VMware became a widely adopted solution for enterprise virtualization, enabling organizations to host multiple virtual machines on a single physical server. This technology offered advantages like better resource utilization, potential reductions in hardware spend, and simplified server management.
For healthcare organizations, VMware provided a platform for critical applications, supporting their security and compliance frameworks.
However, Broadcom’s acquisition of VMware in November 2023 has changed the game, and subsequent strategies for organizations to reconsider where they store their workloads.
Let’s explore what’s changing, the potential impact for VMware clients in healthcare, and alternatives to VMware in the midst of these changes.
VMware’s Licensing Changes
Transition to Subscription-Only Model
VMware has eliminated perpetual licensing options, requiring customers into recurring subscription fees. While this aligns with industry trends toward Software-as-a-Service (SaaS), the financial impact on healthcare organizations has been severe. Organizations that previously owned their licenses, now face ongoing subscription costs that can dramatically increase their total cost of ownership.
What this means for healthcare organizations: Many EHRs, PACS, and legacy applications still run on VMware. Losing perpetual licenses means ongoing costs for systems that can’t be easily modernized.
Minimum Core License Subscription
Starting April 10, 2025, VMware required a minimum 72-core license subscription, but after backlash, it quickly rescinded this and re-adopted the previous 16-core minimum. However, the switching has caused unease with customers, and organizations worry that they might soon have to pay for capacity they don’t need, creating unnecessary financial strain on already tight healthcare budgets.
What this means for healthcare organizations: Data centers often segment workloads for PHI isolation — so multiple low-density hosts become expensive under core minimum rules. Additionally, switching has caused unease with customers, especially smaller healthcare facilities, remote clinics, and edge locations that don’t require extensive computing power.
Product Portfolio Consolidation and Forced Bundling
Broadcom has consolidated VMware’s extensive product portfolio to just a few bundled offerings, primarily VMware Cloud Foundation (VCF) and vSphere Foundation (VVF). Customers are no longer able to purchase individual VMware products outright but instead must purchase products bundled into more expensive suites. Many healthcare organizations are now forced to purchase bundled products like NSX Networking and vSAN, even when they don’t need these additional features. This lack of flexibility has eliminated the ability to tailor solutions to specific healthcare use cases.
What this means for healthcare organizations: Security and compliance teams may be forced to manage new features (like NSX) that require additional validation for HIPAA/HITRUST — adding overhead without clear ROI.
Penalties for Missed Renewals and Long-Term Commitments
VMware now enforces a 20% penalty on first-year subscription prices for customers who miss renewal anniversary dates. Additionally, the company has moved away from annual renewals, requiring three-to five-year subscription commitments.
What this means for healthcare organizations: These changes might create challenges for healthcare organizations that need flexibility to adapt to evolving regulatory requirements and patient care technologies. Additionally, if a health system merges or restructures, early termination or reallocation of VMware subscriptions can be costly and time-consuming to re-negotiate.
Customer Concerns Over Price Hikes and IT Strategy
The pricing changes have created unprecedented disruption in the healthcare IT landscape. Organizations report cost increases ranging from 150% to over 1,000%, with some customers like AT&T alleging increases as high as 1,050%. These dramatic price hikes force healthcare organizations to divert resources from patient care initiatives to cover escalating infrastructure costs.
Beyond the financial impact, 95% of VMware customers consider the acquisition disruptive to their IT strategy, with 46% viewing it as extremely disruptive. This disruption comes at a critical time when healthcare organizations are investing heavily in digital transformation initiatives, AI-powered diagnostics, and telemedicine capabilities.
A recent survey by CloudBolt Software and Wakefield Research of over 300 VMware customers summarize the reactions and main concerns of VMware users following Broadcom’s acquisition. Here are a few notable ones listed below:
⚠️ 99% of customers express concern about Broadcom’s acquisition impact on their business
⚠️ 76% report extreme or high concern about the changes
⚠️ All respondents anticipate price increases, with 73% expecting more than 100% price hikes
⚠️ 69% have VMware contracts expiring within the next 12 months, creating urgent decision timelines
These findings underscore the urgent need for healthcare organizations to explore alternatives before contract renewals force them into unfavorable terms.
VMware Cloud Alternatives
The recent changes in VMware’s pricing and licensing model have pushed many organizations to explore alternatives. In fact, Gartner is ready to predict that by 2028, 35% of VMware workloads will migrate to alternative platforms.
The major public cloud providers—Amazon Web Services (AWS), Microsoft Azure, and Google Cloud—emerging as compelling options. Transitioning to these platforms offers significant benefits, including scalability, cost efficiency, and access to advanced services that go beyond traditional virtualization.
AWS provides robust virtualization solutions while offering built-in compliance frameworks for standards like HIPAA and HITRUST, which is especially valuable for healthcare organizations. Microsoft Azure integrates seamlessly with existing Microsoft tools and provides strong hybrid cloud capabilities, making it ideal for businesses with mixed workloads. Google Cloud excels in data analytics and machine learning, providing cutting-edge capabilities for organizations aiming to innovate.
By moving to the public cloud, organizations can simplify regulatory compliance, reduce overhead from managing on-premises infrastructure, and leverage the vast resources and innovation of global cloud providers.
The Democratization of AI and the Rise of Multi-Cloud Strategies in Healthcare IT
Top 5 Considerations for Choosing the Right VMware Alternative in the Cloud
When evaluating VMware alternatives, healthcare organizations must consider several critical factors:
- Compliance Requirements: Healthcare organizations operate under strict regulatory frameworks including HIPAA, HITRUST, GDPR and GxP. Any alternative platform must support these compliance requirements or integrate with solutions that provide necessary healthcare-specific protections.
- Migration Timeline: Moving from VMware to alternative platforms might 6-12 months for assessment and several years for complete migration. Healthcare organizations should begin evaluation processes immediately to avoid being locked into unfavorable VMware contracts.
- Total Cost of Ownership: While alternative platforms often offer lower licensing costs, organizations must evaluate the complete TCO including migration expenses, training requirements, and operational changes.
- Security Considerations: Healthcare data requires specialized security measures. Alternative platforms must provide robust security frameworks tailored to healthcare-specific threat landscapes.
- Integration Capabilities: Modern healthcare organizations rely on complex ecosystems of applications and services. Alternative platforms must integrate seamlessly with existing healthcare IT infrastructure.
Transform Your Healthcare IT Infrastructure Today
The VMware pricing changes of 2025 represent more than a cost increase—they signal the end of an era for traditional virtualization approaches in healthcare. While these changes create immediate challenges, they also present opportunities for healthcare organizations to modernize their infrastructure, reduce costs, and improve security posture.
Healthcare organizations face an urgent imperative to evaluate alternatives before contract renewal deadlines force them into unfavorable terms. The 69% of organizations with expiring contracts in the next 12 months must act quickly to avoid being locked into three-to five-year commitments at dramatically increased prices.
Don't let VMware's price increases derail your organization's mission of providing exceptional patient care.
With ClearDATA, you can drive healthcare innovation securely while maintaining the reliability and compliance standards your patients deserve—all without the burden of unexpected cost escalations.
