renewing as leverage – negotiate better maintenance rates or threaten to self-support if needed. For subscription, negotiate renewal caps (e.g. max 3-5% annual increase) and start renewal discussions early. Put renewal dates on your calendar and never let Broadcom’s renewal quotes be the only option – explore alternatives to strengthen your position.
Longevity & Lock-In	Lower lock-in risk: You can use the software as long as it works for you, even if you stop paying Broadcom. If the software meets your needs, you could run it for a decade or more on a supported platform. The risk is eventually technology moves on or Broadcom ends support, but you have a degree of independence.	Higher lock-in: You must keep paying to keep using. Over many years, you’re tied to Broadcom’s pricing and terms. It’s easier for Broadcom to enforce lock-in (license expires if not renewed). However, you have the option at each renewal to walk away completely (with no software left).	Maintain alternative plans. If you go subscription, always have a contingency if Broadcom’s terms become unbearable (even if it’s far-fetched, like moving to a different product). Insist on clauses that allow data export or assistance if you exit. If you stay perpetual, ensure you have the installation media, license keys, and documentation to run independently in case Broadcom’s support goes away.

Transition Strategies

Transitioning from one licensing model to another (e.g., perpetual to subscription or vice versa) can be challenging. Broadcom’s shift means many customers will eventually face a transition.

Here are some strategies to ensure a smooth changeover and avoid common pitfalls:

• Avoid Double-Paying: One of the worst-case scenarios is paying twice for the same software during a transition (for example, paying maintenance on a perpetual license while also paying for a new subscription of the same product). To prevent this, consider negotiating a grace period or an overlap waiver. If you convert to a subscription before your current maintenance term ends, ask Broadcom to credit the unused maintenance or align the start dates so you’re not paying maintenance and subscription concurrently for the same licenses. Broadcom might allow you to co-term the new subscription with your maintenance renewal date or provide a discount to offset the overlap. The key is to coordinate the timing: ideally, plan the subscription start to coincide with the expiration of your maintenance, so you smoothly switch from one model to the other.
• Dual Running for Migration: In some cases, when moving to a new licensing model or version (especially if the subscription comes with a different version of the software or a cloud-based deployment), you may need a period of running both the old and new systems in parallel (for testing, data migration, etc.). Negotiate the right to run the old perpetual system for a short time alongside the new subscription deployment without additional charges. Broadcom might include a clause for “transition period use” where, say, you have 3-6 months of overlap to ensure a successful migration. This ensures you’re not forced to “flip the switch” overnight and risk downtime.
• Start with a Pilot: As mentioned in negotiation angles, a pilot program can be a wise transition strategy. Instead of a big-bang conversion of everything to a subscription model, identify a subset of your environment to trial it. This could be a non-critical segment or a region/business unit. Use the pilot to evaluate actual costs, performance, and Broadcom’s support under the subscription arrangement. If the pilot shows benefits, you’ll have internal data to justify a larger move (and if it reveals issues, you can adjust your approach or even reconsider the move). Be sure to negotiate that the pilot counts toward a bigger deal (e.g., if you subscribe 20% of your licenses as a pilot, you should get credit or consistent pricing when adding the other 80% later, rather than paying a premium because they were separate deals).
• Lock Renewal Protections Early: Transition contracts often have attractive introductory terms to get you on board. Don’t assume that a good first-year price will hold—build in protections from the start. If you’re agreeing to move to Broadcom’s subscription, that’s the moment you likely have the most leverage (Broadcom wants you off perpetual and onto subscription). Use that to bake in renewal caps, options to extend at the same rate, or capped uplifts as we discussed earlier. It’s much harder to add these protections later once you’ve already switched.
• Document Everything: When transitioning, details can slip through the cracks. Ensure that your new agreements clearly list the licenses or usage rights being retired and the new rights you are gaining. You don’t want a situation where, for example, you thought you had rights to X feature in the subscription, but the contract doesn’t explicitly say so. Also, document any promises made by Broadcom reps about the transition (support for migration, feature equivalence between old and new, etc.) in the contract or at least in a signed scope of work. Clarity is key to avoiding disputes later.
• Be Mindful of Compliance During Transition: If Broadcom is sunsetting your perpetual license support and you’re moving to a subscription, ensure there’s no compliance gray area. Sometimes, license metrics change between models (e.g., how VMware counts CPUs for perpetual versus subscription licenses may differ). Confirm that the new model adequately covers your current usage. If any audit or verification is needed, negotiate a gentle approach (no immediate penalties if something was miscounted during migration – allow a period to adjust true-ups).

By proactively managing the transition, you can make the change on your own terms rather than being caught off guard.

Broadcom will push for a swift conversion, but take the time you need to do it right.

The goal is to minimize business disruption and financial waste while moving to the model that best suits your organization.

Risks to Watch For

Whether you go perpetual or subscription, or are in the middle of switching, keep an eye on these risks inherent in Broadcom’s licensing approach:

• Subscription Lock-In: Once you’re on a Broadcom subscription, you’re effectively locked in to a recurring commitment. The risk is that down the road, Broadcom could significantly raise prices or change terms, and you have limited options because your business depends on the software. If you haven’t prepared an exit strategy, you might feel you have no choice but to accept unfavorable terms. Mitigation: Negotiate long-term price caps and continually explore alternative solutions (even if only as a backup plan). Don’t let Broadcom assume you’ll automatically renew without question.
• No Flexibility to Reduce (“Shelfware” Risk): If you overestimate your needs and subscribe to too many licenses or too large a bundle, you could be stuck paying for shelfware – subscriptions that aren’t fully used. Broadcom contracts often lock you in for the term, so you can’t reduce quantities mid-term and maybe not even at renewal without a fight. This risk is especially high if you commit to a large bundle that sounds appealing, but you ultimately fail to deploy half of the products. Mitigation: Start with known needs and grow later (rather than overcommitting). And, as mentioned, negotiate the ability to true-down at renewal. Regularly audit your usage to determine if you have surplus licenses, and address the issue with Broadcom promptly.
• Perpetual Maintenance Price-Out: If you stay on perpetual licenses, Broadcom may attempt to make it financially burdensome to remain by increasing maintenance fees or discontinuing standard support, effectively pricing you out of the model. We’ve seen scenarios where customers with legacy Symantec or CA perpetual licenses suddenly received renewal quotes at exorbitant prices (in some cases, maintenance costs doubling or more), prompting them to consider subscription deals instead. Another tactic is not offering new features or even critical updates (like security patches) unless you’re on a subscription. Mitigation: This involves negotiating caps on maintenance increases and securing support commitments. Also, consider third-party support as a temporary safety net if Broadcom’s maintenance terms become unreasonable (though ensure it doesn’t violate your license terms). Ultimately, if Broadcom is intent on phasing out a perpetual product, you need to know early so you can plan a migration on your timeline, not under duress.
• Contractual Pitfalls: Broadcom’s agreements might include clauses that can bite if you’re not careful – for example, audit rights, auto-renewal terms, or bundling clauses that commit you to additional products down the line. Always read the fine print. Mitigation: Redline aggressively. Remove or soften any terms that over-commit you or give Broadcom too much power (like auto-renewals with built-in price hikes or audit provisions that are too punitive). Ensure you have the right to terminate if needed (with appropriate notice) and that any bundling is clearly defined (so you don’t accidentally agree to buy more Broadcom software than intended).
• Operational and Support Issues: During transitions or under new Broadcom management, there may be hiccups – e.g., delays in obtaining license keys, slower support responses, or confusion in account management. These aren’t exactly “licensing” risks, but they are risks of the Broadcom takeover to be aware of. Mitigation: Keep a close relationship with Broadcom support and your account manager. Document any issues. If you’re negotiating a renewal or new deal, use any past support issues as leverage to demand better support terms (maybe a named support engineer, or credits for past problems, etc.).

Being forewarned is forearmed. By watching for these risks, you can address many of them in your negotiation or internal strategy.

The worst position to be in is realizing a risk after you’ve already signed a contract. Therefore, incorporate risk mitigation into your decision-making process regarding perpetual vs. subscription from the outset.

FAQs

Q: Is Broadcom forcing everyone onto subscriptions?
A: Broadcom is not literally forcing you to switch if you have existing perpetual licenses – you can continue using what you own. However, they are strongly encouraging and incentivizing a switch. In practice, Broadcom has made new perpetual licenses unavailable for most products and is phasing out renewals of support on older contracts. Tactics like huge maintenance fee increases, bundling products only in subscriptions, or even refusing to provide updates to perpetual users effectively force customers’ hands toward subscription. So while you might not get a letter outright cancelling your perpetual license, you may find that to stay supported and current, you have little choice but to move to a subscription. Consider it a soft force – Broadcom’s policies drive you in that direction even if they aren’t cancelling your entitlements outright.

Q: Can I still buy perpetual VMware licenses now that Broadcom is in charge?
A: As of early 2024, no new perpetual VMware licenses are being sold. When Broadcom took over VMware, one of the first public changes was ending the sale of new perpetual licenses for VMware products (like vSphere, vCenter, etc.). VMware offerings are now sold as subscription or fixed-term licenses (for example, through VMware Cloud Universal credits or similar subscription bundles). If you already own VMware perpetual licenses, you can continue to use them, and you can renew support for them in the meantime (Broadcom initially allowed existing support contracts to run their course). However, once your current support term expires, Broadcom has indicated that standard support renewals for perpetual VMware licenses will cease. They want customers to transition to subscription versions or SaaS alternatives. Therefore, you cannot expand your environment with new perpetual licenses; any expansion or new deployment will require a subscription purchase. If having a perpetual VMware environment is crucial for you, keep those existing licenses under support as long as possible, and clarify with Broadcom what the last possible support renewal is. But plan for a future where even VMware is subscription-only.

Q: How do 5-year costs compare between perpetual and subscription?
A: The 5-year cost comparison can vary depending on the specific pricing you have, but it’s essential to crunch the numbers for your case. Generally, if we assume a typical scenario (e.g., perpetual license cost plus 20% annual maintenance, versus a subscription that might be roughly equivalent to 30–40% of the license cost per year), we often see the subscription model becoming slightly more expensive around the 4- to 5-year mark. For example, suppose software X costs $100,000 for a perpetual license, with annual maintenance fees of $20,000. Over 5 years, that totals $100k + (5*$20k) = $200k (not counting any maintenance inflation). Now, say the subscription is $35,000 per year for the same software. Over 5 years, that’s $175k. In that simplified scenario, the subscription is a bit cheaper at 5 years. However, if the subscription were $50k/year, 5 years would be $250k – more expensive than perpetual. Broadcom’s pricing strategy often prices subscriptions so that in a short horizon (3 years or so), they look cheaper, but by 5 years, they might cost roughly the same or even more. Furthermore, any price increases for renewals can skew the math.

The takeaway: do a detailed 5-year (and even 7-10 year) TCO analysis with actual quotes. Include all fees, including perpetual licenses (initial cost + maintenance with projected increases) and subscriptions (annual fees with projected uplifts). In some cases, Broadcom may offer a deal where the first few years of subscription are discounted, which could temporarily lower the 5-year cost. However, be aware that years 6-10 may be more expensive if you plan to use the software for that long. Many organizations find that perpetual licensing is more cost-effective when they expect to use a product for an extended period and have stable requirements. However, with Broadcom’s new regime, they may no longer have the option to buy perpetual licenses. If you already have perpetual licenses, comparing the cost of maintaining them with the cost of converting to a subscription over five years is crucial. Often, staying on a perpetual basis (with negotiated maintenance terms) can be cheaper during that period if Broadcom doesn’t massively hike your costs, which circles back to negotiating those caps. In summary, don’t assume – model it out with real numbers for 5 years (and beyond, if this is a long-term system).

Related articles

• Broadcom Subscription Conversion – How to Trade In Perpetual Licenses for Maximum Value
• Broadcom Legacy Perpetual Contracts – What Customers Need to Know
• Calculating TCO for Broadcom Licensing – Perpetual vs Subscription
• Broadcom’s SaaS, On-Prem, and Consumption Licensing Models (2023–2025)
• Broadcom Licensing Models FAQ – 20 Essential Buyer Questions Answered

5 Actionable Recommendations

To wrap up, here are five actionable recommendations for CIOs and IT procurement leaders when deciding between Broadcom’s subscription vs perpetual licensing models:

1. Run a 5-10 Year TCO Analysis for Each Option: Before making any decisions, do the math. Model out the total costs of sticking with perpetual (including license amortization and maintenance fees) versus switching to subscription (including all recurring fees) over a realistic timeframe (at least 5 years, and even 10 if the software is mission-critical). This analysis should account for expected vendor price increases. Use these figures to drive your strategy – sometimes the numbers will clearly favor one model over the other, or they’ll show a break-even point that informs how long you plan to keep the software.
2. Align with Finance on CapEx vs. OpEx and Obtain Approvals Early: The choice between perpetual and subscription models often hinges on financial preferences. Discuss with your CFO or finance team whether a capital expense (such as purchasing a license) or an operational expense (like subscriptions) is more suitable for the organization’s accounting and budgeting. If moving from CapEx to OpEx (or vice versa), prepare the internal justification and approvals in advance. For instance, if you’ve always bought VMware licenses (CapEx) and now will spend that budget on subscriptions, finance might need to reclassify those funds. Getting buy-in early prevents delays and surprises when you’re ready to execute a contract.
3. Negotiate Price Protections (Caps and Locks) into Every Contract: Whether you go perpetual or subscription, never accept open-ended price exposure. For perpetual maintenance, negotiate a cap on the annual fee increase (e.g., a maximum of 3%). For subscriptions, cap the renewal rate increases and ideally lock in pricing for at least one renewal term. If Broadcom is offering a good price now, get it in writing how long that price (or a controlled increase) will last. Do not rely on verbal promises like “We don’t intend to increase prices significantly” – get a clause. This will protect you from the common scenario of a steep hike after you’re committed. It’s easier to negotiate caps before you sign the deal than after you’ve become dependent on the software.
4. Leverage Your Legacy Investments and Insist on Transition Incentives: If you have a significant investment in Broadcom (or CA, Symantec, VMware) licenses already, use that as a bargaining chip. Don’t move to a new model without getting something in return. This could include credits for your past purchases, extended support at no extra cost during the transition, or a discount on new subscription licenses, acknowledging what you’ve already paid. Also, insist on any available migration tools or services being provided – if Broadcom wants you to transition to a new platform or subscription, they should assist you in doing so (for example, data migration, deployment assistance, training, etc., potentially at no or low cost). The key point: make Broadcom earn your conversion. As a paying customer, a transition should not feel like starting over from scratch financially.
5. Be Prepared to Push Back and Redline Broadcom’s Proposals: Broadcom is a tough negotiator, and their initial offers/contracts often heavily favor them. Go into any negotiation with a healthy skepticism of the “standard” terms. Never accept the boilerplate contract without thorough review and negotiation. Common areas to redline: overly broad audit rights, automatic renewal clauses, one-sided termination clauses, liability and performance commitments, and, of course, pricing and fee terms. If something is important to you (such as a renewal cap, a usage flexibility option, or a specific service level), explicitly include it. Broadcom might resist, but if the deal is important to them, you’ll be surprised at what can be achieved. Engage your legal counsel and, if needed, external licensing experts to identify hidden traps. Remember, once you sign, you’re bound by those terms – so fight to make them fair. By pushing back on default terms, you can often get concessions or at least clarifications that save you headaches later. As a rule, don’t hesitate to walk away from a bad deal – or at least make Broadcom think you will. Your best leverage is when Broadcom believes you have other options, whether it’s staying on an old system longer, considering a competitor, or simply delaying the deal. Use that leverage to get the best possible outcome.

In conclusion, choosing between subscription and perpetual licensing with Broadcom comes down to understanding your organization’s needs and negotiating hard to align the deal with those needs.

Broadcom has its strategy (maximizing revenue and locking in customers), and you need yours (maximizing value and maintaining flexibility).

By being informed, running the numbers, and proactively negotiating key terms, you can turn what might seem like an imposed change into a well-planned decision that benefits your business in the long run. Good luck, and stay strategic in those negotiations!

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