Broadcom’s VMware strategy pushes customers towards rival virtualisation platforms
VMware is set to lose its long-held dominance of the virtualization market, a decline Broadcom, its owner, appears untroubled by as it narrows its focus to a smaller pool of high-value customers. Three approaching deadlines will force tens of thousands of VMware users to decide whether to commit fully to VMware Cloud Foundation (VCF) or migrate elsewhere, marking a shift away from the standalone vSphere and vCenter tools many relied on for basic server virtualization.
Before its acquisition, VMware served around 350,000 customers and held over half the virtualization market, but Broadcom is reportedly interested in retaining only 10,000 to 30,000 of them who need the pricier VCF bundle. Key dates include 22 November 2026, when many pre-acquisition multi-year subscriptions expire; 31 March 2027, when numerous Cloud Service Provider partnerships end; and 11 October 2027, when support for VCF version 8 ends. Rivals such as SUSE and Cisco are courting departing customers, while firms including Tesco and Allstate have voiced anger at Broadcom, even as some partners like Centorrino say they understand, if not agree with, the company's strategy.
- VMware set to lose 20-year virtualization market leadership under Broadcom.
- Three deadlines through October 2027 will push many customers to switch platforms.
- Broadcom is reportedly targeting only 10,000-30,000 core VCF customers.
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VMware makes software that lets one physical computer run many virtual ones, a technology widely used by businesses and cloud providers to manage their IT systems efficiently. It became the leading player in this field over two decades, building a huge customer base that relied on its tools for everyday server management. In 2023, VMware was bought by Broadcom, a much larger technology and chip company known for buying software firms and restructuring how they charge customers.
Since the takeover, Broadcom has changed how VMware sells its products, moving away from standalone tools towards a bundled, more expensive package called VMware Cloud Foundation. This has prompted many long-standing customers, including large organisations, to reconsider whether to stay with VMware or switch to competing products from other technology firms. A series of contract and support deadlines over the next two years mean many businesses will soon have to make that decision.
The situation matters because virtualization software underpins much of the world's everyday computing infrastructure, from company data centres to cloud services. Decisions made by large organisations about which platform to use can affect costs, reliability and technical planning for years to come, making this a closely watched test of how far a major supplier can reshape its business without losing the customers who depend on it.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates of Broadcom's approach argue that VMware's old model, serving hundreds of thousands of customers with thin margins on basic virtualisation, was commercially unsustainable and left the platform under-invested. Concentrating on 10,000 to 30,000 large enterprises willing to buy the fuller VCF bundle allows Broadcom to fund deeper engineering investment, deliver a more integrated private-cloud stack, and run a leaner, more profitable business, which ultimately benefits the customers who remain by giving them a more capable, better-supported product.
The case against
Critics argue that Broadcom is using its acquired market dominance to coerce long-standing customers, many of whom only ever needed straightforward server virtualisation, into buying an expensive bundle they neither want nor need, or scrambling to migrate under tight deadlines. They see this as a betrayal of firms like Tesco and Allstate that built infrastructure around VMware in good faith, arguing that abrupt licence changes and shrinking support windows prioritise short-term shareholder value over the trust and stability customers were promised, and that it unfairly punishes smaller organisations for not being lucrative enough.
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Originally published by The Register as “The balkanization of virtualization will de-throne VMware, which doesn’t mind a bit”.