How far can a company stretch customer loyalty before it snaps? That is the question hanging over Broadcom's reshaping of VMware, and the answers are dividing boardrooms, server closets, and IT budgets in real-time. Some call it a fair price for a modern private cloud. Others call it a textbook shake-down. Both sides have numbers to support their claims.
Before Broadcom, VMware ran on a familiar model. Businesses of all sizes purchased perpetual licenses for the parts they needed, primarily vSphere for managing virtual machines, along with any extras when their budget allowed. Many companies are still stuck with the basics. It worked. Costs remained predictable, and third-party tools filled any gaps that were missing.
Enter Broadcom. The new leadership wasted little time in transforming VMware into what it calls a fully integrated private cloud platform, complete with security, automation, lifecycle management, and more. This package is VMware Cloud Foundation. It is sold only as a subscription. There is no splitting it apart or running it piecemeal, no matter how lean your data center might be.
Joe Baguley, Broadcom's lead technology voice for Europe and neighboring regions, has become the main public face defending this approach. His counterargument in conversation with the Register was that many firms were not using VMware to its fullest potential. They ran the core hypervisor and skipped everything else. Under the new model, they must pay for the whole engine room, so they should switch it all on.
Broadcom CEO Hock Tan proudly recently revealed that 87% of VMware's largest 10,000 accounts have renewed under the new plan. However, VMware has over 500,000 customers worldwide, prompting many to speculate that Broadcom is primarily interested in high-value accounts.
Unhappy mediums
The loudest pushback comes from small and medium-sized companies. Many have seen their costs multiply overnight, with new subscription quotes landing at eight, ten, or fifteen times their old support renewals. Some could stomach a price jump if they needed all the latest features, but for many, those tools overlap with the software they already have or are not required.
How to lose $750,000 by @VMware pic.twitter.com/ffCQkoPgm9
undefined Cristian (@CristianVZC) April 25, 2025
The result has been a quiet but steady shift toward cheaper hypervisors. Proxmox, a long-time community favorite, has become a haven for lean IT shops tired of surprise licensing spikes. Nutanix, which offers a more polished alternative with proper support contracts, reports a surge in new conversations with VMware escapees.
And yet, none of this is as easy as walking out the door. Even frustrated buyers admit migrating a mature VMware environment is no weekend project. Years of virtual machine sprawl, deep integration, and staff knowledge keep most customers stuck where they are for now.
Private cloud or just another server?
Part of Broadcom's pitch rests on a convenient trend. The grand promise that the public cloud would replace every server room has worn thin for many businesses. Rising bills, compliance headaches, and unpredictable performance have turned "cloud-first" into "cloud when it makes sense." Broadcom's own Private Cloud Outlook report leans heavily on this.
Over half of the surveyed companies indicate that new workloads will initially run in private clouds. Baguley claims that VMware Cloud Foundation delivers everything buyers now want, including cloud-like operations within their own walls, tight control over data, and freedom from unpredictable public cloud bills.
It sounds like a tempting offer theory. But in practice, some buyers feel they are paying for a heavy bundle of features that they lack the time or personnel to run correctly. Others argue that VMware has yet to catch up with modern container platforms and public cloud services in terms of usability.
Forced consumption or full value?
Critics argue that Broadcom's sales tactic is more traditional than transformative. Strip away the polished slide decks, and it comes down to forcing customers to pay for extras they would never have chosen to purchase. If that feels familiar, it should. For decades, software giants have locked users in with complex licensing and limited exit routes.
VMware claims that customers quickly realize the value of the extra features once they are activated. Security policies, automated configuration, and cost tracking are often neglected when purchased separately. When these pieces connect natively, they can save more money than they cost.
That pitch convinces large enterprises that have teams ready to handle complex tools. Smaller companies with smaller teams often lack the time or budget to extract full value from every included component. They pay for them anyway, or they leave.
Industry response: A slow burn
Interestingly, market watchers do not all see this ending badly for Broadcom. For the biggest clients, the risk and pain of ripping out VMware is huge. Some have spent decades layering workloads on top of it. Moving means retraining staff, rewriting runbooks, and testing every legacy workload on a fresh platform.
Analysts have warned that switching off VMware can be costly and may take years to complete. This risk has provided Broadcom with a substantial safety net. Angry customers may complain on forums today about the limitations on direct customer relationships, but will they sign the renewal paperwork tomorrow?
Heard Broadcom is limiting direct customer relationships? It’s true. In this short TechTalk video Paul Mckenna, VMware Specialist at Redcentric, explains why Broadcom is now working with fewer customers directly and instead focusing on a strong partner network. pic.twitter.com/Pzx8pXgCQH
undefined Redcentric (@Redcentricplc) June 20, 2025
What comes after VMware?
While some customers bolt for Proxmox, Nutanix, or plain old KVM, others bet on the public cloud once more. Microsoft Azure and Google Cloud are popular havens for firms that no longer trust Broadcom's licensing. Even the oldest critics of hyper-scale cloud admit it is sometimes less painful than staying boxed into an inflexible subscription.
A quieter trend runs deeper. More IT leaders are building hybrid strategies from day one, choosing a mix of private hardware and external cloud. The goal is simple: spread risk and avoid giving any single vendor too much leverage. Broadcom's pricing shock has become an unexpected case study of why that mindset pays off.
No vendor can continue to squeeze forever without consequences. Many industry veterans remember Oracle's licensing feuds. That playbook worked for a while until cloud competition provided customers with a credible alternative. Once trust is broken, regaining it is expensive and slow.
The VMware team is aware of this. They say the new model ensures a stronger, more consistent product that can keep pace with changing tech demands. They argue that most customers undervalued VMware for too long and that the subscription model aligns incentives more effectively.
I hear folks talk on Twitter about the move from VMware but genuinely zero of my customers are talking about it 🤷🏻♂️
undefined Ross Wynne (@RossWynne) July 20, 2024
From Broadcom's point of view, the logic checks out. Focus on customers too big to leave. Let smaller buyers walk if they must. Funnel the profit from locked-in accounts into dividends and share buybacks. This is Hock Tan's blueprint, proven over and over in semiconductors.
Whether it translates cleanly to software is still unclear. Software customers talk to each other more than chip buyers ever did. Open-source options are better now than they were a decade ago. And once a competitor tastes fresh momentum, old giants often find themselves forced to change tactics or risk losing more ground each year.
The next renewal
Few expect Broadcom to roll back its pricing. Some hope regulators care, but the odds are slim. Realistically, the big test comes when the first wave of forced subscriptions hits its next renewal window. If companies have not used all those bundled tools by then or still resent the sudden switch, the slow trickle of exits could become a flood.
Until then, Broadcom's VMware remains a lesson for the entire industry. It shows just how far a vendor can push customers when the cost of leaving feels higher than the cost of staying. It also reminds every CIO and IT manager watching that putting too much power in one supplier's hands almost always ends badly.
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