Broadcom’s response to market outrage solves nothing

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2024-04-24 13:30:08

Brussels, 22nd April 2024. In a blog last week, Hock Tan, CEO and Chairman of Broadcom sought to reassure customers, partners and investors over the brutal licensing changes imposed on the market. By seeking to frame this move as pro-competition and pro-innovation through the adoption of a subscription licensing approach, Broadcom tries to obfuscate the main issues in this dispute.

The subscription license model has never been the problem; indeed, CISPE members and their customers are already using it. What threatens the economic viability of many cloud services used by customers in Europe, are the massive and unjustifiable hikes in prices, the re-bundling of products, altered basis of billing and the imposition of unfair software licensing terms that restrict choice and lock-in customers and partners.

Subscription licensing should allow flexible pay-as-you-go models that help customers and providers scale resources to demand. Broadcom’s new terms are the opposite and are in essence anti-cloud, forcing partners to commit and pay in advance for virtualisation capacity that they may never need. Instead of paying-as-you go for actual consumption (based on memory used), as is common for cloud infrastructure and for VMware previously, the new terms insist on up-front commitment to 3 years-worth of capacity based on server cores that could be used. This is like being forced to pay, in advance, for a fleet of taxis that you may, or may not, use in the next 3 years! The unfair software licensing practices of dominant software companies are undermining the fundamental value of the cloud; the ability to deliver services that an enterprise needs when and where they need them.