VMware and Broadcom have launched a major lawsuit against Siemens over software licensing violations, creating shockwaves across the enterprise technology sector. This high-profile legal battle between tech giants seriously impacts your organization’s software compliance strategy.

Since Broadcom purchased VMware for $61 billion in 2023, the licensing requirements have changed significantly and become much more expensive.

Check Vmware price increase 2025 here.

The VMware-Siemens Legal Dispute Explained

On March 21, 2025, VMware filed a complaint for copyright infringement against Siemens AG and its affiliates in the U.S. District Court for the District of Delaware. The dispute centers around Siemens’s September request for a one-year renewal of VMware maintenance and support services. According to the complaint, Siemens listed “thousands of copies of VMware products for which it had never purchased a license.” The court filing is interesting.

The situation became more complicated in October when Siemens amended its reporting to more closely align with VMware’s assessment, yet reportedly resisted an independent audit. VMware, acquired by Broadcom for $61 billion in November 2023, is seeking an injunction to prevent Siemens from continuing to use unlicensed products, as well as damages and profits attributable to the alleged infringement.

We have yet to hear Siemens’ side of the story, but if the VMware/Broadcom filing is accurate, it reflects poorly on Siemens for several reasons:

1. Poor software asset management for VMware programs. This appears to be the case for two reasons:
   • If VMware is right, Siemens has been using unlicensed and/or under-licensed VMware programs. This is a major failing, if true.
   • Siemens’ messaging with VMware indicates they did not perform a simple license reconciliation before sharing information.
2. Inadequate communication with VMware. The messaging with VMware may not have been as careful and methodical as it should have been.

While we don’t yet know all the details and haven’t heard Siemens’ response, things don’t appear to be off to a good start for Siemens.

This case highlights a significant risk many enterprises face: the potential for massive financial penalties resulting from software licensing non-compliance.

Pattern of Aggressive Licensing Enforcement

The Siemens lawsuit isn’t the first high-profile legal action involving Broadcom and VMware licensing issues. In late 2024, AT&T filed suit against Broadcom seeking injunctive relief and extended support services after being informed their VMware costs would increase by a staggering 1,050%.

While AT&T and Broadcom reached a settlement out of court in November 2024, the details remain confidential. What’s clear is that AT&T’s experience isn’t unique – many VMware customers have faced substantial price increases since Broadcom’s acquisition.

This pattern of aggressive enforcement and pricing adjustments appears to be Broadcom’s strategic approach to maximizing revenue from VMware’s customer base. Shortly after acquiring VMware, Broadcom:

• Ended perpetual licenses in favor of subscription-based models.
• Consolidated hundreds of separate components into four large product bundles available by subscription only.

As a result, many enterprises have seen a sharp rise in their VMware license costs.

What This Means for VMware Customers

These legal disputes carry important implications for all VMware customers:

1. Heightened Compliance Risk: Proper license management is no longer just good practice – it’s essential for avoiding potentially expensive legal action. Organizations should ensure they have accurate records of their VMware license entitlements and deployments.
2. Increased Cost Pressure: Many customers report substantial price increases upon renewal, with some seeing their VMware costs multiply five to ten times over previous rates. Budget planning should account for this new reality.
3. Limited Negotiation Leverage: The consolidated product bundles limit your ability to purchase only what you need, forcing many to pay for components they don’t use or face losing support for critical infrastructure.
4. Strategic Decisions Required: Your organization needs to carefully evaluate whether to accept Broadcom’s terms, attempt to negotiate, or begin planning migration to alternative solutions.

FAQ: VMware Licensing Challenges

How common are software audits that result in significant financial penalties?

Very common. Most organizations report being audited by at least one major vendor (Oracle, Microsoft, IBM, VMware) at least once in the last 2-3 years. Over 80% of enterprises have material license compliance gaps that could lead to penalties.

How dramatic have the VMware price increases typically been?

While experiences vary, some organizations have reported increases of 600% to over 1,000% in their VMware renewal costs. AT&T’s lawsuit specifically mentioned a 1,050% increase.

What factors might trigger a software license audit or dispute?

License changes, product bundling modifications, major infrastructure shifts, mergers and acquisitions, or self-reporting usage patterns that don’t align with purchase history can all potentially trigger licensing reviews or disputes.

Navigating VMware Licensing in the Broadcom Era

At Redwood Compliance, we’ve developed a methodical approach to help clients navigate these challenging waters. Here’s our recommended framework:

1. Comprehensive License Entitlement and Deployment Analysis: Begin by thoroughly reviewing all VMware contracts to establish a clear picture of your entitlements. This documentation serves as your foundation for any negotiations or compliance discussions. Establish your deployment picture in detail and reconcile against entitlements.
2. Usage Optimization: Consolidate and downsize your VMware footprint where possible. Many organizations can reduce their licensing needs through better resource management and the elimination of unused or underutilized instances.
3. Strategic Alternative Planning: Identify viable alternative technologies and develop migration plans where feasible. While migration may not be immediately possible for all workloads, having a clear roadmap for reducing dependency on VMware products improves your negotiating position.
4. Contract Negotiation Strategy: With a clear understanding of your entitlements and actual needs, develop a negotiation strategy that leverages your specific situation. Even in Broadcom’s more rigid licensing environment, certain concessions may be possible.

Our approach is rooted in data-driven analysis and years of experience with enterprise software licensing. Our focus helps clients grasp their available choices and linked expenses and costs so they can make decisions that match their business targets instead of merely giving in to vendor demands.

What Customers Should Take Away from the VMware-Siemens Dispute

The Siemens case serves as a powerful reminder of several critical points:

1. Documentation is Crucial: Maintaining accurate records of all license purchases, deployments, and usage is essential for defending your organization in case of disputes.
2. Self-Reporting Can Be Risky: Siemens’ issues began with self-reported usage that, according to VMware, revealed unlicensed installations. Organizations should carefully review their compliance position before engaging in renewal discussions. Even if the self-reporting was initially inaccurate, the optics are negative.
3. Legal Action is on the Table: Broadcom has demonstrated a willingness to pursue legal remedies, making compliance a matter of significant financial and reputational risk.
4. Strategic Planning is Essential: Organizations heavily invested in VMware technology need both short-term tactics for immediate renewals and long-term strategies for potential migration to alternatives.

The transition from VMware’s traditional licensing model to Broadcom’s more aggressive approach represents a seismic shift in the virtualization software market. Organizations must adapt their software asset management practices accordingly or face potentially significant financial consequences.

Conclusion

The Broadcom-VMware lawsuit against Siemens signals a new era in software licensing enforcement. With VMware price increases reported up to 1,000% and aggressive legal action now evident, your organization faces significant financial and compliance risks.

Effective VMware license management is no longer optional. Companies with robust software asset management processes and clear documentation will avoid costly legal battles while controlling skyrocketing VMware expenses.

Our licensing experts will optimize your VMware license costs and eliminate compliance risks with a customized strategy for your business. As always, feel free to reach out for a complimentary 1-hour consultation click here!